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“Analysis of Supply & Demand”

Moderator: Harvey Bernstein, Vice President, Industry Analytics, Alliances & Strategic Initiatives, McGraw-Hill Construction

Panelists:

Robert M. Gasperow, Executive Director, CLRC Construction Labor

George Gritziotis, Executive Director, Construction Sector Council, Canada

Panel Discussion:Analysis of Workforce Supply & Demand Harvey Bernstein, F.ASCEVice President, Industry Analytics, Alliances & Strategic Initiatives, McGraw-Hill Construction

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Why Do We Need Labor Forecasts?

Helps with big picture big picture understandingunderstanding of trends and worker migration

Provides insight into changes changes over timeover time of workforce

Provides a springboard springboard to answer some questions about the distribution of trades by building type and geography

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Challenges to Creating Demand & Supply Forecasts

Understanding exactly how much labor, by trade, flows into different kinds of construction types

Differences in construction practices by geography

Understanding the supply of labor by trade & across geographic areas

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Examples of Existing Major Information Sources Department of Commerce’s Economic

Census of Construction Industries

Bureau of Labor of Statistics Occupational Employment Surveys

McGraw-Hill Construction Dodge Construction Project Data

SEMTA’s* Southeastern U.S. Open Shop Craft Census Study

Construction Labor Research Council’s Database of Labor Costs

* Southeast Manpower Tripartite Alliance (SEMTA) has been organized to determine the magnitude of craft labor demand and supply in the Southeast, including the impact of Hurricanes Katrina and Rita; identify ways to minimize potential labor shortages; and develop appropriate action plans

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Specific Outcomes of Demand & Supply Forecasts Projection of overall demandProjection of overall demand and supply

for each of the skilled trades during the intermediate (up to 5 years) and long-term (more than 5 years)

Geographic concentrationGeographic concentration for each skilled trade

Determination of the impact that changes in construction practiceschanges in construction practices, building products and worksite management / training may have on skilled trade

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Understanding the relationship relationship between different craft hours for between different craft hours for different project typesdifferent project types

Construction activity trendsConstruction activity trends, nationally, regionally and by state

Construction industry project industry project forecastingforecasting methodology and expertise

Number of people with occupational skill sets

Mobility of labor force

Elements Needed in Labor Demand & Supply Forecasts

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Construction Sector Council (Canada) Construction Sector Council (Canada) Construction Labour Market Construction Labour Market Information (LMI) Program Information (LMI) Program

– Workforce supply demand forecasting

– Canadian national, provincial, metro

Construction Labor Research CouncilConstruction Labor Research Council

– Analysis of labor supply through 2015 and specific studies

– Quantify needs in the Southeast and Midwest

McGraw-Hill Construction Labor McGraw-Hill Construction Labor Demand ForecastDemand Forecast

Current Demand & Supply Forecast Models

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Data’s Role in Assuring Adequate Supply

Robert M. Gasperow, Executive Director,

CLRC Construction Labor

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To Be Covered

Volume

Demographics

Wages

Government

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Volume

Mix Change

SEMTA

BCTD

Other

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SEMTA Labor Demand Survey Finding Craft Data

20,000

30,000

40,000

50,000

60,000

70,000

80,000

1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

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SEMTA

Data Entry

http://www.surveystoday.com/sedemand.html

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Demographics

Aging

New Entrants

Composition

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Labor Force Growth RateTotal Male 16-24

90 – 00 1.3% -0.1%

00 – 10 0.9 -0.2

10 – 20 0.6 -1.0

20 – 30 0.4 1.0

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Wages

Relationship to Supply

Relationship to Demand

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Track Record

Past Success

Evaluating Entrants

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Government

BLS Projections

Apprenticeship

Voc Ed

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State Projections

http://www.projectionscentral.com

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McGraw-Hill Construction’sConstruction Labor Demand Forecast

Harvey Bernstein, F.ASCEVice President, Industry Analytics, Alliances & Strategic Initiatives, McGraw-Hill Construction

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MHC Construction Labor Demand Forecast Focuses on creating a demand model for skilled trades in

the construction sector

– Over the intermediate termintermediate term (5 years)

