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Iowa Builders Worried by Shortage of Workers

A resurgent industry has to deal with a major manpower problem.

Fri June 07, 2013 - Midwest Edition

DES MOINES, Iowa (AP) During the recession, Jack DeLeon Jr. looked at moving to North Dakota to build homes for some of the thousands of oil workers flocking to the Williston Basin for jobs.

But the shortage of homes included space for the builders constructing them.

“At the end of the day, you still have to have some place to park your body,” said the Des Moines homebuilder.

The Des Moines Register reported DeLeon decided to remain in Iowa and tough out one of the worst building recessions in history. But many builders moved on — going into manufacturing, moving to other states like North Dakota, and retraining for jobs in new industries. Now, builders say they’re beginning to see shortages that they say will likely only grow as big projects ramp up.

“A lot of workers have been out of the construction business for seven years now. And it’s quite likely that most of them have moved on,” said Ken Simonson, an economist with the Associated General Contractors of America, an industry group based in Arlington, Va. “They’ve either been hired in other industries, they’ve gone back to school, or they’ve retired and dropped out of the labor force,” he said.

At the same time, fewer young workers are entering the field, baby boomers are retiring, and demand is growing.

This year, Iowa is expected to see about $9 billion in large public and private commercial projects and a rebounding housing market. Major projects include $2.5 billion in work at state universities, a $238 million renovation at Principal Financial Group’s downtown Des Moines campus, a $100 million expansion of Wells Fargo’s West Des Moines campus, and the first $300 million phase of Facebook’s nearly $1 billion data center in Altoona.

Work also begins this year on two huge fertilizer projects: Orascom Construction Industries is building a $1.8 billion plant near Wever in southeast Iowa and CF Industries plans a $1.7 billion expansion near Sioux City.

“There’s a lot of work out there and a tremendous amount of work coming,” said Kent Brcka, vice president of operations at Henkel Construction Co. in Mason City.

Already, builders are reporting shortages for some skilled workers — steel workers, heavy equipment operators, concrete workers, carpenters and project supervisors — and they say it’s likely to broaden and deepen in the months ahead.

“It’s hard to find skilled workers who want to do construction today,” said Mike Espeset, president of Story Construction in Ames. “It’s harder than it was, and I think it’s going to get a lot, lot worse.”

Henkel’s Brcka said northern Iowa has lost workers to hydraulic fracturing operations in the oil fields in North Dakota.

“Heavy equipment operators are hard to find because those with experience headed north,” he said.

Master Builders of Iowa estimates the industry will see a shortage of about 2,730 workers annually over the next seven years, based on demand, retirements and the number of new trained workers coming into the industry. That approaches 20,000 workers by 2020.

The builders group is pushing efforts to recruit young workers, with job fairs at high schools and community colleges, Iowa leaders said.

States like Alabama, Georgia and Arizona also are mounting major worker recruitment efforts to attract young workers, said Brian Turmail, the spokesman of the Associated General Contractors of America. For example, Alabama hired “Dirty Jobs” TV star Mike Rowe to promote the industry to young workers.

Iowa unions also are rebuilding apprenticeship programs and urging former members to return to the industry.

Earl Agan, business manager of plasterers and cement masons Local 21, said he’s sent letters to about 80 former members, encouraging their return. Agan realizes it could be a tough sell, especially if workers found jobs that lack the seasonality of construction.

“Some workers will be willing to come back once we’ve got steady work, but some are just gone forever,” said Agan, who also is president of the Central Iowa Building Construction Trades Council, a group of union leaders and contractors focused on worker training.

Iowa has 12,000 fewer construction jobs now than it did in 2006, when construction activity began to decline, and the national jobs deficit is close to 2 million.

U.S. construction workers will need to see long-term sustained improvement before returning, Turmail said. Iowa, Arizona, Texas and Colorado may be seeing some construction shortages, but in many parts of the country, construction workers continue to struggle to find work.

“Why would you go back to the girlfriend who dumped you, if the new one has been pretty loyal?” he said.

Still, some large builders across Iowa are asking some critical workers to delay retiring, using recruitment companies to find workers, and gearing up in-house training.

Mike Tousley, executive vice president at Weitz Construction, said the company has encouraged some experienced project managers to postpone retirement.

“We’re having a lot more conversations than we have in the past, but so far we haven’t been too successful in convincing anyone” to continue working, Tousley said.

The large Des Moines-based contractor has been hiring both professional and skilled workers since the beginning of the year. The company’s industrial group “is in a hiring frenzy” with construction on Orascom’s Iowa Fertilizer Co. plant construction beginning, Tousley said. Orascom purchased the longtime Iowa company earlier this year and Weitz is a project leader.

“There are lots of applicants, but with the skills set we’re looking for, and the experience we need, it’s been a real challenge, a real struggle,” Tousley said, adding that some of the hardest jobs to fill are project engineers, managers and estimators. The company’s hourly, skilled labor pool is “about as low as it’s been in a long time. But it’s about to mushroom.

“In the past three or four years, we’ve been able to get by. There has been work, but there haven’t been really large projects” like those coming online now, he said.

U.S. construction spending increased an average of 10 percent annually for the past two years, but employment has climbed only an average of 2 percent annually, the Associated General Contractors of America said.

“More firms are at the point where they can no longer say we can make do by stretching the hours of workers we have,” said Simonson, the industry economist. “There will be more ’help wanted’ signs out there.”

Tousley said Weitz hasn’t begun offering hiring bonuses but has used them in the past.

“I could see us doing it again in the future,” he said.

Iowa pay for builders has improved, according to U.S. Bureau of Labor Statistics, climbing 18 percent since 2007. By comparison, manufacturing pay has climbed 11 percent during that time.

Henkel’s Brcka said companies like his will need to rely on subcontractors more frequently to get jobs done — and pay more overtime to the workers he has.

As work on big projects overlaps, that will make managing their completion more difficult, and potentially more costly.

“It’s pretty risky just to assume that you’ll find the people that you need,” he said, adding that Henkel has added a training position to help better prepare workers for existing jobs and positions that senior workers will vacate through retirement.

The north Iowa company could add about 10 qualified workers to its current 100-person workforce, he said.

Ned Rasmussen, who leads the Des Moines Area Community College’s building trades program, said he gets three or four calls a day from contractors looking for workers. And he has 45 students interested in his courses but only has room for 25.

“I think the general public sees that there are construction jobs out there,” said Rasmussen, adding that construction enrollment was steady despite the recession. “I think they wanted to retrain for something they thought they’d really enjoy. Now, it’s paying off for them.”

Creighton Cox, executive vice president of the Home Builders Association of Greater Des Moines, said some home builders and their subcontractors are busier than they’ve been in years.

“Those who want to hire can’t because the workforce isn’t there,” Cox said. “Others aren’t hiring because they’re still unsure the recovery will last.”

DeLeon, the Des Moines builder, said his business is still struggling. A run-up in large construction projects could reduce the number of competitors he sees for smaller residential and commercial jobs. “I’m doing everything I can to keep our 67-year-old business alive,” said DeLeon, who runs Jack DeLeon Construction with his 83-year-old father, Jack Sr.

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