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MODESTO — Construction, which boomed before the recession, has been slow at coming back, especially in the Central Valley. It’s not so much that demand for projects is low as that the industry is having trouble finding enough workers.
“There are fewer qualified laborers in today’s construction workforce,” said Chris Marr, director of business development for George Reed Construction in Modesto. “And it seems the attitude for doing hard work isn’t there in today’s younger generation.”
Construction is a major contributor to California’s economy and to that of the Central Valley. In 2014 the industry has contributed $75 billion, or 3.2 percent, of the state’s GDP of $2.3 trillion. Wages and salaries totaled $42.3 billion, according to a study by the Associated General Contractors of America.
“Many parts of the country continue to see robust construction job growth as demand for projects rises,” said the organization’s chief economist, Ken Simonson. “Compared with the same time a year ago … construction spending continues to rise at a double-digit pace.”
But for the industry’s jobs to expand the labor needed to do the work must be available.
Jim Hanley, president of Stockton’s Hanley Construction Inc., explained that the Valley’s current construction marketplace is a “mixed bag. ” Residential is slowly coming back, but commercial projects are somewhat smaller. However, there is enough of them for Hanley to feel optimistic about 2016.
“I feel this year will be as good as last year,” he said. “But the new minimum wage that will eventually reach $15 an hour will certainly affect us and all businesses over time.”
Hanley said hiring from within and training individuals is becoming more popular.
“It’s s now a challenging environment finding and integrating a labor force into your company,” he said. “However, if you’re skilled in construction, you’ve got a job.”
Ryan Haggerty, president of Haggerty Construction, Inc. in Stockton sees signs of improvement in certain construction sectors.
“Overall, construction’s picking up slowly, steadily and is up 6 to 7 percent over last year,” Haggerty said. “Industrial and education projects will be improving while office construction slows a bit.”
Fewer high school and college graduates are entering the construction industry, so there is a serious shortage of people to fill management and field positions. However, Haggerty said the construction industry has stepped up to establish various education programs and scholarships for construction-oriented students. Some high schools are also bringing back construction and other vocational-oriented programs.
“It’s too bad that we as an industry didn’t foresee these challenges as they began,” Haggerty said.
Another challenge facing the construction industry in California is its regulatory environment. Companies say residential-related construction has been slowed by high fees that are a disincentive for building in some areas.
“I’m seeing 4 to 6 percent increase in costs due to regulations,” Haggerty said. “The federal and state governments churn them out and eventually consumers will have to pay for the upsurge of regulations.”
“There are so many regulations, rules and mandates that we need consultants to advise us on all the regs,” said Hanley. “Their emphasis is on penalties and fines, not compliance.”
Still, contractors believe the industry is on the upswing.
Marr believes residential construction will experience growth and commercial will follow.
“If residential continues to grow steadily the commercial folks will build, too,” Marr said.
Haggerty sees education, industrial logistics and agricultural projects as “primary growth areas.” Agriculture perhaps will be the fastest growing, he said, as sheds, shipping and processing facilities, wine tasting rooms, storage, winery expansions and need to be built.
“Ag is the future with its cherries, walnuts, almonds, wine and a vast selection of other products,” he said. “Can they retain their current popularity? Who knows? But the construction industry will be there to fulfill their future needs.”