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By: Andrew Valenti, Reporter December 14, 2021 Comments Off on Louisiana’s construction industry ending 2021 with hope, worries

Like most of the U.S., Louisiana’s construction industry has been plagued by labor shortages and high materials prices in 2021.

As the end of the year nears, there is a mix of optimism over the infusion of new federal funding for projects and continued concern about rising costs and labor issues.

The state has seen one of the largest declines in construction employment since the COVID-19 pandemic shut down the country’s economy in March 2020. A recent analysis by the Associated General Contractors of America said Louisiana lost 16.1% of its jobs in the industry from February 2020 to September 2021 — the highest percentage of all 50 states and the District of Columbia.

The state has made some gains over the past year. Louisiana added 6,100 jobs between October 2020 and October 2021. The New Orleans area added 200 jobs over that period, while Lake Charles saw its job count rise by 800 – the most in the state.

The numbers overall are still below pre-pandemic levels, however. The state had 120,100 construction jobs in October 2020 and 126,200 in October 2021, according to the data. Louisiana had 137,000 construction jobs in February 2020, the AGC said.

Many options remain for general contractors to increase their workforce and grow their businesses, according to Andre Kelly, a regional manager of the Louisiana Associated General Contractors.

Home and business owners continue to receive funds from insurance proceeds and the federal government to repair damage from Category 4 Hurricanes Laura in 2020 and Ida in 2021. Lake Charles and other areas of southwest Louisiana continue to show scars more than a year after Laura made landfall, and tarped roofs and wrecked homes and businesses still dot the landscape in Lafourche and Terrebonne parishes and parts of the New Orleans area from Ida’s destruction in August.

Louisiana also found itself with a billion-dollar surplus from a better-than-expected economy and collected revenues from the fiscal year that ended in June. Kelly said a large chunk of this money would be spent on deferred maintenance and improvements of state-owned facilities.

And as a result of a $1 trillion bipartisan infrastructure bill passed by Congress this fall, Louisiana is set to receive roughly $6 billion in the coming years to improve its highways and bridges, which are some of the lowest rated in the country. Additionally, Louisiana is expected to receive $101 million in federal funds during the current budget year to make drinking water system improvements around the state, U.S. Sen. Bill Cassidy announced in December.

While Kelly declined to identify potential targets for the $6 billion infrastructure funds, one of the first candidates could be a new I-10 Calcasieu Bridge that connects Lake Charles to Westlake in southwest Louisiana. The dilapidated bridge, built in 1952, is outdated and must be replaced to meet current highway standards, the Louisiana Department of Transportation and Development has said. The infrastructure bill does authorize the Interstate 14 corridor, which would run from Georgia to Texas and cut through Alexandria and Leesville in central Louisiana.

Brett Ruppel, leader of Impetus’ infrastructure division, said the passage of the legislation is a “win for the residents of Louisiana and upgrades to highways, bridges and other infrastructure will be realized throughout the state.”

“This help is much needed after the number of natural disasters we have dealt with over the past few years as well as our aging infrastructure that spans the vastly different areas of the state,” Ruppel said.

William Lemoine, president of LEMOINE building construction, said he feels Louisiana stands to benefit more from the infrastructure bill than other regions of the country because of the state’s critical role in providing a base for much of the country’s fuel and energy production as well as its transportation of goods and its geographic location and susceptibility to storms and flooding. Louisiana also has one of the highest numbers of elevated bridge roadways in comparison by area in the nation, but much of them have been rated as poor or structurally deficient, he said.

Lemoine said he expects to see a fair amount of business at the company as a result of the funding, which would include bridge, civil work, flood mitigation and the utility sector related to wastewater and water treatment facilities. LEMOINE has already seen an increase in spending commitments in the last 24 months.

It could take years for the new federal funds to begin flowing to projects. Kelly said that by that time, the industry’s workforce shortages will likely be mitigated and “the scales will balance out again as dollars begin to be spent.”

President Joe Biden announced earlier this year he had named former New Orleans Mayor Mitch Landrieu to oversee the program and determine how to allocate and implement the $1 trillion. Kelly said the appointment puts Louisiana in a unique position, as Landrieu understands the specific needs of New Orleans and the state concerning coastal protection and drainage.

“By having an intimate knowledge of that, it’s heads and shoulders above any other appointment that could’ve been there,” he said.

But the availability and prices of key materials could hinder some of this work.  While costs are beginning to drop, they still remain well above prices from last year.

According to the most recent data from the AGC, the producer price index for new nonresidential building construction jumped more than 21% from October 2020. Prices for steel mill products swelled by 142%, aluminum mill shapes increased by 37% and plastic construction products surged by 30%, data said.

Kelly said materials such as polymer and glass could have as long as a six-month delay.

“These are nationwide issues,” he said. “If you have the available labor but you don’t have the materials to build, then we’ll have an entirely different issue.”

Rising costs and the availability of skilled and nonskilled labor could further strain an already stressed private sector when it comes to viability of projects moving forward, Lemoine said.

“This could create a negative effect on some sectors of our industry,” he said.

Tagged with: Associated General Contractors construction costs covid-19 employment labor Louisiana

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