The construction industry is currently experiencing an unprecedented mix of steeply rising materials prices, snarled supply chains and staffing difficulties. Meanwhile, slumping demand is keeping many contractors from passing on their added costs. This combination threatens to push some firms out of business and add to the industry’s nearly double-digit unemployment rate.

All of this is happening just as the industry is emerging from the worst effects of the COVID-19 shutdowns and project interruptions around the United States. Although Oregon’s construction industry was able to remain open and continue working through 2020, owners, contractors and suppliers in our region are not immune from the economic problems that are now starting to show.

This situation poses an immediate threat to contractors from fast and steeply rising prices for materials, both for projects that have already been bid or started and for preparing-price or guaranteed-maximum-price bids.

Since April 2020 the prices of all materials and services used in nonresidential construction have collectively soared nearly 13 percent. Meanwhile, bid prices have remained virtually stable, rising only 0.5 percent from April 2020 to February 2021. Numerous materials have risen even more steeply in price.

For instance, the national average retail price of on-highway diesel fuel climbed from $2.80 per gallon on February 8 to $3.19 on March 22 – a rise of 14 percent in just six weeks, according to a weekly truck stop survey posted by the Energy Information Administration. Private price-tracking services have reported similarly steep increases for a variety of steel, lumber and engineered wood products.

Given that materials often represent half of the cost of a contract or more, such an increase could easily wipe out the profit from a project and create severe financial hardship for the contractor.

Additionally, delayed deliveries, higher expenditures for personal protective equipment and other sanitation measures, and shortages of employees or subcontractors’ workers on jobsites due to coronavirus impacts are all driving up contractors’ costs. In some cases, project completions are being delayed, meaning contractors receive needed payments later and may incur penalties for missed deadlines.

AGC is providing briefings directly to groups of federal procurement officials and Biden administration officials directly, and is working with coalitions to eliminate harmful tariffs on construction materials and to expedite freight movements. However, many of the current problems result from the extreme economic disruptions caused by the pandemic and subsequent labor shortages, aggravated in some cases by plant breakdowns from storms or other factors. These supply/demand imbalances will take time to work out.

Until the economy responds to the shocks that have occurred over the past year, what can be done?

The situation calls for immediate action by federal trade officials to end tariffs and quotas that are adding to price increases and supply shortages. Officials at all levels of government need to identify and remove or lessen any unnecessary or excessive impediments to the importation, domestic production, transport, and delivery of construction materials and products. Project owners need to recognize how much conditions have changed for projects begun or awarded in the early days of the pandemic (or earlier) and consider providing greater flexibility and cost-sharing. Contractors should become even more vigilant about changes in materials costs and expected delivery dates and should communicate the information promptly to current and prospective clients.

Owners and bidders may want to consider price-adjustment clauses that would protect both parties from unanticipated swings in materials prices. Such contract terms can enable the contractor to build in a smaller contingency to its bid, while providing the owner an opportunity to share in any savings from downward price movements (which are likely at some point, particularly for long-duration projects). Public owners and agency personnel should review all regulations, policies and enforcement actions that may be unnecessarily driving up costs and slowing importation, domestic production, transport, and delivery of raw materials, components and finished goods.

While contractors cannot unclog ports or rescind tariffs, they can provide project owners with timely and credible third-party information about changes in relevant material costs and supply-chain snarls that may impact the cost and completion time for a project that is under way or for which a bid has already been submitted. This communication must occur regularly, both before bid submission and throughout the construction process.

Owners can authorize appropriate adjustments to design, completion date and payments to accommodate or work around these impediments. Nobody welcomes a higher bill, but the alternative of having a contractor stuck with impossible costs or timing is likely to be worse for many owners. For projects that have not been awarded or started, owners should start with realistic expectations about current costs and the likelihood of increases. They should provide potential bidders with accurate and complete design information to enable bidders to prepare bids that minimize the likelihood of unpleasant surprises for either party.

The parties may also want to discuss the best timing for ordering materials and components. Buying items earlier than usual can provide protection against cost increases, but it comes with the need to pay sooner and to potentially pay for storage, security against theft and damage, and the possibility of design changes.

Materials prices eventually will reverse course. Owners and contractors alike will benefit when that happens. Until then, cooperation and communication can help reduce the damage.

Mike Salsgiver is the executive director of Associated General Contractors’ Oregon-Columbia chapter. Contact him at 503-685-8305 or mikes@agc-oregon.org.

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91ĘÓƵ guarantees the accuracy or completeness of any information published herein.

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In my previous columns I’ve spoken in first person, in my own words about issues of importance to the commercial construction industry. This month I decided to try something different, and write from the perspective of a fictional construction worker. Given the very personal toll the past two months have had on each and every one of us, I thought it would be interesting for readers to get a sense of how this pandemic has changed the way builders do their jobs. This column is a salute to those men and women.

