Optimistic Outlook: Construction Firms See High Demand Amidst Labor Shortages

With an industry as nuanced as construction, it can be difficult to isolate general themes. But, it is fair to say that Midlands firms are largely expressing more optimism than around this time last year. 

Furthermore, materials and supplies shortages have taken more of a backseat to concerns over the availability of labor – concerns that industry and professional organizations and firms alike are actively addressing.

Associated General Contractors of America – Nebraska Chapter aims to ease the hiring struggle for its members with workforce development efforts – from Equipment Days, which allows students to try out equipment simulators, to its “The Road Rebellion” career marketing campaign. 

Communications Specialist Carly Smith emphasized the need to focus on labor. 

“There has been a material shortage over the past few years, but the material suppliers have been working hard to meet the demands,” she said. “Labor is probably the biggest concern, with more work coming down the pipe, we need people now more than ever.”

Smith referred to how the Infrastructure Investment and Jobs Act (IIJA) will bring in funds for roads, bridges, and other projects to “put a dent in the needs of the state over the next five to seven years.”

The Metro Omaha Builders Association aims to promote and protect the homebuilding industry; Executive Director Jaylene Eilenstine referred to its signature Parade of Homes and Street of Dreams, as well as its scholarship to assist women in obtaining a construction-related associate’s degree (courtesy of its Professional Women’s Council). Additionally, its involvement with the Builders of the Future program helps identify, support and educate “next-generation” construction professionals. 

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“While the construction industry is booming, we need more skilled trades in construction … these programs were developed to combat the shortage of skilled labor in our industry,” she said.

Matt Kronaizl, MOBA president and owner of Sierra Homes, said other materials shortages are not “back to normal,” but are “improving every day.” 

The I-80 and Highway 75 interchange project. (Photo courtesy of McGill Restoration)
The I-80 and Highway 75 interchange project. (Photo courtesy of McGill Restoration)

“ … window and garage door timelines are getting better, certain high-end appliances can still be 12- to 18-month lead times, and various floorings are in short supply or being discontinued every day, still,” he stated. 

Interest rates, too, have affected move-up buyers, as Kronaizl said it’s harder for them to swallow a higher interest rate as their payments change drastically.

“We are still seeing very strong demand in the remodel and higher-end buyers, and the sales for the mid-range seems to still be strong and steadily improving from last fall,” he said. 

Homeowners are reportedly desiring more advanced and creative features at all price levels – from smart lights and automation to more utilitarian flow with drop-zone, mud room, laundry, etc.

Kronaizl added that social media sites such as Pinterest and Houzz have helped homeowners hone their style before the design phase. 

Activity on the Upswing 

McGill Restoration is experiencing backlogs of weeks or months, notably from spring through fall. 

“The construction industry in general is busy,” said Tim McGill, president. “McGill Restoration has the largest backlog of work that we have had in our history. Part of that is because we are growing, and the other part of that is there has been a lot of opportunity in the marketplace  … We’ve seen more growth limitations relating to less available craftsmen than a reduction in leads.”

Over the last 12 months, McGill said they have had several “fast-track” projects to put valuable infrastructure back into service ASAP; specifically the I-680/Dodge Interchange and I-480 bridge rehabilitation in downtown Omaha.  

“The I-480 project downtown is one that was completed in time for both shutdown phases of bridge rehabilitation,” he explained.

As infrastructure is the firm’s primary sector, McGill said the IIJA will present a lot of opportunities for workers entering the trade to stay busy year-round. 

“We’re still waiting to understand the full effects of the funding, but it will help push some important projects into motion much faster,” he said. 

Thus far, the team is testing out different recruiting tactics but, he said, “It’s very common for new hires to come with little to no construction experience and need time to be trained in more advanced skill sets.”

As to supply chain issues, in 2022 McGill increased on-hand inventory four-fold. 

Interior of the Ceres Group headquarters. (Photo courtesy of Tom Kessler/Boyd Jones)
Interior of the Ceres Group headquarters.
(Photo courtesy of Tom Kessler/Boyd Jones)

“In 2023, we believe that we can reduce the amount of inventory we keep on hand as the manufacturing of our materials is trending in a positive direction,” McGill stated.

