Construction job growth over last year ranged from 4 to 8 percent in June across most of Idaho, bringing the statewide total of construction workers to 47,500, according to the Associated General Contractors of America.
Idaho as a whole ranked No. 13 with a 6.0 gain in construction jobs June over June, a typical spot the Gem State has found itself in over the past year or two after ranking No. 1 and 2 several times in 2014 and 2015. The states ahead of Idaho are a mix of western states, small northeastern states and Georgia and Michigan.
Boise ranked No. 170 out of 357 metro areas with a 4 percent gain in construction jobs in June to 23,600. Boise, not just Idaho, found itself at No. 1 or No. 2 in job growth gains among cities in 2016.
The job gain numbers in Idaho are still strong even if they don’t put the state at the top, said Wayne Hammon, executive of the Idaho Associated General Contractors.
“We are holding our own,” Hammon said. “There’s a lot of work going on. Contractors are busy. They are actively hiring. I think we’re going to be busy for a long time.”
The U.S. Census Bureau recently said Idaho is the No. 1 fastest-growing state in population.
Coeur d’Alene ranked No. 62 with an 8 percent job gain. Idaho Falls and Lewiston each are No. 83 with 7 percent gains, but Pocatello ranked No. 273 with no gain or loss.
Where Idaho and its cities rank in construction job gains
June figures
Nationally, out of 50 states and Washington, D.C.
No. 13 Idaho, 6 percent gain
Among 357 metropolitan areas
No. 62 Coeur d’Alene, 8 percent gain
No. 83 Idaho Falls and Lewiston, both 7 percent gains
No. 170 Boise, 4 percent gain
No. 273 Pocatello, no gain or loss
Perspective
No. 1 Idaho, several times in 2014 and 2015. The construction job count across Idaho since October 2014 has increased from 34,400 to 47,500
No. 1 Boise in August and September 2016 with a 24 percent job gain over the prior 12 months
No. 1 Lewiston in August 2017 and No. 2 several other months
Steel at a Treasure Valley construction site. Tariffs on steel and other construction materials are raising the price of construction materials in the U.S. File photo.
With President Donald Trump imposing a 25 percent tariff on imported steel and 10 percent on aluminum, the construction industry is bracing for the next wave of material price spikes.
The Idaho construction industry has already weathered 15 to 20 percent increases in material costs and 25 to 30 percent increases in labor costs, over the past half year to year, said Wayne Hammon, executive director of Idaho AGC, a chapter of the Associated General Contractors of America.
“It’s very difficult,” Hammon said. “A lot has to do with where you are in the project. It make things much more difficult and unpredictable. Contractors just in the bidding phase are rejected because bids are too high. Our rapid growth and construction going on puts a burden on the marketplace. We’re not alone (in the country).”
Just what the latest steel and aluminum tariffs have in store for the Treasure Valley construction industry remains a mystery, said Neil Nelson, president of ESI Construction, one of Idaho’s largest general contractors.
“Generally speaking, if it provides the outcome we want, bringing jobs back to the U.S., we’re in favor of (tariff increases),” Nelson said.
ESI so far has not been heavily affected by the overall 8.8 percent national increase in all construction goods over the past year, as calculated in May by the AGC. About half of ESI’s projects are done with the construction manager/general contractor approach, which produces a guaranteed maximum construction price at the outset but also has general contractors and designers collaborating to find more cost-effective ways.
“We often are invited to the table a lot earlier with designers (than was the case just a few years ago),” Nelson said. “I would say the biggest thing is getting in early. There is timing of when to go out to bid and look at the marketplace as a whole, labor as well. We’re making good decisions in the design phase.”
The threat of a trade war with Canada has taken a toll on the confidence of U.S. homebuilders, according to index released June 18. The Associated Press reported thatThe National Association of Home Builders/Wells Fargo builder sentiment index released June 18 fell two points to 68 in June. A reading of 70 in May temporarily snapped a four-month slide.
Any reading above 50 indicates more builders see sales conditions as good rather than poor. The index has remained above 60 since September 2016.
Builders’ view of current sales conditions fell one point, to 75 in June. The outlook for sales over the next six months fell one point to 76. A measure of buyer traffic fell one point to 50.
“Builders are optimistic about housing market conditions as consumer demand continues to grow,” said NAHB Chairman Randy Noel, “However, builders are increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability.”
Cost estimators at construction companies have to predict the future, which includes the Washington, D.C. wildcard.
”It comes to accurate estimation,” Nelson said. “What that doesn’t account for is political changes.”
Sandy, Utah,-based Layton Construction, which has a Boise office, is monitoring tariff talk, said Alan Rindlisbacher, Layton’s director of corporate communications.
