A Report from Summit Academy OIC on Trends Shaping the Industry Today

SUMMIT ACADEMY OIC

MSP 2015: Construction Workforce Update

MSP 2015: Construction Workforce Update

A report from Summit Academy OIC on trends shaping the industry today

Executive Summary

In May 2014, a team of MBA candidates from the University of Minnesota Carlson

School of Management prepared original research, analysis, and a model assessing the current

state and expected future supply and demand for the construction workforce in the Twin Cities

seven county metropolitan area. Their findings, delivered to the Minneapolis Saint Paul Regional

Workforce Innovation Network (MSPWin), identified trades that expect to experience future

labor shortages and showed an existing complexity to understanding the pipeline to enter the

trades that discourages newcomers, particularly communities of color and women.

Summit Academy OIC, an accredited training institution, prepares new entrants into the

construction trades with pre-apprentice construction training. At Summit, we have invested in

making a commitment to researching and collaborating with stakeholders to meet the labor needs

of the construction market, while ensuring that the industry remains inclusive of qualified

workers of color and women interested in a construction career. This past year Summit

committed two staff to conduct follow-up research that would serve as an update to the work

completed by the Carlson team. Their report, provided below, sought to explain contradictions

from the Carlson model’s projections on whether shortages existed in specific trades or not and

gain a clearer picture of how stakeholders viewed workforce supply issues on the ground.

Their key findings identify:

● Local workforce shortages in the trades of boilermakers, ironworkers, the finishing

trades (painters, drywallers, and glaziers), concrete finishers, carpenters, and

operating engineers will continue in years to come.

● A lack of transparency and accessibility around entrance and career pathway

opportunities into the trades, particularly for communities of color and women.

This necessitates further collaboration and solutions from industry stakeholders,

including unions, contractors and training institutions.

● Development and maintenance of shared labor data could provide greater clarity of

future workforce needs in the industry.

● Adoption of trades promotion practices from other states could alleviate local

workforce shortages.

Louis J. King, II President and CEO, Summit Academy OIC

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Table of Contents

Executive Summary 1

MSP 2015: Construction Workforce Update Researchers 2 Carlson School of Management Team Report: 3

I. Purpose and Methodology 3

II. Key Findings 3

Summit Academy OIC Construction Workforce Update: 4

I. Purpose and Methodology 4

II. Key Findings 5

A. Update on CCE Model Contradictions 5

B. Contractor Experiences 6

C. Benefits of Continued Stakeholder Engagement 6

D. Minority and Women Inclusion 6

E. Improving Construction Trades Exposure: Recommendations 7

Next Steps 7

MSP 2015: Construction Workforce Update Researchers

Summit Academy OIC would like to express gratitude to the Jay and Rose Phillips Family

Foundation of Minnesota and the AmeriCorps VISTA program for making these researchers

available to us.

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Carlson School of Management Team Report

I. Purpose and Methodology Purpose:

● MSPWIN commissioned a report that was researched and written in the spring of 2014

by a team of MBA candidates in the Carlson Consulting Enterprise (CCE) program at the

University of Minnesota Carlson School of Management.

● CCE Team’s Purpose: Develop a methodology to forecast construction workforce

shortages in the Twin Cities metropolitan statistical area, and

○ Identify acute workforce shortages in construction trades.

○ Understand the flow of the talent pipeline.

○ Identify next steps for forecasting and stakeholder engagement.

Methodology:

● Interviews were conducted by the MBA students with 41 stakeholders in the industry in

the spring of 2014 to better understand how it operates and to validate or challenge their

forecasting model’s results.

Data and Software Used to Construct Forecasting Model:

● CLMA: The Construction Labor Market Analyzer (CLMA) was used as the forecasting

tool for workforce demand. The CLMA is a proprietary software subscription that pulls

demand data from:

○ U.S. Department of Commerce project data, forecasts from McGraw-Hill’s Dodge

model, and Standard Occupational Codes from the U.S. Department of Labor.