Hi, my name is Dave and I am a carpenter. I have been one since I can remember. Let me tell you about a typical day for me.

It’s 4:30 a.m. when I wake up. I didn’t used to wake this early, though. My mornings started earlier two months ago when all the COVID-19 stuff started happening. I was recently transferred to the hospital project my company is working on clear across town – hence the new early morning routine.

Before COVID, I used to have some time when I first woke up to sit down and eat some oatmeal, do a light cardio workout, and drink a couple cups of coffee before heading out. My foreman would pick me up in the company crew cab F-250; ride share is one of the perks of working for a big outfit. All that has stopped now with COVID. I have to drive myself to work since we can’t all pack into the trucks like we used to.

The superintendent of the jobsite I am on said he would make special accommodations for fuel reimbursements and that we would see this on our paychecks, but that money has not hit my account yet. So I drive an hour to the jobsite each morning, and an hour from it each evening. Traffic isn’t that bad though. It used to be pretty terrible; not anymore. I wonder what all those former commuters are doing for work and money now? When I look at all those free lanes, I am sure thankful I still have a job.

I start a slow walk to the front gate of the hospital entrance, putting on my high-vis vest, safety glasses, gloves, and one of the nice masks my mom made for me. Through glasses made foggy by a combination of the cool morning air and the hot air trapped by the mask, I can see the typical safety posters strung up along the fence: “PPE required,” “Danger: Authorized Personnel Only,” and a big 10-foot-long one that says “Be Smart, Stay 6 Feet Apart.”

There are only a couple of guys waiting in line to get in, all standing on X’s spray-painted on the ground six feet apart all the way down the sidewalk and around the block. It is classified as a choke point where folks congregate, and it’s “closely monitored” by the site brass. The line to get in moves slowly; it usually takes way longer to get into the site than planned. All hands must stop at the guard shack to get a temporal thermometer scan from the guy at the gate. He also keeps a daily attendance log of all workers and visitors to know who we might have come into contact with.

Once past the gate we have our morning meetings, where we keep a solid six-foot distance between each other, don’t share pens to sign in, and keep our meeting numbers under 10 people. Our crew of five hits a quick stretch and flex, and then a toolbox training topic. Then we have our normal job safety analysis, where we talk about how we are going to keep from getting hurt and get the job done with the new COVID-19 job practices.

We have a superintendent on the hospital job who is the COVID-19 supervisor. He pulls double duty and is always there to check up on us and make sure we follow the COVID safety plan. He is our go-to guy for solutions to problems in this new world. He helps us find ways to modify the work, put up barriers between us, or use personal protective equipment that can help keep us from spreading germs to each other. After we check in with him, we go wipe down all our common shared drills, grinders and other tools before using them.

In the morning we strip out 80-pound Doka post shoring props from floors that have cured out, load them onto carts, and swing them up to the top floors where they can be used again. We take lunch and breaks in staggered shifts to avoid large concentrations of people. While eating lunch, I can smell the cleaners used on the folding tables. My company hired a bunch of folks to wipe down the common areas after we get done eating; they do a really good job.

One good thing I’ll say about the COVID jobsite practices is that our sanitation stuff is light-years better than it used to be. Prior to COVID it was kind of hard to find a place to wash our hands before eating. Now we have all kinds of handwashing stations – some my crew and I made ourselves. We wash our hands a lot throughout the day, and there are tissues, wipes, sanitizers and other materials we use to keep ourselves, our tools and our equipment clean. We work the remainder of the shift stripping plywood filler formwork from the intermediate floors, meet for an end-of-day debrief about what went well and what we can change up tomorrow.

So, that is a day for me, my crew, my job team and my company. The COVID protocols are inconvenient for me and my team, but we have proved we are able to stay almost as productive as we were before, and we are able to stay safe. Our crews have already had processes in place for managing risks way more dangerous COVID-19. Other than wearing masks that fog up my safety glasses, it’s really not that big of a deal for us.

I drive my truck back home through the very light traffic, head into the house, eat a good dinner, call it a day, and then prep to do it all again tomorrow.

Mike Salsgiver is the executive director of Associated General Contractors’ Oregon-Columbia chapter. Contact him at 503-685-8305 or mikes@agc-oregon.org.

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91ĘÓƵ guarantees the accuracy or completeness of any information published herein.

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What a difference a month makes.

At the beginning of March 2020, the construction economy – both nationally and in Oregon – continued its blazing performance. Volumes were at record highs, employment was at record levels, and companies were clamoring for additional workers. The dip or recession many people had forecast after five record years still had not materialized. The pipeline of work seemed strong for at least another year.

In mid-March, the economy of the entire world hit a wall – one we have come to know as “COVID-19.”