Ronco Construction Company isolated activity in industrial and multi-family construction; notably, President Zak Olsen highlighted warehouses and distribution centers in areas such as around I-80 and 144th Street, Highway 370 and Gretna. 

“At the end of 2022, Omaha’s new construction and proposed multi-family projects totaled more than 26,000 units, with over 3,000 of those in construction already,” he said. 

Olsen attributed robustness in these sectors to the lack of single-family homes and high interest rates. 

“So, the demand is high for affordable, convenient multi-family options,” he said. “On the industrial side, it’s mainly the lack of space — it’s around a 1% vacancy. Larger distribution centers for e-commerce companies like Amazon and Home Depot are growing.”

Projects span Home Depot market delivery operations; a 320,000-square-foot space for new tenant UPS; and a 300,000-square-foot nerve center for GXO Logistics – all at the I-80 Logistics Hub.   

On the multi-family side, Olsen noted how the former 24 Hour Fitness at 120th and Blondo streets is being reimagined into a 160-unit, 225,000-square-foot apartment complex, while the 84-unit, 108,400-square-foot Nest Apartments is owned by La Vista biotech firm, Streck, as the “first-of-its-kind, employer-assisted housing project in Nebraska.”

Investments for the firm included surveying and modeling equipment; for example, a Matterport 3D scanner to scan and model existing building/property conditions and to generate a useable Revit model. 

“Now, instead of doing this by hand with tape measures and pictures that can take weeks, we can generate results in a matter of days that are more accurate which, in turn, helps to accelerate project planning,” Olsen explained.

The use of drones in aerial surveys and greenfield developments, too, allows for quicker and more accurate scanning and documentation, while virtual and augmented reality showcases spaces and supports design feedback all in real time.

“You can ‘walk’ your project before it’s even constructed,” he stated.

Industry-wide Advancements

Boyd Jones VP of Preconstruction and Estimating Adam Marr reflected on technology advances. 

“One advancement we’re proud to put to work to make things easier for clients is an advanced laser scanner,” Marr said. “It’s a wearable scanner that captures extremely accurate and detailed data that we use to document as-built conditions and create virtual tours.”

Marr said this information provides a reference to enhance the efficiency of future facility modifications.

“We know exactly what’s behind the walls or above the ceilings, where conduit and other building components are located,” he said. 

Such technology and foresight are complemented by robust relationship-building, exemplified by long-term partnerships with the likes of Airlite Plastics, Baxter Auto Group and Kids Can. Newer clients include Hillcrest Health Services. 

Exterior of the Ceres Group headquarters, located in the Omaha Box Company building. (Photo Courtesy of Tom Kessler/Boyd Jones)
Exterior of the Ceres Group headquarters, located in the
Omaha Box Company building. (Photo Courtesy of Tom Kessler/Boyd Jones)

“Since we first began working with the Bellevue-based senior living provider five years ago, we’ve completed or begun work on independent living, assisted living, memory support, and skilled nursing facilities at properties in Sarpy County,” said Boyd Jones SVP of Integrated Services George Schuler. 

Repeat work is also afforded by higher-education projects for Southeast Community College, University of Nebraska Medical Center, University of Nebraska at Omaha and K-12 projects for Springfield Platteview Community Schools, DC West Community Schools, and other school districts in Nebraska and Iowa.

Boyd Jones SVP of Operations Tim Meyer spotlighted award-winning projects. Engineering News-Record Midwest awarded Boyd Jones an Award of Merit for the renovation of the Omaha Box Co. complex into the Ceres Group headquarters. The National Association of Women in Construction also awarded it the President’s Choice honor at its Project Excellence Awards for its utility-scale solar project in Burt and Dodge counties.  

“The project team reclaimed existing materials like beams and hardwood flooring and incorporated them into design details, including stair treads, interior shutters and wall cladding,” Meyer said of the Ceres Group project. 

The latter project, Meyer said, enables Burt County Public Power District to store energy for anticipated peak usage days and put it onto the local distribution grid during periods of high demand for better cost control.

For JE Dunn’s Nebraska office, 2022 was a “record year” for sales, new hires, awards and project achievements, according to VP Doug Duren. Notably, ENR Midwest named the firm its top contractor in Nebraska. 

