THE FUTURE OF U.S. SKILLED LABOR Daniel Groves, CLMA/CURT October - - PowerPoint PPT Presentation

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THE FUTURE OF U.S. SKILLED LABOR Daniel Groves, CLMA/CURT October - - PowerPoint PPT Presentation

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THE FUTURE OF U.S. SKILLED LABOR Daniel Groves, CLMA/CURT October 2016 Construction Industry Resources LABOR GAP OUTLOOK Supply & Demand United States 8 $800 7 $700 6 $600 5 $500 Millions Billions 4 $400 3 $300 2 $200 1

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Construction Industry Resources

October 2016

THE FUTURE OF U.S. SKILLED LABOR

Daniel Groves, CLMA/CURT

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Construction Industry Resources $0 $100 $200 $300 $400 $500 $600 $700 $800

  • 1

2 3 4 5 6 7 8 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Billions Millions

Supply & Demand

United States

Demand Forecast

LABOR GAP OUTLOOK

Net Employment BLS Supply Spending Data represents all non-residential construction

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Construction Industry Resources $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 0.0 0.5 1.0 1.5 2.0 2.5 3.0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Billions Millions

Supply & Demand

Southeast Region

Demand Forecast

LABOR GAP OUTLOOK

Net Employment Spending BLS Supply Data represents all non-residential construction

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Construction Industry Resources 30 32 34 36 38 40 42 44 46 48 50 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2005 2010 2015 2020 2025 2030 Average Age % of Employed Construction Workers

Age Distribution of Employed Construction Workers

Ages 16-24 Ages 25-54 Ages 55+

  • Avg. Age

CRAFT WORKER DEMOGRAPHICS

36 43 44 Increases over 80% Decreases nearly 40%

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Construction Industry Resources 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 2 5 10 15

Attrition (Years)

Attrition Of Industrial Craft Workers & Professionals

Construction Professionals (Retire at 64) Industrial Craft Workers (Retire at 61)

PROJECTED ATTRITION

42% 38%

26% 29% 18% 16% 12% 10%

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Construction Industry Resources 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Increased labor cost Lower productivity Lower quality More rework Longer schedules More safety incidents Project start delays Project cancellations

What was the impact of the skilled labor shortages/challenges on your project(s)?

2004-2009 2011 2012 2014-2015

LABOR SHORTAGE CHALLENGES

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Construction Industry Resources

CRAFT LABOR STAFFING DIFFICULTY AVERAGE COST CHANGE AVERAGE SCHEDULE CHANGE OSHA RECORDABLE INCIDENT CASES

(PER 200,000 HOURS)

Moderate - Severe 17.3 %

(8.4%, 26.2%)

22.5%

(11.5%, 33.4%)

0.94

(0, 2.84)

Slight 3.2 %

(-0.9%, 7.3%)

12.8 %

(7.7%, 17.9%)

0.43

(0, 1.72)

No Difficulty

  • 6.2 %

(-10.7%, -1.8%)

6.4 %

(1%, 11.8%)

0.26

(0, 1.25)

LABOR SHORTAGE IMPACT ON PROJECTS

Is there a demographic craft labor cliff that will affect project performance?

CII RT 318, Aug 2015

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Construction Industry Resources

Disclaimer: The wage rates shown on this slide are blended forecasts based on multiple job skills and should not be used by individual facilities to predict future wages for a specific job category.

CRAFT WAGES & OPPORTUNITIES

1.45% 1.23% 2.15% 2.13% 2.99% 3.17% 2.55% 2.56% 2.51% 2.24% 2.24% 0.61% 1.11% 2.28% 2.37% 3.22% 3.25% 2.67% 2.72% 2.70% 2.46% 2.50% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Annual Change in Average Base Wages

National Average Texas & Louisiana Blended

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Construction Industry Resources

PRODUCTIVITY PERFORMANCE

Source: Global Vantage, Compustat, Bloomberg, National Bureau of Economic Research, BCG analysis

1% increase

in productivity

(construction cost reduction)

saves an estimated

$100B Globally $7B U.S.

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Construction Industry Resources

PRODUCTIVITY IMPROVEMENT

Attract & retain skilled talent Embrace “lean” construction principles Early project planning Optimized design & construction process Increase pace of innovation adoption

1 2 3 4 5

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Construction Industry Resources

WORKFORCE INVESTMENT ROI

CII RT 231 SUMMARY AVERAGE IMPROVEMENT

Capital Projects Maintenance Projects

Productivity 11 % 10 % Turnover Cost 14 % 14 % Absenteeism 15 % 15 % Injury 26 % 27 % Rework 23 % 26 %

$1.00 invested ≈ $3.00 ROI

Research demonstrated high value by investing 1.0% of the total project labor budget in workforce development

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Construction Industry Resources 2 4 6 8 10 12 14 16

TRIR

Industry Average Total Recordable Incidence Rate 1989-2013

OWNERS’ SAFETY TRAJECTORY IMPACT

14.3 3.6 CURT’s Owner Safety Blueprint Issued

  • Accelerating Factors
  • Common Language & Definition
  • Shift Cultural Mindset
  • Lagging Indicators > Leading Indicators

OSHA enforced rules Phillips 66 chemical plant explosion

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Construction Industry Resources

OWNERS’ WORKFORCE RECOMMENDATION

“Owners should only do business with contractors who invest in training and maintain the skills of their workforce.”

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Construction Industry Resources

WHY SHOULD YOU CARE?

Leadership / Influence Cost / Budget Economic Growth

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Construction Industry Resources

  • Robust construction activity expected

even with economic turbulence

  • Labor shortages will impact projects
  • Industry solutions available, but owners

must lead

  • How & why should you respond?

SUMMARY

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Construction Industry Resources

October 2016

Daniel Groves

(859) 339-5071 | dgroves@myCLMA.com www.ConstructionIndustryResources.com