● The Bureau of Labor Statistics, Minnesota Department of Employment and Economic

Development (MN DEED) employment forecasts, and Occupation Employment Statistics

(OES) data from the U.S. Department of Labor were used by the team to forecast supply.

II. Key Findings from Carlson Team Report

With the forecasting model created by the CCE Team, their report generated 5-year

(2014-2018) workforce supply and demand projects for 9 construction trades. They then revealed

whether their model’s projection was validated, conflicted with, or unvalidated by stakeholder

feedback received through their interviews.

Forecasting Model Results Validated by Stakeholder Feedback:

Labor Shortages:

● Boilermakers

● Ironworkers

Labor Surplus:

● Electricians

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II. Key Findings from Carlson Team Report (continued)

Forecasting Model Results Conflicting with Stakeholder Feedback:

Labor Shortages (according to stakeholders) / Surplus (according to CCE model):

● Operating Engineers

● Painters

● Pipefitters

● Carpenters

Forecasting Model Results Unvalidated by Stakeholder Feedback:

Labor Shortages:

● Laborers

● Concrete Finishers: In the example below, the Carlson team’s model predicted an average

shortage of 1,065 FTEs in the concrete finishing trade in a 45 mile radius around

Minneapolis over the next 5 years, however, this was unsubstantiated by stakeholder

feedback they obtained for their report.

Concrete Finishers1 AVERAGE SHORTAGE: 1,065 FTEs

SHORTAGE

Summit Academy OIC Construction Workforce Update

I. Purpose and Methodology Purpose:

● The Summit Academy OIC research team sought to provide an update to the CCE report,

particularly to resolve contradictions in the CCE’s findings between surplus workforce

numbers generated for trades when stakeholders had stated future shortages would exist.

● The Summit team also spoke with unions and contractors about what types of labor

forecasting they undertook, how well they thought the industry was bringing in workers

of color and women, and what future alignment around workforce projection data could

look like.

Methodology:

10 Group Interviews Conducted with Construction Industry Stakeholder (Nov. 2014-Jan. 2015):

● 4 unions

● 4 large general contractors (horizontal and vertical construction)

● 1 contractors association

● 2 training organizations

1 Concrete Finishers model. Source: Carlson Consulting Enterprise, University of Minnesota Carlson School of

Management (May 1, 2014). Minneapolis-St. Paul Construction Workforce Forecasting Presentation.

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Sample Questions:

● Unions: What are your membership numbers? What is the expected impact of retirements

on your trade? Have you experienced periods of shortages in meeting workforce

demands?

● Contractors: What was your experience over the course of the past year in hiring from

various trades? Have there been any challenges in particular (e.g., for a specific trade)?

● Contractors/Unions: Has your experience been better or worse in hiring workers of color

or women? For unions: What are your current membership numbers for minorities and

women?

● Contractors: Does your office use any statistical models for forecasting tradesperson

labor supply and workforce demand?

● How would you describe your outreach efforts to attract people into the field?

II. Key Findings from Summit Academy OIC Update

A. Update on CCE Model Contradictions

Based on Summit researcher interviews and analysis:

Known Trade Shortages (already validated from CCE report):

● Boilermakers

● Ironworkers

Demand and Demographics Creating Opportunity for Entry:

Pipefitters

“Replacing retirees will be more of a problem for us in 10-15 years.”

- Pipefitters Local Union #539

Finishing trades (painters, drywall finishers, glaziers)

“40% turnover expected in the next 10 years. This is likely to accelerate in the next 1-2 years.”

- Finishing Trades Institute of the Upper Midwest

Carpenters

AGC of Minnesota 2014 survey2: Lists trade as one of the “most difficult” trades in which to

meet hiring needs.

Operating engineers

“The hall appears to have to pull in from out-of-state.”

- Contractor on union’s difficulty in meeting demand

Concrete finishers

“We’re taking in 90 apprentices now, which is up from 15 in previous years [...] The bench may

clear again late this summer and early fall [more requests for workers than people to fill them].”

