Tech can help construction’s labor crisis: McKinsey

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Dive Brief:

  • As the labor gap continues to widen, builders need to think of different, creative ways to attract new labor and bolster what they already have, according to an April report from consulting firm McKinsey.
  • The picture that the firm paints is grim. In skilled trades roles such as construction laborers, welders and electricians, the firm said for every successful new hire in the industry, there will be an additional 20 job openings to fill. Illustrating how robust demand for workers is, average wages in manufacturing and construction have increased by more than 20% since the first quarter of 2020.
  • To rectify these issues, McKinsey says that builders must turn to solutions that include collective action across public, private and social sectors, along with technology. The report’s authors pointed to, for example, an engineering firm on an unnamed high-profile project that secured scarce skilled workers with attractive sign-on bonuses and relocation packages.

Dive Insight:

McKinsey noted that construction laborer positions are among the hardest jobs to fill, as about 80% of all construction firms struggle to find workers. This, coupled with the flood of cash from the $1.2 trillion Infrastructure Investment and Jobs Act, which could increase the amount of needed positions by 345,000 jobs, according to the report, could potentially worsen the situation as more money disburses from the bipartisan infrastructure law.

“Persistent challenges in filling vacancies are already delaying projects, hampering quality control, and raising costs—and are likely to worsen as demand for megaprojects accelerates,” wrote the report’s authors.

McKinsey’s findings build on its oft-cited report from 2017 about the lack of productivity gains in construction. While certain industries, such as agriculture and manufacturing, have increased productivity 10 to 15 times since the 1950s, the productivity of construction has been stuck in the same place it was at 80 years ago. Worse, the firm found productivity in construction has actually been declining since the 1960s.

To combat the issue, McKinsey cited the engineering firm that enticed workers with high pay packages, as well as the use of robotics. For example, the report referenced a heavy equipment manufacturer that used what it called “cobots” to automate repetitive tasks and free up workers, resulting in a 40% productivity gain and a 50% improvement in resource utilization. It also pointed to an electronics manufacturer that used digital twins and remote controls, which allowed employees to problem solve issues from anywhere in the world, which reduced vacancies by 25% and nearly doubled productivity.

The idea that technology could fix construction’s labor woes isn’t a new one, but rapidly advancing products, like generative artificial intelligence, could help builders save time and money, according to panelists at the National Institute of Building Sciences Building Innovation Conference in Washington, D.C., on May 20.

Other tech, such as robots, are on the way, but won’t dominate the jobsite in the near future. They can move around, execute simple tasks and have even been successful operating one experimental jobsite on their own.

“In the short term, with labor increasingly scarce and expensive, productivity is the answer to prosperity,” the report’s authors write.

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