by Sean Hackbarth
Contractors are already having trouble finding skilled workers, according to the USG and U.S. Chamber of Commerce Commercial Construction Index. For those helping people rebuild after Hurricanes Harvey and Irma, it’ll likely be even harder.
In Texas and the Southeast, billions of dollars in damage need to be repaired, Fortune magazine reports:
Cost estimates for Harvey and Irma destruction are $290 billion, according to AccuWeather. Irma caused $100 billion in damages (though other estimates that exclude Puerto Rico and the U.S. Virgin islands put the cost closer to $50 billion), while Harvey damages will cost an estimated $190 billion to repair.
That could make Hurricane Harvey the costliest weather disaster in U.S. history. Hurricane Katrina left $160 billion worth of damage in its wake in 2005 and Sandy cost $70.2 billion in 2012, according to inflation-adjusted figures from the NOAA National Centers for Environmental Information.
The Q3 index, compiled before the storms hit the United States, found that two-thirds of contractors in the South reported difficulty finding skilled workers. Demands from post-hurricane reconstruction will only exacerbate that.
For the U.S. as a whole, 53% of contractors expect to hire more workers, down from 66% in Q2. Sixty percent said it is difficult finding workers (nearly the same from Q2). On top of that, nearly all contractors—more than nine-in-ten—are “at least moderately concerned about the skill levels of the workforce.” That’s down slightly from Q2.
The construction trades with the biggest shortages are concrete, electrical, and masonry, the report found—all critical skills when rebuilding after a natural disaster.
— U.S. Chamber (@USChamber) September 19, 2017
As for its overall health, the commercial construction economy is good, with the index at 73, down slightly from Q2.
Contractors have a project backlog of 9.5 months of work. Seventy-seven percent have a stable or increased backlog.
Contractors remain confident about new business over the next year. Ninety-seven percent have either high or moderate confidence.
They’re also confident about revenues in the next 12 months. Ninety-five percent expect either higher or stable revenues, about the same from Q2. But they’ve tamped down how big those revenue increases could be. Those contractors expecting increases of 10% or more fell from 23% to 19%, while those expecting up to 3% revenue increases rose from 26% to 38%.
As for profit margins, 36% expect higher margins, up from 27% in Q2.
But these expectations rest on having the workers available to get the job done.
Sean Hackbarth is the Senior Editor Digital Content for the U.S. Chamber of Commerce