By: Earl Hall, Executive Director, Syracuse Builders Exchange
2022 proved to be a good, but challenging year for construction industry employers. Buoyed by both private and public sector investments throughout central New York, the industry enjoyed an abundance of work but saw tighter margins as competition remained strong. Employers endured supply chain issues, a thin labor market with labor shortages and sky-rocketing inflation that impacted material costs. In the end, 2022 was a good year for most contractors, but of course their attention has quickly shifted to future opportunities and challenges.
Opportunities
Over the next 1-3 years, central New York will enjoy an extraordinary amount of capital investment by both public and private sectors; however, many of the private sector projects will be subsidized by various governmental entities. While the normal, routine, and periodic construction work in higher education, public education, hospitals and medical facilities, manufacturing facilities and the service industry will continue, new projects of significance will draw most of the attention of the general public and many contractors.
Besides the well-publicized Micron Corporation’s 20-year investment in their Clay, NY facility, expected to break ground in 2024, contractors will be focused on Onondaga County’s new $90 million aquarium in the Inner Harbor; a $100 million STEAM school in downtown Syracuse; the $2.3 billion Route 81 reconstruction project in and around the city of Syracuse: the $108 million investment in and around Onondaga Lake/Inner Harbor; and $1 billion for development of a new Syracuse neighborhood near Route 81 in the city of Syracuse. This anticipated construction, in addition to the Davis-Bacon federal infrastructure projects such as sewer and water treatment plants, and highway and bridges reconstruction, will provide employers with an abundance of building and heavy/highway bidding opportunities over the next 3 years.
Challenges
Labor shortages and lack of skilled labor remains a huge problem with no immediate solution. Many of the new craftspeople entering the commercial, industrial, and institutional sectors of the construction industry are not skilled or trained to be productive for employers competing in those markets. In many cases, contractors are being very selective on the projects they bid and occasionally choosing not to bid on projects for fear of a lack of a skilled, productive work force. While employers and unions alike are investing in future training facilities, such will take time to properly attract and train the next generation construction worker.
Inflation continues to adversely impact contractors’ material costs, as uncertainty remains when bidding on projects. Anticipating the cost of materials 6-9 months prior to the project starting remains a challenge for estimators and project owners alike.
Wages will increase significantly over the next 3 years. One of the many features which attracted Micron to central New York is the relatively low cost of labor. With labor shortages already at historically low levels, demand for skilled labor will increase wages. Many employers are already experiencing such today, often paying premiums above those wages negotiated in collective bargaining agreements. Although many of the New York State prevailing wage rates for construction are derived from the Construction Employers Association of Central New York’s collective bargaining agreements, many believe employers will continue to pay above those rates to not only attract new employees, but to retain their current workforce.
Conclusion
Although contractors across the country are experiencing many of the above-noted opportunities and challenges, central New York is well positioned to take advantage of the capital, institutional and governmental investments in our region of New York. These opportunities do not come without challenges, but what history has shown is that construction industry employers throughout upstate New York are innovative, resilient, and determined. This region of New York state enjoys some of the best specialty subcontractors, suppliers, general contractors, and construction managers in the United States. Project owners are fortunate to have access to such contractors as the on-time, on-budget deliverer of construction goods and services will continue despite any challenges the future may hold. Contractors relish in challenges as opportunities and solutions are often created when challenges are presented.