The Midwest construction industry is being fueled by unprecedented investment in data centers, power generation, transportation infrastructure and healthcare facilities. While contractors, engineers and consultants report strong backlogs and robust growth, they also face increasing challenges related to labor shortages, supply chain constraints and the need to deliver increasingly complex projects on accelerated schedules.
Industry leaders say the region’s construction boom is being fueled in large part by the rapid expansion of digital infrastructure and the energy systems needed to support it. As developers race to build new data centers and utilities expand power generation capacity, construction companies are at the center of a transformation that affects both the economy and the built environment.
“Data centers are fundamentally reshaping the construction market in the Midwest,” says Chris Anvik, regional president of McCarthy Building Cos. “Our region has become one of the nation’s leading data centers, built on reliable, low-cost energy. [and] access to robust fiber networks and available land.”
This rise in digital infrastructure is creating ripple effects across a number of sectors. Anvik notes that power generation has become “the next wave” as utilities and developers work to meet growing demand for electricity. Solar generation, battery storage systems and natural gas facilities are expanding as aging coal assets are retired and grid reliability is increasingly important.
Terracon Consultants is seeing similar trends across the region. According to the company, thriving sectors currently include digital infrastructure; energy and transmission; transport and infrastructure; and health care. Broad-based growth extends across the company’s materials, geotechnical, environmental and facility services lines.
“Data centers have kept many offices very busy,” says Don Dracon, Terracon’s senior vice president of customer development. “Energy projects are ongoing to support all new energy needs, [and they include] solar, wind, battery storage and many transmission lines.”
The firm also points to continued activity in road, bridge and other infrastructure projects, as well as major hospital developments in several Midwest markets.
McCarthy is also undertaking several large-scale projects directly connected to the growth of digital infrastructure and energy development. In its core region alone, the company has more than 15 energy projects under construction involving natural gas generation, battery storage and solar power.
“Data centers have kept many offices very busy.”
—Don Dracon, Senior Vice President of Client Development, Terracon Consultants
One example is the company’s role as the engineering, procurement and construction contractor on a dual-fuel conversion project at Ameren Missouri’s Audrain Energy Center in Vandalia, Missouri. The upgrades aim to improve the plant’s flexibility and performance during periods of peak energy demand.
Meanwhile, McCarthy’s mission-critical team manages hyperscale data center projects in Wisconsin and Missouri.
“These infrastructure projects are reshaping the construction market by driving unprecedented demand for capacity, compressing schedules and raising expectations around certainty of delivery,” says Anvik.
The increase in work comes as project owners are increasingly looking for ways to manage risk and improve project execution. Leslie Duke, CEO of Burns & McDonnell, says market conditions are pushing owners towards integrated methods of project delivery.
“If there was ever a time to focus on the most efficient way to deliver construction projects, this is it,” says Duke. “Tight labor availability, renewed price volatility and global uncertainty escalated by the Iran conflict mean project owners are turning to integrated delivery methods such as design-build/EPC to reduce their risk profile.”
Duke cites industry research indicating that design-build and EPC delivery is expected to account for nearly half of all U.S. construction spending by 2028, accounting for more than $500 billion annually.
Labor availability is a major challenge facing the Midwest construction industry.
“The question is no longer whether there is enough work, but whether the industry has the people and the capacity to build it,” says Anvik.
He points out that the metropolitan area of St. Louis could experience three to five times more major projects over the next five years than it did in the previous decade. If current market conditions continue, he estimates the region could face a shortage of approximately 10,000 electricians and plumbers in the next 12 to 18 months.
Burns & McDonnell sees other challenges in the wider AEC industry.
“The biggest challenge is the gap between the rapid acceleration of demand and the slower pace of infrastructure delivery, particularly due to permitting, supply chain and labor constraints,” says Duke.
He adds that companies are being asked to deliver “unprecedented scale and speed” while managing growing complexity and resource constraints.
To deal with labor shortages, companies are investing heavily in recruitment, training and new project delivery methods.
McCarthy is expanding its use of off-site prefabrication, advanced technology and new labor partnerships. The company is also partnering with labor organizations and community groups to strengthen the construction talent pool. This fall, McCarthy plans to open the St. Louis Solutions Center, a 17-acre warehouse and equipment distribution facility in Maryland Heights, Missouri, to support growing prefabrication and self-fulfillment operations.
Burns & McDonnell focuses on talent development through STEM education and workforce training. It recently opened a construction academy in Houston to recruit workers, assess skills and provide hands-on training that simulates real-world construction site conditions. “We need to continue to grow and innovate how we build the talent pipeline,” says Duke.
