Construction

As the manufacturing industry in the Monadnock Region saw a surge in business in 2023, so did the construction industry — with no end in sight. Construction weathered many of the same challenges as other businesses last year at the tail-end of the pandemic. Local construction business owners expect some of those challenges to continue but are being proactive in 2024 to meet them head-on. Recruiting and retaining skilled workforce was at the top of the list for 2023. "Small contractors are struggling with manpower," says Tom Weller of Weller & Michal Architects in Harrisville. "If someone is out sick, a two-person crew is down to one person." Weller, who had planned to retire, has stayed on with his firm because of these labor challenges. "I'm still working because other architects are overworked," he says. "I can't send my clients anywhere else." Emily Benson, employee success officer at Bensonwood in Walpole, says the company lost quite a few employees who left during the pandemic to start their own construction businesses. Bensonwood designs, engineers and builds timber-frame, hybrid and LEED homes and other structures. "Construction was in such demand," she says. "People were doing renovations — anyone in skilled construction or carpentry had the world at their fingertips." While skilled construction remains in high demand, she thinks an uptick in job applications signals that these workers are wanting careers with a stable employer. "If we can meet them with what they want — good career growth and clear paths toward increased compensation over time — they will see value in staying with an employer," she says. Joshua Reap, president and CEO of Associated Builders and Contractors (ABC) New Hampshire/Vermont, says labor shortages in the construction sector were an issue 10 years ago, and today, they're a crisis. "There's never been enough emphasis on skilled trades and good opportunities for the rewarding lifestyle it provides," he said. "We still don't have enough people who want to work." There are several thousand job openings right now in a variety of skilled trades, Reap says, but employability skills are lacking. However, there is work being done to help recruit and train workers in the construction field. "A lot of employers do direct outreach by going into schools," he says, adding that ABC NH/VT has its own craft training and apprenticeship program registered with the U.S. Department of Labor Office of Apprenticeship. "In two years you become a journey worker," he says. Benson says the company offers an apprenticeship program in carpentry and another in sustainable prefabricated building in 2024 with Apprenticeship NH. "The [apprenticeship] movement will be bigger," she says. "Hiring is as hard as retaining. You really have to build your own training programs, giving opportunities inside the organization to grow careers in a clear and planned way." Workers at Bensonwood receive a significant amount of on-the-job training as well. Supply-chain woes ease Another issue that has persisted after the pandemic across the construction industry and countless others is the supply chain. During the pandemic, Weller says, window delivery was taking 16 weeks. "[Companies] were short of help at the manufacturing end," he says, adding that the wait time this year decreased to four to six weeks. Benson says the situation is improving, with wait times getting shorter and prices of materials stabilizing. Weller says cost-plus contracts have become a lot more common in recent months. A cost-plus contract is an agreement to reimburse a company for expenses incurred plus a specific amount of profit, usually stated as a percentage of the contract's full price. These types of contracts are primarily used in construction where the buyer assumes some of the risk but also provides a degree of flexibility to the contractor. One contractor he works with charged a 20 percent markup, more than double what he's seen in the past. Contractors "can't guarantee anything," he says. "They do the cost-plus contract because they don't know what will happen on the way to the lumber yard. They need to build on a cushion." Bensonwood received a supply-chain grant in 2023 to try to improve these issues via a Manufacturing Extension Partnership program in New Hampshire funded by the National Institute of Standards and Technology. "We're connecting with them on various issues," says Benson. "Because of COVID and other issues, the government has more resources and seems to be more on the forefront of trying to help. The Manufacturing Extension Partnership program provides training and is a new resource on building a domestic supply chain. They have the bandwidth and put in the research and can connect with partners around the state to help with these issues." Interest rates are another factor. "There has been some concern about interest rates," says Benson. "There's a wait to see if they drop in the next quarter." Reap says contractors will be busy in 2024, but construction projects in the $10 million to $20 million range will slow down because of the increase in interest rates. The nationwide housing crisis has also greatly affected local business, as there are limited dwelling units to attract workers to the region. At the same time, it's a massive opportunity for the construction industry. Looking ahead, Reap sees a lot more mixed-use development projects on the horizon, but municipalities will need to allow mixed zoning. "Getting back to [mixed-use] is what we need," he says. Meeting the housing demand will be crucial. "Because New Hampshire is tax-free," Reap says, "there will be a lot more remote workers moving here and people moving out of Massachusetts to escape the millionaire's tax. Retirees aren't moving out of state as they used to, and there will be a demand for 55-and-up housing. This all creates development demand also because there will be more need for goods and services." He believes private investment firms that can make loans for multifamily housing developments will become popular. "[They] will help get us over the finish line," he says. Once the Federal Reserve eases interest rates, Reap says construction will start up again and give more confidence to investors. "The future still looks good," he says. "I think New Hampshire will be a beacon of hope in New England."