Archive for category: News

By Tom Zind | Originally posted on ecmweb.com

Biden EO mandating PLAs on $35 million and up federal construction projects draws ire and applause.

Long controversial construction project labor agreements (PLAs) are back in the news with President Biden’s recent executive order requiring them on more federal projects, clashing with vigorous responses by construction industry interests.

The February 9 executive order targeting federal projects above $35 million was followed a week later by a formal letter of opposition and vow to fight it from groups including Associated Builders and Contractors (ABC) and Independent Electrical Contractors (IEC). Yet other groups applauded the move, including the National Electrical Contractors Association (NECA), which sent representatives to the signing.

Industry reaction

In a formal statement attributed to CEO David Long, NECA said expanding requirements for PLAs as government infrastructure spending ramps up will help increase the odds of better overall outcomes in these critical projects.

“This order prioritizes safety, value, quality, and on-time delivery of our federal projects, built with a highly skilled and trained workforce — all areas in which NECA contractors exceed their competitors,” the statement read. “This ensures American tax dollars are going toward federal construction projects that will be completed at the highest standard.”

Opponents balk at that assessment, saying the opposite is true — that PLAs are on balance demonstrably harmful, primarily because their bias favoring unionized labor limits competition and raises construction costs. They say PLAs, which generally establish the terms and conditions of employment for the project and require all contractors to adhere to them, effectively exclude millions of non-union contractors and workers.

In its formal statement, IEC says its merit shop members could be “prevented from partnering with the federal government to build back our nation’s infrastructure at a fair price to the American taxpayer,” and that the order would “exacerbate workforce shortages and limit opportunities for small contractors.”

In its response, ABC asserted that the expanded use of PLAs would have the effect of raising costs of upcoming federal infrastructure projects by 12-20% due to the exclusion of merit shop contractors and added costs associated with union-friendly contracts. Proponents of PLAs counter that the big picture shows agreements produce more evenly spread benefits that make them a net positive force in construction planning and execution.

The road ahead

With the order in place, opponents are now turning to the playbook for countering the administration. Since the order puts in motion a process of formalizing its particulars, they’re now looking for opportunities to blunt its impact. Ben Brubeck, ABC vice president of regulatory, labor, and state affairs says he’s heartened by indications that federal agency contracting officers privately express dismay over the order and have characterized it as “a terrible idea.” With ABC contractors having won about half of all federal contracts over $25 million in recent years, Brubeck says his members are nervous about the impact of what’s coming and are looking to ABC to aggressively counter the order, which the group recently posted a primer on.

“We’re going to wait to see what the proposed rule looks like, but all options are on the table,” he says. “We’ll look at litigation or legislative solutions and participating in the regulatory environment to push back on this.”

Jason Todd, IEC vice president of government affairs, says there is cause for some optimism.

“The final rules related to the executive order will likely dictate the direction IEC and others that oppose it can take to push back against it,” he says. “In the meantime, IEC continues to promote the Fair and Open Competition Act (FOCA) in Congress, which would prevent this order from ultimately taking effect. While IEC remains hopeful its members will have the opportunity to implement the infrastructure bill, it’s disappointed with the message the administration is sending to 87% of the construction industry, that it’s not welcome to partner with the federal government on these important projects.”

WASHINGTON — Associated Builders and Contractors and a coalition of 19 associations and organizations representing the construction industry and business community sent a letter to Congress expressing support for the Fair and Open Competition Act (S. 403/H.R. 1284), sponsored by Sen. Todd Young, R-Ind., and Rep. Ted Budd, R-N.C, and strong opposition to government-mandated project labor agreements.

“Co-sponsoring the Fair and Open Competition Act is critical in light of President Biden’s Feb. 4, 2022, EO 14063, which requires PLAs on federal construction projects of $35 million or more,” the coalition wrote. “PLA mandates exacerbate the construction industry’s skilled labor shortage of 650,000 workers in 2022 by unfairly discouraging competition from quality nonunion contractors and their employees, who comprise 87.4% of the private U.S. construction industry workforce.”

The Biden administration is also “promoting PLAs on federally assisted projects procured by state and local governments competing for federal dollars authorized and funded through bipartisan legislation—like the Infrastructure Investments and Jobs Act of 2021 and other bills—that do not require or encourage the use of PLAs on taxpayer-funded construction projects,” the coalition wrote. “Your opposition to President Biden’s pro-PLA EO and any legislative and regulatory language promoting controversial government-mandated PLAs on spending bills, coupled with your support of the Fair and Open Competition Act, will create a level playing field in the procurement of government construction contracts, increase competition, help small businesses grow, decrease construction costs and spread the job-creating benefits of federal and federally funded contracts throughout the construction industry.

