facebook-gray.png

September 24, 2021   

Contractors Struggle to Find Workers, Materials

2021 09 contractors struggle.jpg

55% of commercial contractors report "high difficulty" in finding skilled workers

The Q3 2021 U.S. Chamber of Commerce Commercial Construction Index (CCI) found that commercial construction contractors are seeing a slowdown in the post-pandemic  recovery as escalating challenges—including worker shortages, materials shortages, and rising costs—mount. 

Contractors’ concerns are reflected in the Index score, which rose just one point this quarter to 66. Two of the three leading indicator scores—confidence in new business opportunities and backlog—improved slightly, while the score for revenue remained unchanged.

However, the overall score is still well below pre-pandemic findings. In Q1 2020 the CCI score was 74, which at the time was in the midrange of scores since the CCI began in 2017. 

A critical worker shortage gets worsecontractor converns.png
Commercial contractors have had consistent concerns about having enough skilled workers to fill open positions. These already-high concerns worsened this quarter.

Almost all (92%) contractors report some level of difficulty finding skilled workers, but this quarter, 55% indicate high levels of difficulty—a jump of 10 percentage points from Q2.

This lack of workers is having an impact on contractors’ bottom lines. The lack of skilled workers has caused 42% of those contractors reporting difficulty finding workers to turn down work, up from 35% in Q2. Also, this quarter, 73% of those contractors who report difficulty finding skilled labor say it’s a challenge to meet project deadline requirements (up from 56% in Q2), and 59% are putting in higher bids for projects (up from 50%).

Construction material costs and shortages add to contractors’ woes
Contractors are also struggling to find materials to complete their projects and are increasingly concerned about their fluctuating costs.

A record 93% of contractors report they are facing at least one material shortage. Also, an all-time high of 98% of contractors say building product cost fluctuations are having an impact on their business, up 35 points year-over-year. 

Steel shortages surpass lumber, as tariff worries escalate
Reversing a year-long trend, the product which most contractors are experiencing a shortage in this quarter is steel (34%), followed closely by lumber at 31%. Since Q3, lumber had been the most often reported shortage. Last quarter, 33% of contractors reported a lumber shortage, 29% reported a steel shortage.

As steel shortages worsen, contractors are growing more worried about steel tariffs. 45% of contractors say steel and aluminum tariffs will have a high to very-high degree of impact on their business in the next three years, up 10 points from 35% in Q1 2021.

What the Experts Are Saying:

“This quarter’s Index findings demonstrate the fragility of our economy’s recovery from the COVID-19 pandemic. And unfortunately, these trends are not limited to the commercial construction industry,” said U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley. “Across all sectors of the economy, businesses are facing tremendous difficulties finding skilled labor. Supply chain shortages and rising inflationary pressures are threatening to stop our economic resurgence in its tracks. We need to address our worker shortages, including by doubling legal immigration, and address supply chain issues, including through tariff reductions.” 

Headline Number and Key Drivers: Slightly Up This Quarter

The overall CCI score is 66 this quarter, up one point from last quarter. The other three key drivers for Q3 2021 are:

  • Revenue: Contractors’ revenue expectations over the next 12 months held steady at 61.
  • New Business Confidence: The overall level of contractor confidence increased to 64 (up two points from Q2 2021).
  • Backlog: The ratio of average current to ideal backlog rose three points to 74 (up two points from Q2 2021).

More Key Findings:

  • Equipment spending declines. More contractors report pulling back their purchasing plans this quarter: 40% say they will increase spending on tools and equipment over the next six months (down from 44% who said they would increase spending in Q2).
  • Contractors are less confident in their revenue expectations. The percentage of contractors who expect their revenue to increase (37%) is down two points from last quarter, while more contractors (10%) expect their revenue to decrease, up from 6% in Q2.

 

Full Report:  Q3 Commercial Construction Index »

 

Source: Thaddeus Swanek, Senior Writer and Editor, Strategic Communications, United States Chamber of Commerce

 

Don’t miss the next big lighting story…

Click here to subscribe to the inside.lighting InfoLetter
Just 3-4 emails per month and it’s easy to unsubscribe

 

 

 

  • Current

 


OTHER NEWS