- Cement Masons Local #633

2 “AGC of Minnesota Construction Industry Assessment, 2014-2015.” Retrieved from www.agcmn.org

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II. Key Findings from Summit Academy OIC Update (continued)

B. Contractor Experiences

● General and Specialty Contractors and Subcontractors rated these trades as “Most

Difficult” or “Difficult” to meet workforce needs: Carpenters, Equipment Operators,

and Laborers.3

● General contractors may be experiencing delays of up to a day in filling labor orders from

union halls. Shortages may have a negative impact on the industry as a whole but may

not be felt acutely by the individual contractor.

● The recession created an experience gap in enough workers becoming experienced

journeymen. This amplifies the need to actively train in new apprentices to meet future

demand for more skilled workers. Some trade advancement has picked up with an

improving economy.

● One contractor has seen unions pull from out-of-state to meet labor needs or actively

encourage non-union members of trade to join the union.

C. Benefits of continued aligned stakeholder engagement

● Clearer publishing and marketing of pathways for entry into each trade could improve

recruitment:

“The fact that hiring and staffing criteria could be made more transparent, but that contractors

and unions have not on the whole done so, suggests that there is an exclusionary intent behind

this opacity.”

- Contractor in initial CCE-Carlson report

● Active buy-in to a forecasting system like CLMA and input of workforce data by local

unions would generate clearer projections of supply versus model predicted demand.

○ Pros: Unions and training institutions could better align training of new

apprentices.

○ Con: Contractors can’t project out far enough on projects they will be awarded to

know their demand.

D. Meeting inclusion hiring goals for minorities and women

● Unions and contractors claimed to not have any difficulties meeting hiring goals for

minorities and women, but reported a lack of diversity in their membership.

● Some said that women were hard to recruit to some trades, and minorities were also

difficult to recruit because of the lack of exposure to the trades at an early age.

● Unions do a significant portion of recruitment and training into all trades, but overall

performance of contractors of not meeting metro minority and female hiring goals may

indicate sufficient resources are not placed into recruiting new apprentices that are

women or people of color.

3 “AGC of Minnesota Construction Industry Assessment, 2014-2015.” Retrieved from www.agcmn.org

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E. Improving exposure to construction trades: Recommendations

1. Build relationships with mission-driven organizations that have strong relationships

with communities of color and women. Support mediums that drive interest and steer

workers to the industry, including TV, radio, billboard, print, and social media and an

informational website.

2. Increase investment in middle and high school technical/vocational education

programs available in the Metro area to attract more young people into the trades.

a. Interviews with unions, training organizations, and contractors and their

representatives indicated lack of exposure for youth to construction and technical

education in schools that used to spur interest in joining the trades.

3. A transparent and centralized website needs to exist and be well publicized to make

information about entry and advancement along a career pathway in the construction

industry in Minnesota more clear, transparent, and accessible.

a. The Apprenticeship Coordinators Association of Minnesota website could be used

as a transparent and centralized source for information on apprenticeship

programs, but it needs clearer information for each trade/area on when one can

apply for training and membership. The website also needs promotion via social

media and an intense marketing effort by industry stakeholders to attract potential

workers and trades members.

i. A model for this type of site is the California Apprenticeship Coordinators

Association website.4

b. Enhancements could be made to the Construction Hiring Connection (CHC)

website used in Ramsey County to make it a marketable tool to help attract new

entrants into training for and advancement into the construction trades.5

Next Steps

1. Continuous updating of the CCE model will:

a. Make the local construction industry more transparent.

b. Make the industry career pipeline more clear and inclusive to women and

minorities.

c. Involve stakeholders in the development of a new diverse, skilled workforce.

2. Continue to interview stakeholders in trades with conflicting data on workforce

shortages.

3. Involve stakeholders in the CCE model and CLMA forecasting process in order to:

a. Attain and input more reliable data into forecasting model.

b. Create a mutually beneficial relationship between Summit Academy OIC and

stakeholders in the construction industry.

c. Express the value of this type of forecasting model to all stakeholders.

4. Continue to input data into CCE model and CLMA system with updated labor statistics

annually.

4 Retrieved from http://www.calapprenticeship.org/ 5 Retrieved from http://chcconstruction.net/