Construction and Engineering Industry Outlook




(front row, left to right): Todd Winnerman, MW Builders; Darcy Stewart, JE Dunn Construction; Steve Swanson, Centric; Pete Browne, Kissick Construction; Jeff Blaesing, JE Dunn Construction (Event Chair); Rosie Privitera Biondo, Mark One Electric; Chris Vaeth, McCownGordon Construction. (back row, left to right): Gabe Perez, United Contractors of Kansas City; Joe Sweeney, Ingram’s Magazine (Moderator); Erica Jones, MW Builders/MMC Corp; Courtney Kounkel, Monarch Build; Emily Tilgner, McCownGordon Construction; Greg Carlson, Burns & McDonnell; Margaret Bowker, JE Dunn Construction; Don Greenwell, The Builders AGC; Brandy McComes, IBC, Inc.

 

Construction Executives Bullish on Region’s Prospects
Three years had passed since Ingram’s most recent in-person Construction Industry Outlook assembly took place against a backdrop of reports on a mysterious virus emerging from China. The mood that day was upbeat; construction pipelines were brimming, work was well underway on a new international airport, and the Chiefs were on their way to a second straight Super Bowl. Much has transpired since then, as nearly a score of construction executives demonstrated when they gathered at JE Dunn Construction on Jan. 11, and there was much to discuss. With Dunn’s Jeff Blaesing chairing the assembly, they quickly blitzed through two hours of exploration into the biggest challenges the sector faces.

Among the topics covered: The continuing challenges of attracting and retaining labor. Safety issues. Training. The evolution of programming to bolster firms owned by women and minorities.

Amid all of that, there remained a nearly unanimous sentiment that Kansas City is poised for great things: The NFL draft and the airport opening this spring, mega projects with Panasonic and Meta, the Downtown Streetcar expansion, a possible Downtown baseball stadium, the World Cup hosting in 2026. 

The discussion provided an upbeat assessment and a shared belief that, despite some current challenges, this region is poised for significant—even transformative—growth.

Ingram’s publisher Joe Sweeney opened the assembly on a whimsical note, passing around an image of influential construction-sector participants from the first Construction Industry Outlook Assembly 22 years ago and asking who could name the greatest number of people pictured. The short answer: Not many.

Also telling was that the long-ago assembly included only one woman; this iteration featured a nearly 50-50 mix. Such has been the breadth of change within the sector.

Sleep Disrupters
Turning to business at hand, Sweeney teed up everyone around the table by asking what was keeping them up at night.

Steve Swanson, co-founder of Centric, was able to distill that to a single word: “People.” Finding, recruiting and retaining talent is a primary concern today, he said, and a number of those in the room agreed.

For JE Dunn’s Margaret Bowker, who’s charged with helping the region’s biggest contractor keep its work-flow pipeline filled, it’s a simple matter of “feeding the beast.” Rosie Privitera Biondo offered the same response. “As our company gets bigger and we want to keep x-number of people, one of our biggest challenges is keeping the pipe-line full,” she said. “That, and retaining the best people.”

Erica Jones, marketing director for MMC Corp, said the challenges of a planned rebrand for a 90-year old company were foremost among her concerns, while Jeff Blaseing of JE Dunn, chairing the assembly, pointed to the need to keep existing staff fully engaged as big projects wrap up and they move on to the next thing.

Brandy McCombs seconded Blaesing on employee engagement, but also asked “What does 2025 look like? We’ve got a good backlog for work in 2024, but what about after that?”

Courtney Kounkel of Monarch Build livened things up: “Nothing keeps me awake—I sleep lovely,” though she did confess that, as a small business owner wearing multiple hats, she has plenty to focus on during the day. “I’m juggling a lot,” she said.

Burns & McDonnell’s Greg Carlson worries about the numbers of qualified builders out there. “Literally, the trades folks,” he said. “We get people who aren’t quite up to speed when they get to the site,” which requires an extra measure of training and development. “Project-wise, I worry about what’s going on with inflation now,” he said.

Kissick Construction’s Pete Browne also points to engagement levels. With so much going on, he said, “we have to work extra hard to make sure the team spirits stays there.

Heading up the recently merged Builders’ Association and Association of General Contractors, Don Greenwell has a more esoteric sleep disrupter. “On a macro level, globally, my concern is about people taking sides, with less interest in people finding common ground and advancing together,” he said. “On a micro level, it’s succession planning and leadership of our own organization.”