“How (tariffs) will direct prices is uncertain,” he said. “We are just watching closely. There’s a lot of caution on the part of everybody. I’d quote some of my favorite economists: A tariff is just a tax. It creates some challenges for doing business.”
Rindlisbacher noted that anticipated steel shortages for the balance of the year compound the tariffs.
“You just do the best you can,” he said. “You just have to flat-out look ahead, plan ahead. You can look at other options. Maybe that will push some owners back to a concrete structure.”
For home construction, the biggest impact is the labor shortage, which is adding about three weeks to the standard 100 days to build a home, said Dan Richter, managing partner of the Avimor development north of Boise.
“It’s a longer building time,” Richter said. “The trades just can’t meet the dates. My building time is probably 25 percent longer for the last six months.”
Regarding tariffs and construction material costs, Richter said he had no answers.”
“We talking with the trades every day,” he said. “I personally feel and hope these things are short-lived and these tariffs are resolved.”
Homes under construction in Boise. Idaho ranked No. 5 in construction job growth in January, according to the Associated General Contractors of America. Photo by Anne Wallace Allen.
As the fastest-growing state, Idaho this year has restored its Top 5 standing among states in construction job growth. The Gem State ranked No. 3 in March with an 8.6 percent gain over the prior year, according to the Associated General Contractors of America.
Idaho several times recorded No. 1 job growth gains in 2015 and 2016, but tumbled into the 20s and 30s for much of 2017 as shortages in qualified construction workers stunted job growth in the state.
Idaho ranked No. 5 in construction job growth in January and No. 4 in February.
“I think we’re finally making some progress (finding qualified workers),” said Wayne Hammon, executive director of Idaho AGC. “Everybody knows Idaho is a great place to do business. Construction workers are moving here, too.”
Idaho added 3,800 construction jobs from March to March to reach 48,100 statewide. Broken down by metro areas, Lewiston ranked No. 9 out of 358 metros with a 17 percent gain; Coeur d’Alene at No. 19 at 13 percent; Idaho Falls at 107 at 6 percent; Boise at No. 130 at 5 percent; and Pocatello at No. 338 losing 6 percent.
“I was just in north Idaho,” Hammon said. “I was greatly impressed with all the construction going on up there, especially on the commercial side.”
Lewiston’s large construction projects include a new 204,000-square-foot Lewiston High School and a 13,000-square foot airport operations building at Lewiston-Nez Perce County Regional Airport. All Saints Catholic Church is building an All Saints Catholic School, and the Lewis Clark State College plans to put its career and technical education building out to bid soon, said Doug Mattoon, executive director of Valley Vision Economic Development in Lewiston.
Construction workers on a scaffold. Idaho, Boise and Lewiston have all led the nation in construction job growth at different times in the last year. File photo
Idaho as a state and Boise and Lewiston as metro areas have led the nation in construction job growth at various points in the past year, and the state overall added 7,000 construction jobs in the past three years to provide the manpower for surging growth.
Yet Idaho still falls about 8,000 workers short of its all-time high of 52,800 construction workers in February 2007, just as the national economic collapse surfaced. Construction jobs in Idaho ultimately deflated to 29,600 in March 2011.
Wayne Hammon maintains that Idaho right now could have more construction workers than the February 2007 peak – if only qualified construction workers were available to hire.
Hammon, executive director of the Idaho Associated General Contractors, said finding qualified workers is the industry’s Achilles’ heel, locally and nationally. He will lobby the Idaho Legislature in the coming session to enable the Idaho Department of Labor to offer broader job training programs for potential construction workers.
Associated General Contractors of America, the parent organization of Idaho AGC, notes the number of construction jobs in America and Idaho is the highest since 2008. But the traditional pipeline for workers through high school shop classes and vocational schools has largely disappeared.
“The greatest challenge is finding qualified workers,” AGC CEO Stephen Sandherr said. “The five toughest crafts to fill are carpenter, concrete, bricklayer, electrician and plumber.”
“We have a lot of people working on this,” Hammon said about addressing this in Idaho. “There are lots of sections of the pipeline that are not connected as a pipeline. We have Idaho State University offering electrician certification. None of the hours (students) spend at ISU count toward an apprenticeship. These programs ought to be better coordinated. The pieces are all there. We just have to get them put together.”
Idaho is by no means alone. The national AGC on Aug. 29 had a national conference call with several industry leaders saying that the process of filling construction jobs is in crisis mode.
“It’s the quality of the people that’s the problem,” said Sean Ray, workforce development manager at Sundt Construction, among Arizona’s largest construction companies. “We can hire people all day. We have people coming to the job site that aren’t even sure how to hold a hammer.”