Opening its Nebraska in 2008 with just six employees, JE Dunn has grown to be one of the largest general contractors in the state.

Arguably, its most important recognition is the National Safety Council of Nebraska’s safest company award winner, with Duren noting: “We strive for each person who steps foot on our job sites to go home in the same condition they showed up. We have some of the lowest incident ratings in the country because of these efforts.”

Industrywide, JE Dunn Senior Preconstruction and Estimating Manager Colby Vetter said materials shortages and cost increases have eased, but lead times continue to be extended on many materials, impacting schedule and budget. 

“Currently, we’re seeing overall construction costs 25% to 35% higher than they were pre-pandemic,” he said. 

Since many budgets were approved two to five years ago, teams are fighting an uphill battle to hit budgets and underscore collaboration and alignment among contractor/client/designer.

Construction at the Heartwood Preserve. (Photo courtesy of JE Dunn)
Construction at the Heartwood Preserve. (Photo courtesy of JE Dunn)

“Together, they can get creative about ways to reduce costs in order to salvage as much of the intended scope of work as possible,” Vetter noted.

He also emphasized the critical nature of incorporating contractors into project planning ASAP.

“Labor, right now and for the foreseeable future, is an even larger issue,” JE Dunn Superintendent Joe Hansen added. “The construction industry is currently experiencing a ‘perfect storm’ of sorts. The industry is growing at a rate of up to 10% in the next 10 years, and it’s estimated that as much as 40% of the building trades workforce will retire in the same timeframe. In short: the industry is growing but our labor pool is shrinking.”

The firm saw this coming and has invested in promoting building trades as a viable career path; for example, Hansen said a team educates K-12 students on the trades and, to support up-and-coming women- and minority-owned businesses, the Nebraska team launched a Minority Contractor Development Program earlier this year.

Health Care and Education

McCarthy Building Companies leadership noted the Omaha team has completed $1 billion-plus in construction work over the past 20 years and now employs upwards of 100 people locally. Recent, prominent project work includes health care, education, and research/manufacturing. VP of Operations Ryan Felton spotlighted UNO’s Durham Science Center renovation, the STEM-focused Bluestem Middle School construction, UNMC’s new administrative tower, and the renovation and addition of American Laboratories’ pharma testing and manufacturing space. 

“With renovations taking place while the building is occupied, work has been carefully phased in and student and faculty safety is top of mind,” said Felton of the nearly $28 million renovation to be complete this year.

Exterior of a home constructed by Sierra Homes. (Photo courtesy of Sierra Homes)
Exterior of a home constructed by
Sierra Homes. (Photo courtesy of Sierra Homes)

Pivoting to the $50 million, 180,000-square-foot Bluestem: “The middle school is the last of five new schools built from the Omaha Public Schools’ $409 million bond issue passed in 2018, which focused on the need for new classroom space in South Omaha, where four of the five new schools are located.”

Regarding health care and lab/manufacturing projects, Felton referred to how the UNMC tower will anchor the campus as a component of a new innovation hub, and to how the American Laboratories’ project presented a highly-specialized environment, tight project site and aggressive schedule. 

Market Leader Kris Montgomery also mentioned its work on a $17 million, more than 40,000-square-foot family health clinic on Immanuel Medical Center’s campus. 

“The design-build team of McCarthy and Hoefer Welker has taken an innovative approach by prefabricating both exterior panels and interior walls to deliver substantial cost and schedule savings,” Montgomery noted. “Prefabrication has also led to increased safety and quality on the project. Building the walls in a warehouse prevents on-site congestion and helps lower trade workers’ hours.”

The kitchen inside a home constructed by Sierra Homes. (Photo courtesy of Sierra Homes)
The kitchen inside a home constructed by
Sierra Homes. (Photo courtesy of Sierra Homes)

Leadership also isolated additional award-winning health care projects; notably, its trailblazing Omaha VA Ambulatory Care Center (a national Project of the Year and ENR’s Best in Healthcare), which was the first VA health care project completed using a P3 funding model – meeting vital needs today and serving as a model for future projects. 

Going forward, the team anticipates both IIJA and IRA (Inflation Reduction Act) to present opportunities for local communities with critical water and wastewater infrastructure needs.