Labor in a Post-KCI World
Four years ago, amid a labor squeeze already years in the making, construction-sector executives fretted about the potential impact of a Kansas City International Airport rebuild—it has been the largest public works project in the city’s history. Thousands of craftsmen were needed at various stages over the four-year construction timetable, and the fear going in was that demand there would wreck the ability of other contractors to find skilled labor.

As it turns out, not so much, some assembly participants said. The fact that the airport is on schedule to meet its completion target date is evidence that the labor pool was deep enough.

Still, there was a ripple effect across the regional labor pool. While KCI itself was able to find plenty of workers, “it affects all of us, when those mega jobs start pulling resources,” said Courtney Kounkel. “With craftspeople, that’s where our issue is.” It scares her, she said, because “smaller projects become totally inflated from a cost perspective—there just aren’t enough people to go around. I think that will continue to be a problem for Kansas City.”

McCownGordon’s Emily Tilgner concurred: “It’s not just the craftspeople; it’s the highly skilled,” she said. “It took a lot of work to get new people up to the skill levels our clients expect.”

Darcy Stewart of JE Dunn cautioned that another big project in the works, the Panasonic Energy plant being built in Johnson County, would present another labor challenge, as well as the ancillary projects that one is likely to spawn with suppliers, vendors and logistics facilities.

When it was suggested that overtime pay had helped some builders get through the staffing challenges, Rosie Privitera Biondo was quick to counter: “Overtime,” she said, “doesn’t solve a thing.”

The COVID Impact
Complicating operations for builders and design firms alike has been the difficulty many employers have had balancing on-site work requirements with the evolving remote-workplace dynamic. When the pandemic hit three years ago, millions of office jobs across the nation transitioned to remote work, and even as the threat has eased, many of those workers have been reluctant to go back to their previous settings.

That’s a thorny issue for builders, because as several at the table pointed out, there’s no remote working on a job site. That can create some internal friction among those who must show up for work.

“This is an industry where half the talent has different work rules,” said Jeff Blaesing. “We continue to struggle with flex scheduling.”

“It just doesn’t feel right,” said MW Builders’ Todd Winnerman, “when people aren’t coming into the office, but the folks in the field are busting their butts.” On top of that, he said, are training and development efforts, “and I just don’t know how you can do those from home.”

McCownGordon, said Chris Vaeth, has come up with a hybrid solution with a certain number of days whereby office staff are required to show up. 

Still, some said, younger workers who initially resisted being in the office are catching on.

“If you’re not present in the office, you’re not top of mind” with executives up the line,” said Steve Swanson of Centric Projects. That will quickly show up with the way raises and bonuses are calculated, and in consideration for choice assignments and promotions.

Pete Browne said his office staff of about three dozen had quickly returned to work when authorities eased pandemic restrictions in the spring of 2020. The bigger issue, he said, came with clients who didn’t make the same commitment. “You have to know the boundaries, and know when a Zoom meeting is appropriate and when it isn’t,” he said.

To Centric employees who suggested they wanted to stick with a remote schedule, Swanson said he had a crisp response: “That’s fine … who do you plan on working for?” The company, he said, took a hard line in order to get people back to their pre-pandemic settings.

The irony of remote-work demands, suggested Darcy Stewart, should be readily available within this sector. “We’re in an industry that builds buildings,” she said. “We want people to be in them.”

The MBE/WBE Evolution
The work at KCI set unprecedented targets for participation by companies with designation as minority-owned and women-owned. Some said the targets were too ambitious, but they were met. 

As an employer and a project partner at KCI, Rosie Privitera Biondo said, “we got to experience that from both sides.” One take-away for the electrical contractor is that KCI drew in large numbers of minority and female employees, she said, “and we need to transfer that talent to other projects.”

The KCI targets, said Don Greenwell, forced the hand of a lot of companies to diversify their staffs. He’s hopeful that additional incentives can be found to keep those people on track with construction careers.

A great many, however, won’t. 

“Even among the higher-educated, there have always been a larger number who will try it and say ‘that’s just not for me’” said Rosie Privitera Biondo. 

But the long-discussed need to diversify the construction work force has gained valuable momentum with the KCI experience, said Gabe Perez, of Unified Contractors, an advocacy group created by the 2022 merger of two minority-contractors associations.