Community colleges are key to training construction workers
Ray has collaborated with Central Arizona College, a community college just south of Phoenix, to reshape a residential construction program into two programs for industrial and concrete construction tailored specifically for Sundt’s needs.
This has created a one-year, 30-credit course, offered for the first time this fall, where graduates qualify for a job at Sundt, said Kristen Benedict, chair of advanced technology at Central Arizona College.
“When Sundt came to us, we understood their company mentality,” Benedict said. ”Sundt was instrumental in working with us for the course work. They get the opportunity to vet the students first.”
CAC has 106 students enrolled in its construction, heavy equipment and welding programs that are all designed to have certificate holders job-ready. The college is working with Northern Arizona University to create a bachelor’s degree in industrial management with 90 units from CAC and 30 units in online coursework with NAU, Benedict said.
“For years in the past, being academics, we always thought we knew what industry wanted instead of sitting back and letting industry tell us what needs to be in a certificate,” Benedict said.
Western States Equipment Company, a Caterpillar dealer in Meridian, is the only business so far to collaborate directly with the College of Western Idaho to provide diesel technician certificates and associates degrees specifically designed to meet Western States’ needs. With CWI only nine years old, the college is still feeling its way in establishing certificate programs based specifically on employer needs, said Mark Browning, CWI’s vice president of communications.
“We have a responsibility to fix that pipeline,” Browning said. “We’re looking at everything every day.”
The big push at CWI is reinventing the standard two-year community college model to better fit in a work world that can’t wait two years for certificated workers, he said.
“The day is coming when we won’t brand ourselves as a two-year institution,” Browning said. “We are trying to expand and condense every program (in construction fields).”
CWI wants to apply this philosophy to offer certification programs in 13 to 15 months in other fields such as engineering and nursing, Browning said.
The challenge is finding construction companies to partner with CWI, Hammon said.
“It’s not the norm yet,” Hammon said. “We’ve talked to CWI and the new college at Idaho Falls (College of Eastern Idaho). We’re trying to figure out how it would fit into their programs and how much it costs.”
Hammon is looking at the Construction Careers Now program established in 2016 by the Colorado Contractors Association (CCA), the Hispanic Contractors of Colorado and the Emily Griffith Technical College in Denver. The four-week program is a free orientation for construction careers that includes a hiring fair with construction companies.
“I’d love to go to the Legislature this winter and say, ‘here’s a successful program in the curriculum in Colorado and we can make it work in Idaho,’” Hammon said. “What I’m talking about is designing a program that at the end of it there is a job waiting for me.”
The construction industry finds itself in a perfect storm to find willing, let alone qualified, construction workers. Job training is only part of the challenge.
Neil Nelson
“It’s generational, having problems filling those positions,” said Neil Nelson, president at ESI Construction in Meridian, the general contractor for many of the Treasure Valley’s largest projects. “There are less millennials wanting to go into construction.”
Hammon hopes swiftly increasing wages in the construction trades will better attract the younger generations.
“All across Idaho we are seeing the value of talent rising rapidly,” Hammon said. “Skilled craft workers might have been making only $4 an hour in 2015, but are now commanding more than triple that amount. In addition, unskilled general laborers are now being paid almost twice the federal minimum wage.”
State labor programs can also get people ready for construction careers
One avenue to introduce and prepare people for construction careers is through the Idaho Department of Labor, Hammon said.
Hammon’s Idaho AGC collaborated with Labor in 2016 to offer Building Our Future, a six-week introduction to construction for at-risk young adults aged 18 to 24. It was limited to a single session because it was funded by a federal Workforce Innovation and Opportunity Grant.
Hammon said 20 students applied, 18 showed up, 16 finished the program and all but one got job offers from the 15 construction companies Hammon lined up to participate in Building Our Future.
“That’s a really nice piece of pipeline that worked for 15 companies,” Hammon said. “I probably have 45 other companies that would like to do this.”
Because of the federal grant, Building Our Future was limited to high-school dropouts or aging-out foster children, said Derek Harris, regional manager for Labor’s Region 3 West.
“Labor can play a definite role (in training future construction workers) but we would have to have industry support,” Harris said. “The real challenge is just getting kids to see construction is a good field to go into and give it a shot.”
Hammon wants to send that message to the Legislature to draw more state funding to train construction workers.
“We are actively working on legislation for the upcoming session that would authorize actions like this on an ongoing basis,” Hammon said. “The program Idaho Labor did as a pilot was targeted specifically to the population they identified. The program we are exploring with the community colleges would be open to any Idaho resident.”
The Idaho Department of Labor has also offered registered apprenticeships since 1937, but in recent times participation didn’t increase substantially until October 2016. Since then, Labor has registered 416 apprentices in all fields with 300 of them in the construction trades, said John Russ, Labor’s area manager for the southwest area.
