Vermont builders say there is plenty of work already in the pipeline, and more is expected from state contracts. What will affect this important industry is the labor force, rising interest rates and supply-chain problems.
“The upcoming season looks busy,” said John Casella of Casella Construction in Rutland. “There has been a lot of conversation about federal and state funding for infrastructure, housing and connectivity, all much needed work. That has led to a strong backlog of work coming out and many projects that have been in planning and permitting during the past few years and look like they will be shovel-ready projects for 2022.”
“It’s a healthy volume of work out there,” said Dan Clar at Clar Construction in Montpelier. “People are interested in investing in their homes.”
According to Clar, he is hearing “a lot of buzz as to what a busy time it is.” He is gearing up for 2022, which says is “going to prove a very busy time for building contractors.”
“We’re booked out 18 months,” said Tom Clark at AW Clark Builders in Waitsfield. “Since the pandemic and before, it’s been nuts.”
Clark said he sees this very busy time as “the reaction because of the pandemic. People are leaving cities and coming here.” In the Mad River Valley, near Sugarbush Ski Area, said Clark, “there is virtually no real estate available.”
“The projected season is looking very good, at least as good as last year,” said Richard Wobby with Associated General Contractor of Vermont.
A lot of money is flowing from Washington, D.C., as part of the Biden administration’s infrastructure funding.
“The federal budget, then the transportation funding piece will be in place. I don’t think we’ll see a big a big change in projects, which includes funding for bridges, roads and commercial construction of broadband towers,” Wobby said.
The Vermont budget for fiscal 2022 beginning July 1 benefits from an infusion of federal dollars from the American Rescue Plan Act (ARPA), which was signed into law in March.
The $7.32 billion budget uses nearly $600 million in federal ARPA money, and harnesses more than $200 million in surplus state dollars to fund long-established priorities, such as broadband buildout, affordable housing and climate change measures. These projects will help the state’s construction industry, industry experts agree.
About $190 million in additional funding will be spent on affordable housing and efforts to relocate people experiencing homelessness from the hotels and motels where they’ve lived during the pandemic each a construction-related project.
Finding workers
Like many industries, the current labor shortage could affect construction, however.
“We’re going to be limited in our ability to produce with the present workforce,” said Wobby. “We are projecting that the industry will be 1,000 to 1,500 workers short.”
About 16,000 workers currently make up the Vermont construction workforce.
Wobby said AGCVT has “a robust recruiting program.” This includes targeting the 18- to 30-year-old demographic and “diversifying to be more a more inclusive industry.”
AGCVT is working with the state’s technical career centers, where 500 students are enrolled in the construction industry. He’s also looking toward perhaps 300 to 500 veterans and people “re-entering the workforce.”
Clark said he is lucky to have just a three-person crew as “there is a huge labor shortage, and we’d be hard pressed to find construction people.”
Casella said AGCVT is doing a good job in building the construction workforce. “Our industry is also focused on workforce development, particularly here in Vermont. … AGCVT has put a big emphasis on workforce development and is beginning to achieve great results,” Clark said.
This includes bringing high school and college students from around the state to different events to outline the opportunities available in construction and the many avenues to a rewarding, high-paying career in the trades, he said.
AGCVT is holding a Career Fair at Champlain Valley Fair on April 26 that will give interested students an idea of what a career in construction might look like.
Interest rates
Rising interest rates might dampen some construction projects, as well.
Flooring costs for construction in condos and other housing developments jumped 22% last month, said Wobby. “I think we see increases across the board at varying rates. We’re already suffering through a very clear instance of affordability.”
Looking into the near future Wobby predicted, “If costs rise 20% more next year, the cost of housing will rise.”
He said he sees borrowing for construction rising before higher rates take hold.
Clark, in Waitsfield, said those individuals buying homes or remodeling do not seem concerned about rising interest rates. “People coming here have money in their pocket and just spend it,” he said.
Clar, whose company does a lot of remodeling, said his portion of the industry will probably not be affected by any rise in interest rates. “The dollar amounts with our projects aren’t so huge as to affect the cost of interest.”
“Rising interest rates are certainly a concern for our business both internally and externally,” said Casella. “Construction is a capital-intensive business and interest rates have a direct correlation. Externally, high interest rates will have an impact on new private project development and could slow the pipeline of development for projects.”
Supply chain
With a lot of construction planned for this year supply chain issues could slow the completion of projects.
“Some items are hard to get” said Clark, including garage doors and kitchen/bathroom cabinets, which both need “a very long lead time.”
“We have gotten over that hump,” said Wobby.
Steel and wood shortages are accepted facts of construction life. “We are getting over that, we have conceded that we’ll have to pay a little bit more,” he said.
“That is real,” said Clar of the shortages. “We can get most anything, but it takes a long time to arrive, from six weeks to now 16 weeks, and from eight to 14 weeks to arrive.”
According to Clar, “Projects require good planning, we need to plan four months in advance. Between the industry being busy and product lateness builders need to look out on the horizon.”
“Project materials are facing back orders and long lead times,” said Casella. “This problem is making it difficult to plan project schedules. In today’s environment this requires a lot more attention and significant pre-planning.”
Despite issues with labor, interest rates and product shortages, Wobby said he is upbeat about the construction season.
“There is going to be work, it’s going to be a great year. Employees are going to make money this year,” he said.