The coronavirus pandemic quickly brought about change in all aspects of our lives. No one is left untouched by its effects. Acting on concerns that the virus was new, that immunity to it was not present, that it was more contagious than other viruses, and that it was especially threatening or deadly to vulnerable citizens, government began to enact unprecedented and sweeping limits on social and economic activity. The result has within weeks brought the American economy to its knees.

Early on in the COVID situation, AGC strongly made the case that construction is essential to the ongoing economic stability of our state. Ensuring our roads and buildings are safe and sound and our schools are ready for the next class of students to come and go is crucial to our state’s continued economic success.

Already broad and strong, we’ve taken additional steps to strengthen our industry partner network here in Oregon, throughout the region, and across the country. We are working closely with our colleagues in the Oregon Home Builders Association, Southwest Washington Contractors Association, the National Association of Minority Contractors–Oregon and others to share information, align messages, and support one another in our work.

Oregon Gov. Kate Brown’s executive order charging all Oregonians to stay at home imposed six-foot social distancing requirements, ordered nonessential and nonprofit organizations to immediately implement telework or remote work arrangements, and ordered companies to immediately designate a social distancing officer to oversee and enforce social distancing requirements at the job site level.

Our industry has taken the threat of infection and community spread very seriously. We moved quickly in mid-March, taking action to protect our members and their companies and employees.

The construction industry has long had an unwavering commitment to the safety and health of every worker. It’s vital that companies do their part to push for additional safety measures. The message I recently passed on to our members was to continue that commitment to safety as safeguarding workers is of the utmost importance. Our industry is only as successful as our safety practices.

We’re suggesting further measures be added to existing protocols. Through social distancing reminders each morning, the additions of handwashing stations, and reinforcement of workplace hygiene protocols, we’re seeing the best in our members. We’re sharing pictures from member companies on Instagram, Twitter, Facebook and LinkedIn showcasing their social distancing practices and new methods of keeping employees safe and six feet apart.

Many priorities have emerged in this time of crisis, including the need to ensure the construction industry continues to operate, with proper job site safety and health guidelines being followed, social distancing requirements in place, and provision of resources to our members – to any contractor, in fact – that needs the information to work safely.

We quickly retooled our website to make it easier for members and visitors to make all our job site safety and health information available online. We have also moved to ensure that the latest news impacting our industry is available. From regulatory announcements, state agency news and legislative actions to safety protocols, we’re continually updating the stream of information.

Additional actions included: interpreting Gov. Brown’s and Washington Gov. Jay Inslee’s respective executive orders and communicating their directions, distributing job site guidelines with tips for setting up a social distancing officer and defining the role, and developing a legal and financial checklist.

The demand for personal protective equipment (PPE) isn’t slowing down. We sent a request to our members for them to donate undesignated supplies to health care professionals. From face masks to hand sanitizer, our industry stepped up to make donations.

Our chapter worked with our partners to inform state and local officials about the importance of keeping construction going to economic survival. Federal, state and local officials have relied on our assurances that social distancing, the use of PPE, and monitoring entrances of people into job sites creates a safe environment for work to continue.

Despite all of these efforts, there is still the possibility that construction in Oregon could be stopped. Contractors and workers must continue to take this situation seriously and execute the proper precautions. Any lapse in safety protocols can and likely will raise public concern that will prompt government officials with the stroke of a pen to reverse the industry’s ability to continue to operate. That is why ensuring that safe practices are known, understood and followed by everyone is paramount. AGC has resources to assist in that effort and will continue to share those safety resources to any and all members of the construction community, regardless of whether they are members of our association. The public is counting on all of us to do our part to prevent the spread of the coronavirus.

As long as construction is allowed to continue, we will move forward to keep Oregon building.

Mike Salsgiver is the executive director of Associated General Contractors’ Oregon-Columbia chapter. Contact him at 503-685-8305 or mikes@agc-oregon.org.

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91ĘÓƵ guarantees the accuracy or completeness of any information published herein.

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Oregon voters, get ready to sharpen your pencils. There are almost countless funding requests coming your way in the 2020 election season.

In Portland alone, residents will face a wide range of measures both on primary ballots in May, and on general election ballots in November. Many of the measures will ask voters whether to approve tax increases.

Statewide, businesses are experiencing a steady increase in tax liabilities. After the passage of the Corporate Activity Tax (in spite of voters rejecting a similar, higher tax by a 2-to-1 margin in 2016) and Paid Family and Medical Leave Program in 2019, government’s demand for more money from the pockets of everyday Oregonians and from Oregon businesses continues to stack up. It seems almost not a day goes by without another governmental request for new funds.

One tax measure in particular aims to address the homelessness crisis through a new income tax. Who would this target? Those with more than $125,000 in taxable income and couples making more than $250,000 would be taxed 1 percent of that income. By almost any measure, the burden is settling more and more on middle-income to upper-middle-income wage earners.