Bringing on large numbers of new employees invariably means extra attention must be paid to workplace-safety issues. Long the prime concern of the construction sector, companies have gone to new lengths to emphasize safe job-site practices. 

While the numbers of fatalities in the sector have declined as a result of those efforts, the numbers of minor-injury incidents has surged. That’s a concern, said Jeff Blaesing, as onboarding and ramping-up continues.

The best way to teach safety, said Pete Browne, is to ensure that a veteran is assigned to newer employees to show them how things must be done. Clearly, that’s not happening across the board: In October alone, the Kansas City region witnessed five fatal workplace accidents. Browne says he makes it a point to visit each site to get an understanding of the factors contributing to those tragic outcomes.

“It can’t be a program; it has to be a safety culture,” said Erica Jones. A decade ago, she said, much of the industry was focused on compliance. Safety has easily moved into the No. 1 slot. 

But things can’t stop there, said Don Greenwell. The sector has considerable challenges with mental-health issues, as well as physical safety. “That awareness needs to permeate the entire industry,” he said. 

Agreed, said Courtney Kounkel: “The thing that worries me most is the stress factor,” she said. “It’s just so much more difficult now to do the exact things we’ve always done.” 

Current Hurdles
Most at the table said their work orders for 2023 would keep them humming; some of them at record paces. If the much-discussed recession threat pans out, said Don Greenwell, “we’ll feel the effects in 2024.” Those who had managed companies during the Great Recession of 2007-09, he said, “know what’s coming at us.”

Greg Carlson said it “seems there are more opportunities, but many of them are more narrow” in scope. Distribution-center construction and facilities for solar-related and battery manufacturing would continue to drive much of the construction activity, he said.

Steve Swanson addressed a concern of many—interest rates—by offering a bit of perspective. “We’re looking at about 7 percent rates,” he said, but by historical comparison, that’s closer to the norm. During periods of near-zero rates, he said, “money was cheap for a long time, and I think some people got lazy because of it.”

Supply-chain issues, many said, remain a concern. The industry has breathed a collective sigh of relief throughout 2022, as prices for many construction materials retreated from 2021 spikes triggered in large part by the pandemic. While the ports in California have resolved much of backlog there, the continuing COVID-19 lockdown in China could trigger a fresh disruption of material deliveries—and a resumption of higher prices.

But demand, as well, has kept prices in check. Owners have been cautious about new projects as they keep an eye on interest rates, and the housing sector has been ravaged with demand slashed by high home price, lack of inventory and buyer sensitivity to higher mortgage rates.

“It’s still an ongoing problem,” said Rosie Privitera Biondo. Orders for switch gears, she said, were now running 85 weeks behind. “It’s horrible. We are not in control of our destiny.”

Builders should approach projects now with that in mind; “it’s becoming the norm for our industry,” said Emily Tilgner.

One upside of the dilemma Privitera Biondo cited, said Steve Swanson, is that if a buyer is waiting 85 weeks for materials, the project itself must be fairly sophisticated—the work may be delayed, but the project is likely to move forward. Not so with restaurant and retail work, he said.

What’s required, said Greg Carlson, is an understanding by pre-construction managers that material deliveries will require longer lead times, and project schedules will have to be built around availability of various materials.

The factors that have driven prices up, said Brandy McCombs,  are not going way. As a result suppliers “are not able to go back” to previous pricing levels.

The Next Generation of Employees
Discussions about talent acquisition and retention among construction executives invariably lead to broader social concerns about the way jobs in the sector are viewed by many young workers, and especially by parents. Too many of the latter, these executives say, are convinced that their children can only succeed with four-year college degrees.

Emily Tilgner credited the metro area’s junior colleges, especially Metropolitan Community College and Johnson County Community College, with raising awareness among students. The ability to start a trades job at $75,000, with no college debt, can position someone for much greater life success than spending four years securing a degree, especially if it’s not in a field relevant to today’s employer needs.

Chris Vaeth said increasing numbers of school districts are implementing Career Technical Institutes, and Pete Browne said his company had hoped to use a Burns & McDonnell/North Kansas City School District collaboration as a model for its own goal of aligning with the Center School District. Unfortunately, the district said it didn’t have the resources to respond in kind.

“If we want to have a greater impact, we as an industry have to go together” and approach K-12 educators with opportunities to engage young students, Steve Swanson said.