This audio is automatically generated. Please let us know if you have any comments.
Dive brief:
- David Mortenson, president of Minneapolis-based Mortenson Construction, expressed cautious optimism about the state of the industry in the Federal Reserve Bank of MinneapolisSeventh Annual Regional Economic Conditions Conference January 12.
- “In the commercial construction industry, our economic indicators tend to be pretty easy: more good tower cranes, fewer not-so-good tower cranes,” Mortenson said during a chat with Minneapolis Fed President Neel Kashkari, and he noted that the Twin Cities area has seen fewer cranes. recently
- While he was more downbeat about the Midwest region specifically, Mortenson said he believes the construction industry nationwide will remain steady, largely due to population growth in the West and South. -East. manufacturing onshoringrenewable energy projects, data center work and a more stable interest rate environment.
Diving knowledge:
With the Inflation Reduction Act and the CHIPS Act leading to a surge in new projects across the country, Mortenson said finding construction jobs should be easy for workers.
Still, the industry it needs approximately half a million workers to meet demand, but instead, Mortenson pointed to the Great Recession, which saw construction lose 2 million jobs that took 15 years to recover from, indicating the strength of the current labor situation.
He pointed out the Taiwan semiconductor factory in the Phoenix area project, which has attracted about 10,000 workers, some from surrounding states, as a sign that the industry has a national draw.
To counter the labor shortage, Mortenson said he believes the industry needs to increase its productivity.
“The problem we have in our industry is that productivity is not changing as fast as you see it changing in manufacturing,” Mortenson said. “We’re going to be in a tight labor market forever if we don’t shift our productivity curve … I think we’re going to be in trouble for the next decade.”
When Kashkari asked him what he thought of alternative construction tactics as a means of increasing productivity, Mortenson said he thought it might be some time before a method like modular was fully viable.
He mentioned Katerra, the defunct modular builder which had offered a just-in-time delivery approach. The company filed for bankruptcy in June 2021, and Mortenson called it a “$1.5 billion kapoof,” because the company tried to do too much too fast.
Mortenson has three manufacturing facilities in Illinois, Minnesota and Utah. The president said he sees competing companies also starting to adopt more modular construction techniques.
“In 20 years’ time I think construction sites will look a lot more like a shipbuilding or aircraft manufacturing facility than this tailor-made scenario where every piece is cut on site,” he said. to say.
Other topics Mortenson discussed included:
- Artificial intelligence. Mortenson said that using generative design instead of an engineering team to plan a complex energy project, for example, can cut up to 5 percent of a project’s budget, but “we’re just scratching the surface, like most industries.”
- The electricity market. Mortenson said the first thing he gets on a project is the electrical transformers, because of a 52-week lead time. The materials are in demand due to the increase in energy and manufacturing projects (electricians remain one of the hardest jobs to hire, for the same reason), but they also require significant regulation because most of them come from the foreigner
- Vacant offices Since the COVID-19 pandemic, offices have struggled, and Mortenson called it the industry’s No. 1 long-term problem, predicting it would take five to six years to correct itself. He noted that urban offices are being converted to residential buildings, but said few lend themselves easily to such a transition.
- Immigration issues. Mortenson acknowledged the opportunities construction can offer immigrants coming to the U.S., but said getting a visa or green card can be incredibly difficult. “We have to change that,” he said.
