Close to home | Why doing more work on-site makes sense during this frazzled economy
As the nation struggles through a rough patch that has already bruised the construction industry, the answer to meeting these new challenges in Maine may lie in our local workforce.
The rising cost of energy, transportation and construction materials could soon spark a new trend in the Maine construction economy — a more pronounced reliance on local, skilled construction labor thanks to its relative stable price compared with the cost of buying and importing regional and global construction materials. It has for years been widely recognized in the construction industry that off-site prefabrication of building parts and delivery of the “ready to erect” product to the site speeds up construction and reduces costs, but lately, the high price of energy and raw materials, along with the cost of moving building components like structural steel or precast concrete, may turn this industry tenet on its head.
How will Maine’s economy benefit from this topsy-turvy situation? One way is that building construction may shift from new construction to renovation because it is cheaper to retain existing materials than it is to use new ones. Recycling and restoring our existing building stock and reworking existing components, including the building structure and façade, to satisfy our future needs tends to translate to more on-site local construction labor than projects that rely on the prefabricated or transported components often used to construct a new building.
Another way Maine can keep construction jobs here is to utilize our competitively priced local labor force to construct buildings using locally sourced materials like concrete or masonry. Using cast-in-place concrete (in which concrete is formed on-site into beams, columns and slabs) has not been popular lately in the Northeast, but it may make more sense now for certain types of building structures. Cast-in-place concrete was a common structural system in the early and middle part of the 20th century because it was durable and cost-effective when materials were more expensive than they have been in recent decades. But since material prices in recent months have escalated so much more than the cost of labor, it may soon be economical to return to systems that rely more on local labor with a more predictable and stable cost structure.
Opportunities in inexpensive labor
The producer price index for construction materials and energy costs has significantly outpaced the rise in the consumer price index, or CPI, over the past five years, according the U.S. Bureau of Labor Statistics. For example, between January 2003 and September 2008, while the CPI jumped 19%, the cost of diesel fuel leaped a staggering 249%, the price of mill steel (the raw material used in steel beams and columns) rose 122%. Concrete increased in price also, by a relatively modest 38%. And while steel, concrete and diesel fuel are major components of a building’s construction costs, many other materials are also much pricier, including copper, aluminum and many other petroleum-based products like rubber and asphalt.
Another significant contribution to the cost of building construction is labor, though the cost of labor in Maine is significantly lower than the national average. While construction wages nationally have increased approximately 19% from 2003 to September 2008, wages here in Maine have increased at a slower pace: Ken Simonson, chief economist for the Association of General Contractors, found Maine construction wages were 17% below the U.S. average, ranking the state 40th in the country in terms of average construction wage. Although not good news for the Maine tradesperson, this trend may bode well for Maine construction employment if raw material prices continue to rise and the cost of transportation of those materials from distant fabrication facilities also increases.
If the cost of construction materials continues to track upward and if the cost of labor stays relatively stable compared with material costs, we in Maine will inevitably be building more with our on-site local workforce or in prefabrication facilities near the jobsite. Additionally, we will use locally sourced and constructed materials, provided they do not require enormous amounts of energy for their creation. The construction industry in Maine may find itself leading the overall U.S. economy as it returns to more labor-intensive construction techniques and increasingly reuses rather than rebuilds structures.
Relying on our relatively inexpensive labor, renovation rather than rebuilding, and our skilled workforce may be the best plan for Maine’s construction industry during this difficult time.
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