Worker shortages, war in Ukraine and lockdowns hit US construction

The Associated General Contractors of America (AGC) has again called on the US Government to end tariffs on construction materials, and to increase construction sector training opportunities.

The association made the plea after its analysis of federal spending data revealed that between February and March of this year, most non-residential and multifamily construction declined – despite high demand, due to labour shortages and ongoing supply-chain issues.

Although construction spending in March of 2022 totalled US$1.73 trillion – up 11.7% on the same month in 2021, it is the month-to-month subsector figures for 2022 that are causing concern.

“There were notable monthly declines in the largest private non-residential categories despite generally robust growth from a year earlier”, said the association.

“The largest private non-residential segment, power construction, slipped 1.2% for the month to a level 0.3% below the March 2021 rate.”

While both commercial and manufacturing construction spending for the month was up on the same time the previous year, these also declined by 1.9% and 1.6% respectively between February and March 2022. Highway and street construction declined 0.4% from February but rose 7.5% compared to March 2021. Education and transportation construction were both down for the month, 0.8% and 0.5% respectively. 

Ken Simonson, the association’s chief economist, said, “Contractors continue to report strong demand for most types of structures, with few owners canceling or postponing planned projects.  But worker shortages and supply-chain problems, from lockdowns in China to the war in Ukraine, are slowing project completions.”

In addition to ending the tariffs that “are restricting supplies and raising prices for lumber, steel, and aluminium products”, the association also called for Washington officials to increase career and technical training funding, to help reduce labour shortages.

Stephen E. Sandherr, CEO of AGC, said, “Now that Congress has funded a substantial increase in infrastructure construction, it is imperative that the supply of materials and workers be increased as well.” 

The AGC’s renewed call for action comes less than two weeks after the White House announced that projects funded by the government’s US$1.2 trillion infrastructure package can only use iron and steel produced in the US.

While it is said the move aims to make the country less dependent on international supply chains, the AGC criticised it limited companies’ ability to source materials.