“PLA mandates are bad public policy because they increase construction costs by 12% to 20% because they effectively exclude the nearly nine out of 10 U.S. construction workers who choose not to join a union from building taxpayer-funded construction projects,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “These controversial agreements hold a third of employees’ compensation for ransom unless they join a union, pay union fees and prop up struggling union pension plans. PLAs also create excessive cost burdens and risks for high-performing nonunion contractors, which built more than half of the federal government’s large-scale construction projects from FY2009 to FY2021 and are more likely to be small, women- and/or minority-owned businesses.”

By George Jared | Originally posted on talkbusiness.net

The construction sector was in a precarious position as 2022 arrived. There are a robust number of commercial, residential and government related projects to be completed. Supply chain issues have stymied those efforts along with workforce shortages as COVID-19 continues. When inflation is added to the mix it makes for an unpredictable sector.

Newly appointed Nabholz CEO Jake Nabholz told Talk Business & Politics his construction company has a record number of back-logged projects. For the next year work crews will be busy clearing those books, but uncertainty remains, he said.

During the next year construction costs will rise by at least 11% and it could be more, he said. The management of costs and budgets will be a top priority as material prices fluctuate wildly in the coming months.

“The next 12 to 18 months we will be busy,” he said. “It’s what happens after that that makes me nervous.”

Halsey Thrasher Harpole Real Estate has several ongoing residential and retail construction projects in the Jonesboro area. HTH Managing Director Gary Harpole said he’s never experienced a market like this. Supply chain issues are impacting the market even more than inflation, Harpole said. It can take as long as 18 weeks to get windows, doors or appliances for new houses his company is building. Prices for those and other items are only locked in for a few days and then go up. These lag times eat into potential profits, he added.

“Supply chain issues are a very real problem on the construction side. It’s an interesting time to be in this business,” he said. “The demand is here. The interest rates are low … it’s been a learning curve.”

Nabholz said his company also is dealing with supply issues. Structural steel joists use to take weeks to get on a construction site now it can take months. It can take up to 12 weeks to just get a door frame and specialty doors can take as long as 20 weeks to acquire. There have been sharp upticks in the price and availability of steel, fire suppression materials and others.

“We’re being told it (supply chain issues) will last through the year. We’re being told it will level off during the first part of 2023,” he said.

Supply chain and inflation issues withstanding, the coming year looks to be a bright one for the construction sector and part of that will derive from the infrastructure deal that was passed through Congress. The construction outlook for 2022 is looking positive, but the industry will face challenges, said Anirban Basu, chief economist for Associated Builders and Contractors and CEO of consulting firm Sage Policy Group.

The impacts of the federal Infrastructure Investment and Jobs Act won’t be as immediate as the 2009 infrastructure package, which was focused more on shovel-ready projects to kickstart the economy, but Basu said he expects projects from the new infrastructure package to be released in the third and fourth quarters of 2022, according to Engineering News Record. Home prices are soaring and that will in turn lead to higher property taxes which will fill local government coffers, he said.

“So state and local government spending, even without [the infrastructure package], would have been a driver of construction activity,” Basu said. “But now infrastructure factors on top of those monies, so you should see a lot of state and local spending on construction going forward.”

Nabholz said his company is also anticipating what projects the infrastructure deal will bring. In addition to those anticipated projects, the demand for buildings used for manufacturing and warehouse space has been on the rise, he added. Solar energy projects are on the rise as well, he said. Office space and K-12 projects have been in steady decline since the pandemic started. Less people are working in offices. The number of students attending brick and mortar classes has been on a steady decline and that trend will continue into the near future, Nabholz said.

Another industry-wide problem has been skilled labor shortages. Those problems pre-dated the pandemic, he said. Due to the shortages, skilled workers wages will only continue to rise as needs intensify. Despite the unusual slate of problems, Nabholz said he’s confident about what the future holds in his industry.

“You always have issues you have to deal with. … We enjoy finishing these projects and helping our customers achieve their goals.”

Editor’s note: Link here to connect to the State of the State section.

Originally posted on metalconstructionnews.com

The not seasonally adjusted national construction unemployment rate plunged 4.6% in December 2021 from a year ago, down from 9.6% to 5%, while all 50 states had lower unemployment rates over the same period, according to a state-by-state analysis of U.S. Bureau of Labor Statistics data released today by Associated Builders and Contractors. This substantial improvement occurred even as the omicron COVID-19 variant was sweeping the nation.