“Our goal is to have as many as we can as quickly as we can,” Russ said. “At least people can get in and earn while they learn.”
Labor administers the apprenticeships and participating companies decide the education component, whether it’s online, a vendor, College of Western Idaho or Boise State University, Russ said.
“It’s all dependent on the employer,” he said
The paid apprenticeships can last one to four years. Completion of an apprenticeship qualifies graduates for a job.
“Apprenticeships are an important piece of the training puzzle,” Hammon said.“However, with Idaho’s desperate need for construction workers, we can’t wait for apprentices to be ready.”
A pair of construction workers at a Boise project. the Idaho Associated General Contractors is expecting Trump to loosen regulations that were tightened during the Obama administration. File photo.
Construction and housing officials are waiting to see what impact the new Trump Administration has on the way they do business.
Affordable housing proponents have identified a few areas of concern: Potential cuts in Section 8 housing subsidies and operating fund proration for low rent public housing projects; the potential loss in investor appeal for low income housing tax credits; and further erosion of Community Development Block Grants.
Deanna Watson
“Virtually everything that has to do with the housing world is out there right now,” said Gerald Hunter, president of the Idaho Housing Finance Association. “We’re in a very interesting situation right now. There’s a lot of talk going on in speculation. I don’t know that anybody knows how things will shake out.”
The Idaho Associated General Contractors sees promise in President Trump’s plans to loosen regulations, particularly in the construction trades.
“The reports are that the Trump Administration is committed to taking a serious look at a wide set of regulations that affect our business,” said Wayne Hammon, executive director of the Idaho AGC. “That is a welcome change from the prior administration.”
The Idaho Housing & Finance Association funds many affordable housing projects. About 20 to 25 percent of those projects are largely supported by low-income housing tax Credits through U.S. Department of Housing and Urban Development. IHFA also provides financing for home ownership, rental housing and small businesses.
Hunter has an eye on the Trump Administration’s intentions with Fannie Mae and Freddie Mac, the nation’s largest mortgage holders that have been under government conservatorship since 2008. Trump has an appetite to privatize Fannie Mae and Freddie Mac.
“We need to figure out what to do with them,” Hunter said. “There seems to be a preference for the market to be funded in the private sector. That seems to be a common desire … I would like to see the private sector step into the mortgage finance sector.”
Hunter is less enthusiastic about the possible fate of housing tax credits, which are bonds funded by investors. He said in the past six months, the credits have lost value for investors with the anticipation that lowering corporate taxes would make other investments more attractive.
Deanna Watson, executive director of the Boise City/Ada County Housing Authority, which provides low-income housing, will seek low-income tax credits for construction of the $5.9 million 50-unit Sandhill Crane Apartments affordable housing in the summer near Whitewater Park Boulevard and for the Allenbaugh recovery-oriented housing.
“In the last two years, the value of a tax credit is $1.05 for every $1 invested,” Watson said. “The projections we are seeing now are closer to 85 to 90 cents. With a more favorable tax environment, (investors) don’t need to find ways to shelter funds.”
Watson is concerned about the fate of the level of federal housing assistance payments for low-income families, commonly known as Section 8 funding. The Boise/Ada housing authority subsidizes about 2,000 local families with $11 million in Section 8 funding each year. About 21 percent who qualify get funding, she said, leaving 8,000 families who qualify without the support.
Watson also wonders what could happen to HUD operating fund proration that her agency uses to operate the 93-unit Capitol Plaza and 67-unit Franklin Plaza low-income housing for the elderly and disabled.
“If the Fed cuts that, it has a significant effect on the housing and services we can provide for the elderly and disabled in those two towers,” Watson said. “I’ve heard predictions all across the board. I’ve heard cuts as low as 10 percent to 75 percent. These are the programs people go to when they go homeless.”
Watson often pairs low-income housing tax credits with HUD Community Development Block Grants, which serve to fill funding gaps. CDBG grants have been cut by 49 percent since 2000, according to the Center on Budget and Policy Priorities, a Washington, D.C., nonpartisan research and policy institute
“You need tax credits and CDBG grants to cobble something together that works (to fund affordable housing projects),” Watson said.
Hammon at Idaho AGC is more optimistic on the impact the Trump Administration could have on Occupational Safety and Health Administration regulations. He said in the last six or eight months of the Obama Administration, the enforcement arm of OSHA stepped up its enforcement and fines.
Prior to that, Hammon said, OSHA, the U.S. Environmental Protection Agency and the construction industry cooperated to provide a safe work environment.
“That cooperation shifted to an enforcement, gotcha approach,” Hammon said “I believe (the local OSHA office was) under pressure to give fines. Hopefully, they go back to doing what they are real good at: keeping everybody safe.”
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