5 stories Ideas that rocked the construction industry in Q3

5 stories that rocked the construction industry in Q3

October is upon us, and that means more than just fall weather and Halloween costumes. This month marks the start of the fourth quarter of 2016. Before we dive into end-of-year news, Construction Dive is taking a look back at some of the most significant industry news stories in the third quarter.

'Blacklisting' rule sparks industry backlash

President Barack Obama's final Fair Pay and Safe Workplaces rule, which will begin to take effect on Oct. 25 and will be fully rolled out by the end of 2017, has met major pushback from construction industry groups. In August, leadership from the Associated General Contractors of America and the Associated Builders and Contractors said provisions of what they call the "blacklisting" rule are vague and allow federal officials to arbitrarily target companies for punishment.

The FPSW order, which requires that contractors seeking federal work disclose labor law violations from the last three years, aims to ensure that contractors who fail to abide by the Department of Labor's standards aren't permitted to perform taxpayer-funded federal work. The AFL-CIO, which represents 56 trade unions, has lauded the Obama administration for enacting a rule that it said would make sure federal contractors "obey the law and respect their employees’ rights."

However, industry groups claim the regulation creates a costly encumbrance that leaves too much decision-making power to local contracting officials. The ABC and AGC have claimed that along with provisions of the rule that they consider to be unfair, the order will also keep smaller firms from seeking out federal contracts due to higher compliance costs. In a September survey of ABC members, the association reported that more than half of respondents said the new rule would prevent them from bidding on federal contracts.

Data on high construction suicide rate shines spotlight on industry crisis

A July CDC report dropped a bombshell on the industry, as it found that construction has the second-highest suicide rate of any occupational group. The study examined 2012 data of 12,312 suicides reported in 17 states and found that the industry with the highest rate of suicide was farming, fishing and forestry (84.5 out of 100,000 workers), followed by construction and extraction (53.3 out of 100,000 workers). That 53.3 rate for construction is more than four times the overall U.S. suicide rate of 12.54 in 2012. By sheer numbers, however, construction and extraction topped the list with 1,324 suicides that year.

The report came as a shock to some in the industry, but others who have tracked anecdotal reports of suicide incidents in construction weren't surprised by the high rate. Experts have pointed to a variety of factors contributing to the figure, including demographics — as suicide is prevalent among middle-aged white men —widespread substance abuse problems, the industry's "tough guy" culture, separation from families during seasonal work, the possible lack of a steady paycheck and a high-pressure work environment.

Now that personal stories have combined with hard data from the CDC, more companies and construction groups are taking notice of a dark reality of the industry and are starting to incorporate new policies, programs and training to better support their employees' mental health. However, experts agree that the industry still has a long way to go in terms of offering the necessary support in an environment of heightened suicide risk.

NYC Harco case draws attention to prosecution of general contractors

Early this summer, a New York State Supreme Court judge found New York City general contractor Harco Construction guilty of two felonies — manslaughter and criminally negligent homicide — as well as the misdemeanor charge of reckless endangerment in the 2015 trench collapse death of 22-year-old construction worker Carlos Moncayo. The court found that Harco allowed Moncayo to work in an unfortified 13-foot-deep trench despite repeated warnings from officials that the lack of protective measures created a dangerous situation. Cases against Moncayo's employer, Sky Materials Corp., and supervisory personnel from Sky and Harco are pending.

More controversy erupted in July, however, when a New York judge ordered Harco to pay for a safety ad campaign as part of its guilty sentence, but a Harco attorney said the company would not comply and would appeal the conviction. The attorney said the court-ordered, televised and printed English-Spanish public safety announcement campaign was a violation of the company's First Amendment rights and would be equivalent to an admission of guilt. If the company does not pay for the PSA campaign, it faces a maximum fine of $10,000.

The Harco case is one of the most high-profile examples of the growing trend of general contractors who may not be present on the job sites they manage facing increased scrutiny when safety violations occur. State officials called Harco's conviction "landmark," and District Attorney Cyrus Vance Jr. said that the verdict sent a message to other companies that "managing a project from afar does not insulate a corporation or general contractor from criminal liability."

Limited housing inventory leads to boost in new home sales

Home sales decline, new home sales go up

Existing home sales decline as new home sales trend upward Construction Dive Industry Pulse

Tight housing inventory has been an ongoing concern in the residential market, as real estate groups call on builders to ramp up construction for buyers fighting for the few entry-level properties available. However, builders point to high regulatory costs as well as the shortage of labor and lots as inhibitors to new construction.

One overarching trend has recently emerged in the residential industry that coincides with economist predictions. Now that the available inventory on the market has been drained, new home construction has an opening to claim a larger share of buyers. Over the past three months, existing home sales have trended downward, while new home sales surged to their highest level in nearly nine years in July and slipped only slightly in August.

This shift from strong existing sales to strong new sales follows the traditional housing cycle pattern. Typically in the early stages of a housing cycle, existing home sales dominate the largest portion of the recovery, according to Tom Rhodes, CEO of Sente Mortgage. "Existing home sales have been carrying the burden of the economic recovery for many years, and new construction is starting to assume its fair share of the marketplace," he told Construction Dive in September. If the cycle continues as experts expect, new sales will grab a larger share of the market as buyers abandon the hopes of finding available existing homes and choose to buy new.

Labor shortage rages on

The skilled labor shortage is nothing new for the construction industry, as employers continue to struggle to find qualified workers and meet demand. However, recent reports and surveys indicate that companies have seen little relief in the ongoing battle for talent.

A nationwide survey of 1,459 contractors — conducted by the Associated General Contractors of America during July and August — found that 69% are having difficulty finding workers to fill hourly craft positions. Despite that figure being 10% lower than last year's numbers, 75% of construction firms in this year's survey said they believe it will be difficult to find hourly craft workers over the next year.

The AGC also reported this month that construction employment grew in 61% of 358 metros between August 2015 and August 2016. The fact that job openings are at a 10-year-high signals that the hiring slowdown is the result of the lack of available labor, rather than a decline in work for firms.