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AGC: 60 percent of construction projects delayed or canceled; labor shortage continues

By |  September 3, 2020

AGCA

Sixty percent of construction firms report future projects have been canceled or delayed, according to a workforce survey conducted by the Associated General Contractors of America (AGC).

In addition, 52 percent of firms that participated in the survey say they struggle to find craft workers during the pandemic.

In addition to the 60 percent of firms reporting at least one future project is postponed or canceled due to coronavirus, 33 percent report having projects already underway halted due to the pandemic. According to AGC, the percentage of firms reporting canceled projects has nearly doubled since the survey the association conducted in June, when 32 percent of respondents reported cancellations.

Further complications stemming from the coronavirus include 44 percent of firms saying it takes longer to complete projects, with 32 percent of firms saying it costs more to complete ongoing projects.

According to AGC, roughly one-third of responding firms furloughed or terminated employees as a result of the pandemic. While most of those firms have asked at least some laid-off workers to return, 44 percent report some employees have refused to return, citing virus concerns, family responsibilities and unemployment benefits, among other reasons. As a result, 40 percent of responding firms report they have adopted new hardware or software to assuage labor shortages.

Furthermore, 38 percent of firms report having increased base pay rates to attract and retain workers, while only 3 percent of firms have reduced pay despite the downturn in business.

“Few firms have survived unscathed from the pandemic amid widespread project delays and cancellations,” says Ken Simonson, chief economist at AGC. “Ironically, even as the pandemic undermines demand for construction services, it is reinforcing conditions that have historically made it hard for many firms to find qualified craft workers to hire.”

Future outlook

Looking ahead, 42 percent of firms report their volume of business has returned to year-ago levels or is expected to do so in the next six months, compared to 52 percent who held this position in AGC’s June survey. Meanwhile, 37 percent of firms expect returning to normal business levels will take more than six months.

While project delays and cancellations are nationwide, AGC says contractor expectations vary by region.

In the Northeast, 45 percent of firms expect it will take more than six months for their business volumes to return to normal. That figure drops to 41 percent in the Midwest, 35 percent in the South and 34 percent out West.

Photo: P&Q Staff

Forty-two percent of firms report their business volume has returned to year-ago levels, compared to 52 percent who held this view in AGC’s June survey. Photo: P&Q Staff

“The results of the AGC and Autodesk workforce study reveal that the construction industry is still grappling with the changes and consequences of the coronavirus pandemic,” says Allison Scott, director of construction thought leadership and customer marketing at Autodesk. “The long-term effects of the current crisis have yet to play out, and firms that double down on innovation efforts, whether an increased focus on lean construction, workforce training or technology that facilitates remote collaboration, will be well poised for enduring resilience.”

A further breakdown

According to AGC, respondent outlooks varied by revenue size and project type.

Seventy-three percent of highway and transportation contractors, for example, reported an unfilled craft position as of June 30. Meanwhile, 69 percent of utility infrastructure and federal and heavy construction firms had unfilled craft positions at that time, along with 58 percent of building construction firms.

Small firms were less likely to experience cancellations of upcoming projects, according to AGC. Fifty-six percent of firms with revenues of $50 million or less report a project has been postponed or canceled, compared with 71 percent of midsized firms (revenue between $50.1 million and $500 million) and 69 percent of large firms (revenues exceeding $500 million).

On the topic of funding projects, 55 percent of firms say they were looking to Congress to increase funding for all forms of public infrastructure and facilities. In addition, 53 percent want Congress and the Trump administration to enact liability reforms to shield companies protecting workers from the coronavirus from lawsuits.

“There is a lot that Washington officials can do to help boost demand for construction projects and get more people back to work rebuilding the economy,” says Stephen Sandherr, CEO of AGC. “The challenge is that the coronavirus has put many contractors in the position of looking for work and workers at the same time.”

Zach Mentz

About the Author:

Zach Mentz is editor in chief of Portable Plants magazine and managing editor for Pit & Quarry magazine. Zach is a graduate of the Tim Russert Department of Communications at John Carroll University. His previous experience also includes time spent in the Cleveland Indians communications department.

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