By CARL ANTHONY
SIOUX FALLS, S.D. (AP) _ Construction in the Sioux Falls area is ramping up, but the ongoing labor shortage remains a top concern for builders and contractors.
“We are seeing a lot of projects coming up in both the residential and commercial markets, and everybody we talk with is busy,” said Darin Hage, vice president of the buildings division for Sioux Falls Construction. “However, the No. 1 challenge is labor because we need a supply of it to meet the demand of what is out there for work.”
Because Sioux Falls didn’t suffer as much as other parts of the country during the recession, recovery has been faster and led to a record year for building permits in 2013. Through March, permits were at their second-highest amount for the first quarter, totaling $109 million.
“We never had the artificial economic bubble here like others had across the country because our market was fairly stable,” said Alan Amdahl, owner of Amdahl Construction and former president of the Home Builders Association of the Sioux Empire Inc. “Our lenders were not as lenient and didn’t allow for people to purchase multiple homes to try and flip them like was the case in other areas of the country.”
Sioux Falls also saw more than 3 percent population growth last year, which sparked more building activity.
“The increase in population means not only more houses but more quality-of-life projects like fire stations, libraries, schools and restaurants,” said Jared Gusso, vice president of the heavy highway and asphalt paving division of Sioux Falls Construction. “Expanding cities also need new roads, structures and water facilities, so with that in mind we see the demand for quality labor being out there for quite a while.”
The shortage in training and labor also is an issue nationally, Gusso said.
To respond, the Associated General Contractors is working with local professionals to address the labor shortage. Southeast Technical Institute, which has focused on training construction managers rather than skilled laborers, is designing an additional curriculum where students can learn skills to meet the labor demand.
“The common misconception is that construction work is just a dirty job, but there are some great careers out there with the potential to make a lot of money,” said Kristen Gundvaldson, a professional engineer and construction management instructor at Southeast Technical Institute. “We are working with the AGC to create a program and educate the population about the great opportunities in construction.”
Amdahl said the programs are a welcome addition.
“The biggest question at Home Builders for the last 12 years has been how we get more people into the industry,” he said. “These days, it seems like all kids are taught to get into computers, but it is nice to see there is a little more emphasis on tech, and I hope that will get more young people into construction.”
The cause of the labor shortage is explained partly by career changes and generation gaps.
“Some individuals in the work force have gone to other places, like the oil fields,” Gusso said. “There are also some that retired, and so they are simply not going to come back to work, regardless of the demand.”
“Older generations are oftentimes responsible for training the younger ones in construction, and when they retire, it can create a gap there,” she said.
But those who do get into the industry are finding growing financial benefits, Hage said.
“The positive in all this is with the need for so many people in the construction industry, the wages will go up,” he said “There will be more people making a living thanks to construction, and that will bring on a healthy economy.”
The construction industry also is contending with rising material costs this year.
“Some of my suppliers are saying materials will be up between 4 and 6 percent, but that is not an increase for the overall project,” Amdahl said. “It just means that some of the materials have jumped along the way, but it does not mean the price of a house went up 4 to 6 percent.”
One of the main factors for materials increasing is the weather. Hurricanes, for example, can raise the price of oil, lumber, steel and concrete. The world economy also plays a role as many materials are imported.
Others in the construction industry note the increase but said it is moderate.
“Some materials rise while others stay flat, but we haven’t seen prices ramp up dramatically,” Hage said. “If anything, it has been a gradual increase, which means now is a good time to build as opposed to waiting.”