While not fully recovered to its pre-pandemic level, national NSA construction employment was 163,000 higher than in December 2020. Seasonally adjusted construction employment was only 96,000, or 1.3%, below its February 2020 peak, before the impact of the COVID-19 pandemic began to affect the employment numbers. This beat national seasonally adjusted nonfarm payroll employment, which, though improving, was still 2.2% below its February 2020 peak as of December 2021.

The national NSA construction unemployment rate of 5% was unchanged in December 2021 from its December 2019 reading. Over that same period, 34 states had lower construction unemployment rates, and 16 states had higher rates.

“The construction industry is making impressive progress despite continuing supply chain issues, which include extended delivery times and shortages of some building materials and appliances,” said Bernard M. Markstein, president and chief economist of Markstein Advisors, who conducted the analysis for ABC. “Employers are also coping with difficulties finding skilled workers. The normal winter slowdown in construction activity is, at least temporarily, relieving some of the stress from these challenges.”

Recent Month-to-Month Fluctuations

National and state unemployment rates are best evaluated on a year-over-year basis because these industry-specific rates are not seasonally adjusted. However, due to the changing impact of the COVID-19 pandemic and related shifts in public policy, month-to-month comparisons offer a better understanding of the pandemic’s effect on construction employment in a rapidly changing economic environment.

Since the data series began in 2000, national NSA construction unemployment rates have always increased from November to December. December 2021 was no exception, with a 0.3% rise in the rate. Eleven states had lower estimated construction unemployment rates than in November, 33 states had higher rates and six had the same rate.

The Top Five States

The five states with the lowest December 2021 estimated NSA construction unemployment rates were:

1. Nebraska, 1.3%
2. Indiana and Utah (tie), 1.5%
4. Georgia, 1.6%
5. Oklahoma, 2%

All five states had their lowest December estimated NSA construction unemployment rate on record.

The Bottom Five States

The states with the highest December 2021 estimated NSA construction unemployment rates were:

46. New Jersey, 8.3%
47. Michigan, 8.6%
48. North Dakota, 9%
49. New York, 9.5%
50. Alaska, 10%

Alaska posted its lowest December estimated NSA construction unemployment rate on record.

Click here to view graphs of overall unemployment rates and construction unemployment rates showing the impact of the pandemic, including a graphing tool that creates a chart for multiple states.

To better understand the basis for calculating unemployment rates and what they measure, check out theBackground on State Construction Unemployment Rates.

Originally posted on concreteproducts.com

In light of the White House’s “Build Back Better” ambitions, Associated Builders and Contractors Vice President of Regulatory, Labor and State Affairs Ben Brubeck questions a new executive order encouraging project labor agreement (PLA) mandates on federal construction contracts exceeding $35 million.

“The policy will not help America; instead, it will exacerbate the industry’s skilled workforce shortage, needlessly increase construction costs and reduce opportunities for local contractors and skilled tradespeople,” he contends. “This anti-competitive and costly executive order rewards well connected special interests at the expense of hardworking taxpayers and small businesses who benefit from fair and open competition on taxpayer-funded construction projects.

“Research has demonstrated that government-mandated PLAs increase construction costs by 12 percent to 20 percent, which results in fewer improvements to roads, bridges, utilities, schools, affordable housing and clean energy projects—and the creation of fewer jobs. PLAs steer contracts to unionized contractors and workers at the expense of the best-quality nonunion contractors and workers who want to compete fairly at a price best for taxpayers.”

“PLA mandates are bad public policy because they effectively exclude the nearly 9 out of 10 U.S. construction workers who choose not to join a union from building taxpayer-funded construction projects,” Brubeck continues. “These controversial agreements hold a third of employees’ compensation for ransom unless they join a union, pay union fees and prop up struggling union pension plans. PLAs also create excessive cost burdens and risks for high-performing nonunion contractors, which built more than half of the federal government’s large-scale construction projects during the past decade and are more likely to be small, women- and/or minority-owned businesses.”

With nearly 88 percent of the construction workforce not represented by a union and the industry facing a skilled labor shorted of 430,000 in 2021, he adds, the White House would be best served by promoting inclusive, win-win policies that welcome all of America’s construction industry to realize the potential of the recently passed Infrastructure Investment and Jobs Act; increase accountability and competition; and, reduce waste and favoritism in public works project procurement. ABC and a coalition of construction industry, small business and taxpayer advocates have been asking lawmakers to oppose PLA schemes and cosponsor fair and open competition legislation (H.R. 1284/S.403) on federal taxpayer-funded construction. Similar pro-taxpayer legislation has been enacted in 24 states.  —  www. buildamericalocal.com