Construction Tsumani - Sam Barnes

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Construction tsunami

With several chemical and renewables projects on the horizon, Baton Rouge’s industrial labor bottleneck could soon reach a breaking point.

THE LABOR FORCES of many industrial contractors in the Capital City are already maxed out and it could get a lot worse should an abundance of expected projects crank up later this year and into 2024. And of all of Louisiana’s metros, Greater Baton Rouge has the largest volume of work about to break ground.

Loren Scott, economist at Loren C. Scott & Associates in Baton Rouge, expects a spike of about 8,000 industrial workers, largely due to several impending capital projects in the chemicals and renewables sector such as Grön Fuels in Port Allen and the retrofit of the Shell plant in Convent.

“Baton Rouge has a host of capital projects with a 60 percent probability of breaking ground,” Scott says. “If you check with any

engineering firm, most of them are slammed with front-end engineering and design work.

“There are all these signals out there that there will be a significant bump in the demand for workers. The question is, where are they going to get the folks? One electrical firm already has 100 positions to fill.”

David Helveston, president and CEO of Associated Builders and Contractors’ Pelican Chapter, says many of his members are already at full employment, and a presumed influx of work will make it difficult for them to find the qualified workers they’ll need.

Helveston meets with the Industrial Contractors Council once a month to gauge future needs. “They expect the labor market to tighten significantly over the next year as many of these projects get under way,” he says. However, he notes that they’re equally concerned about the impact of the work on the already-strapped supply chain and material costs.

Scott Barringer, president and CEO at PALA Group, says he has been in close communication with the Greater Baton Rouge Industry

Alliance, as a member of the ICC, to discuss future workloads. He says that any expected bump in worker demand will only exacerbate a long-term problem.

“For the past 15 years, we’ve experienced a chronic decline in available people to work,” he says. “That could definitely impact a contractor’s decision-making. We look at our backlog, our core workforce and determine if we can adequately man the job.”

It will also jack up wages as contractors try to entice workers from other states. Barringer expects wage rates to increase as projects are released and contractors compete for the same small group of workers.

“Ironically, we currently have more workers leaving the state for work than we have coming to Louisiana,” he says. “Construction workers go where the opportunities are and where they can make the most money.”

Glen J. Gulino, executive vice president of ISC Constructors LLC, says his company’s executive team has been discussing the best ways to prepare for the influx. “We feel most of the heavy lifting will take place in 2024, 2025 and 2026,” Gulino says. “That will be sustained as these projects continue.”

ISC currently maintains a workforce of some 1,200-1,600 craftspeople, and during cyclical maintenance cycles it will bring in another 50 to 300 employees to support maintenance turnarounds.

Fortunately, ISC hasn’t had to turn down work due to a lack of manpower, although Gulino says that time could come.

“We can’t take our eye off the ball,” he says. “When we start getting these wage and compensation pressures, our biggest priority is ensuring that our associates are properly compensated and have good benefits to keep them from going elsewhere.” They currently benefit from a steady supply of trainees being funneled through the ABC training program.

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TALENT GAP: Scott Barringer, president and CEO at PALA Group, says the number of available construction workers in the region has been on a 15-year decline, impacting the number of jobs the company can bid to work on.

Helveston feels that ABC’s existing training facilities on Highland Road can adequately meet the need, whatever that might be. ABC finalized a strategic plan in December that will, in part, determine goals and metrics for attracting new students.

“Internally, our pipeline of students is in a good position over the next few years,” he says. “Our focus will be on recruiting high school students and those who are underemployed in other industries.”

It’s not just a local problem. The construction industry will need to attract an estimated 546,000 additional workers on top of the normal pace of hiring in 2023 to meet the demand for labor, according to ABC’s national office.

The construction industry averaged more than 390,000 job openings per month in 2022, the highest level on record, and the industry unemployment rate of 4.6 percent during the year was the second lowest on record, just above the 4.5% unemployment rate observed in 2019. National payroll construction employment was 231,000

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SURGE ON THE HORIZON : Glen J. Gulino, executive vice president of ISC Constructors, projects the labor pressure will be greatest beginning in 2024 as numerous projects will have broken ground by that point.

higher in December 2022 than in December 2021.

“Despite sharp increases in interest rates over the past year, the shortage of construction workers will not disappear in the near future,” says ABC chief economist Anirban Basu in a press release.

“First, while single-family home building activity has moderated, many contractors continue to experience substantial demand from a growing number of mega-projects associated with chip manufacturing plants, clean energy facilities and infrastructure.

Second, too few younger workers are entering the skilled trades, meaning this is not only a construction labor shortage but also a skills shortage.

“With nearly 1 in 4 construction workers older than 55, retirements will continue to whittle away at the construction workforce,” Basu says.

Of course, the industrial construction surge will be good news for the Louisiana economy.

“Southeast Texas and south Louisiana are going to be unique in terms of having a lot of industrial

expansion work that will continue through any national recession,” Scott says. “As a result, we forecast that Louisiana’s economy will grow right through the recession.”

There’s also some good news on the supply side of the equation.

“About the time we need those workers, you’re going to find a lot of people starting to look for work,” Scott adds. “People don’t appreciate the impact of the stimulus checks. When you look at savings rate in the U.S., it increased above its trend by $3 trillion. It was a monstrous increase. As a result, a lot of people decided to stay at home and live off the money. That has been whittled down to $1 trillion, so people will be looking for work.”

Additionally, most forecasts indicate that a national recession will occur by the second half of 2023. “It’s not going to be a very deep and long recession, but it will be significant enough that people will lose their jobs. They’re going to be looking for a place to find work, and south Louisiana is going to be a hot spot.”

CONGRATULATES

Window World of Baton Rouge CEO Jim Roland

on being named 2023 Hall of Fame Laureate by Baton Rouge Business Report

Thank you to Jim and his entire team for continuing to support Son of a Saint's mission as we uplift and transform the lives of the young men in our organization.

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MAXED OUT: David Helveston, president and CEO of Associated Builders and Contractors’ Pelican Chapter, says many of its firms are already at full employment and finding workers for upcoming projects will prove challenging.
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