Uneven Growth
To understand how you got to 2017, you really have to look back at the past couple years. You will remember 2015 and the collapse of many industries related to the drop of oil prices. Keith Phillips (Federal Reserve Bank, Dallas) observed at the time, “There’s a lot of things going on here [in Texas] besides oil and gas.” His point was that life continues on, even when oil rig count drops by two-thirds in one year. He was talking in the last quarter of 2015.
Construction Jobs Move from Gulf
Industry related to gas and oil along the Gulf was still generating construction jobs, but the product-oriented component of the economy was losing to the service component. Mine Yucel (FRB, Dallas) noted that Texas economic growth had fallen below the national average for the first time since 2002. Still, diversified local economies (think Austin and Dallas) outperformed other areas because of service components in the Texas economy. Yucel anticipated weak growth through 2016.
Housing Industry
A construction company CEO (present when Phillips and Yucel spoke) noted that except “for commercial construction, Texas is the hottest market there is in the country and it’s going to stay that way for a while.” Updates to water and road infrastructure are still needed. 2015 construction in housing addressed the “multi-family market.” He anticipated continuation in 2016, but observed that new construction projects would be selective, utilizing technologies minimizing waste and augmenting supply-chain efficiency. With a 4.2 per cent Texas unemployment rate, construction was still underserved by women and minorities at the management level.
Construction Stability and Stable Growth Enhanced in 2016
Broad Expansion in Building Sectors. Not all data for construction are in at this point, but you can glean some information. Of the region’s top 100 contractors in 2016, 81 were Texas corporations generating $29.77 Billion in 2015. By the middle of 2016, contractors responded to a rigorous building economy. North/Central Texas was experiencing a stable construction industry in commercial, educational, health care, and municipal components. The expectation for 2017 was for slowdown or minor downturn in construction.
Construction Labor Shortages
The general economic downturn of your past decade was accompanied by downturn in construction. The labor pool grew because of lay-offs funneling people into that pool. Now, with continued growth in construction, you see a shortage of skilled labor at the project management level. That pool has shrunk. Companies until just recently could access a large labor pool during the downturn, but with growing construction, now there are fewer skilled people to draw from, causing companies to compete for the same employees. Compensation packages, bonuses, and other incentives have become construction industry mechanisms to retain employees and recruit new ones graduating from key technology schools.
Employee Opportunities in 2016 and Beyond
2016 brought estimated construction industry growth of about 1.36 percent in Central Texas. The industry will continue to grow in the next five years, but more slowly than other economic sectors. The industry continues to offer much to potential mid-manager recruits because of that shrunken labor pool just discussed.