– Calculates local skilled trade utilization mixlocal skilled trade utilization mix

Covers U.S. at national, state and local levels

– The geographic and building type detailgeographic and building type detail in MHC forecasts means projections of demand for the skilled construction trades by building type extends down to the local geographyextends down to the local geography

Links building activity with labor demand in ways that are consistent with federal data and McGraw-Hill Construction forecasts and Dodge project data

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MHC Construction Labor Demand Forecast Methodology Uses proprietary Dodge database of construction startsDodge database of construction starts along

with projects in the planning stages

Uses MHC forecasting modelsMHC forecasting models to determine sector forecasts and scale to regional and state level forecasts

Uses U.S. government dataU.S. government data to determine skilled trade hours in different building types

Creation of national, state demand coefficientsnational, state demand coefficients for state and local forecasts

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MHC Proprietary Project Information Dodge Project Network Database:

– The most comprehensive source for construction starts data for the entire U.S.

– Used by U.S. Department of Census for Put-in-Place, which feeds GDP calculation

– Time series data monthly back to 1967

– 600,000 active projects

– 60,000 plans and specifications per year

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MHC Proprietary Forecasting Methodology

Analytic Analysis:

– Forecasting modelsForecasting models based on the most comprehensive historical database available

– Econometric modelsEconometric models for 22 major construction industry sectors at the national and regional levels

– State and metro area modelsState and metro area models

– Expertise in determining the percentage of percentage of projects that will ultimately reach start projects that will ultimately reach start (within 5 years)(within 5 years)

– Expertise in determining the length of time to length of time to start for projectsstart for projects

construction analysis, forecasts and trends

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Uses Government Data to Create National Demand Coefficients

Create national “demand coefficients” by drawing on two major government information sources to create a table of skilled trade employment per thousand dollars of construction value by building type

– Department of Commerce’s Economic Census of Construction Department of Commerce’s Economic Census of Construction Industries:Industries: Contributions of each construction industry to building activity by building type

– Bureau of Labor of Statistics Occupational Employment Surveys Bureau of Labor of Statistics Occupational Employment Surveys (OES):(OES): Occupational employment for the skilled trades by industry

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Creating State & Local Demand Coefficients

Adjust national demand coefficients to fit state and major metro areas

Use OES data & MHC Dodge project data MHC data allows for impact from large projects These calculations are performed to produce trade

hours per $1000 of construction by building type

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Creating Local and State Skilled Trade Forecasts Multiply the demand coefficients by the

corresponding McGraw-Hill Construction forecast by building type for a state or local level

Sum each skilled trade across building types Note: The construction mix is crucial in forecasting Note: The construction mix is crucial in forecasting

demand for the trades, since utilization rates vary demand for the trades, since utilization rates vary significantly by building typesignificantly by building type

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Labor Demand Forecast Deliverables Forecast out labor hours for five yearsfive years

– By building typeBy building type

– By geographyBy geography

National, state and local levelsNational, state and local levels Information by project typeby project type Information by skilled tradeby skilled trade Information on large project impactlarge project impact on labor demand

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Electricians in Albany-Schenectady-Troy, NY

Estimated Electricians Hours 2004-2010for Selected Building Types

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

2004 2005 2006 2007 2008 2009 2010

Stores & Shopping Centers

Commercial Warehouses

Offices

Anticipated spike of labor demand in office construction sector in 2007

Driven by several large office projects in the planning stages

ActualActual ForecastForecast

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Electricians in Albany-Schenectady-Troy, NY MHC examines large

projects in the planning queue

And evaluates whether projects will go to start

This allows for clarity on labor demand forecasts

More large projects means the forecast will be more stable versus dependence on one very large project

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For More Information:

Contacts:

Harvey Bernsteinharvey_bernstein@mcgraw-hill.com

Ralph Gentile, Economistralph_gentile@mcgraw-hill.com

MHC Resource Websites: www.construction.com www.analyticsstore.construction.comwww.analyticsstore.construction.com www.analytics.construction.comwww.analytics.construction.com

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Labour Supply and Demand

George Gritziotis, Executive Director

Construction Sector Council, Canada

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