Here is a list of tax policy measures being considered for voters in Multnomah, Clackamas, and Washington counties:

• $250 million Metro business income and personal income tax increase
• $16 million city of Portland 10-cent-per-gallon gas tax renewal
• 3.9 percent personal income tax increase to fund universal preschool
• Multnomah County business income tax increase
• $3 billion Metro transportation tax package
• $1.4 billion Portland Public Schools bond
• $405 million Multnomah County library bond

When I survey the tax and spending landscape in today’s Oregon and try to make sense of it, my mind flashes back to a challenge facing my former employer, Intel, about 20 years ago.

In the late 1990s, Intel began to see a substantial flattening in the sale of personal computers. In those days, the microprocessors (i.e., Pentium chips) that were the brains of the computers were premium products. Computers, unless you were a computer hobbyist, were cumbersome and complex – and very expensive. The sales of personal and business computers with Intel’s chips in them were sinking at an alarming rate.

In its usual way, a team of interdepartmental experts went to work to gather data, evaluate it, and seek to understand the threat to computer sales. What that team found led to a term that has stayed with me ever since: the total cost of ownership.

Intel found that, even in the high-flying 1990s, there was a limit to what the vast majority of consumers were willing to pay to have a computer (or two) in their homes and offices. In short, average consumers and business owners were voting with their wallets, and computer sales were sinking. Because the company discovered this, they went to work to nearly completely reinvent the personal computer industry. Computers became faster, better and cheaper.

What happened because Intel discovered there was a limit to the total cost of ownership?

The personal and business computer industry diversified. We saw the birth of laptops, tablets, and smartphones. Because they were modular in their construction, the upgrade of a particular component – say, for example, a hard drive – didn’t mean the entire computer had to be scrapped. The company squeezed costs out of what it took to assemble a computer. The price of a computer dropped by as much as 90 percent, mostly because Pentium chips (and their later offspring) moved from being a premium component to a commodity. At the same time, however, their processing power grew almost exponentially. And overall, computers now last much, much longer.

What, you might ask, does this little trip down computer memory lane have to do with government taxing and spending?

I have long believed that the public equivalent to Intel’s “total cost of ownership” study is what I call the “total cost of citizenship.” In other words, at some point, taxpayers will have reached their financial limit in terms of what they are willing and able to pay to fund government programs and services, and they will stop supporting more taxes and push for reduced spending.

I believe it is likely that funding requests of all kinds – for schools, health care, addressing homelessness, infrastructure improvements – will begin to be rejected with little thought by the voter of their importance. Voters will focus on a proposal’s cost, and they will simply say, “No more.” In the face of a growing perception that government is “broken,” it will be easier for these voters to send a very clear message to the people they elect to fix the system before they send more dollars out the door.

One of the easy throwaway lines people often use when discussing government tax and spend issues is: “Government should run more like business.” In the end, government is not a private business. Its mission is vastly different.

And yet, to some degree, it would be a desirable thing to see government take some pointers from business. It would be to the broader public’s advantage if governments focused on a few core objectives and marshaled public resources toward addressing them in the least-cost, timely, and most efficient way possible. The increased use of business-like principles when administering government programs and services would be to everyone’s benefit – including government’s.

In being more self-aware and in tune with the financial concerns and limits of voters, government would operate much better and more affordably. And we might see the “total cost of citizenship” move from being a problem to an opportunity to achieve better-run, more supportable government programs into the foreseeable future.

Mike Salsgiver is the executive director of Associated General Contractors’ Oregon-Columbia chapter. Contact him at 503-685-8305 or mikes@agc-oregon.org.

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91ĘÓƵ guarantees the accuracy or completeness of any information published herein.

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The debate in Oregon surrounding climate change and what our state should and should not do lives on. This is a debate that will have profound consequences, and the Legislature’s response continues to be the most controversial and divisive issue of the 2020 session.

The basic premise of the cap-and-trade proposal is to require high-emitting industries (transportation, utility and manufacturing) to purchase “credits” in order to release emissions over the state-imposed cap.

Impacts from the proposed legislation will be felt across industries. Regulations placed on one industry will undoubtedly be matched with an increase in costs throughout the supply chain, with the costs of the entire program ultimately falling on consumers.

Seven people appointed by the governor will be the ultimate deciders of transportation costs, energy costs, and the ability for manufacturers to continue to operate facilities. Those facilities employ tens of thousands of Oregonians in mostly rural parts of the state.

As the debate has unfolded, the following are emerging as private industry’s biggest concerns with the proposed cap-and-trade program.

Highway Trust Fund

AGC’s opposition to the current proposal is based on a threat to the Highway Trust Fund. This fund comes from revenue from taxes and fees paid by private and commercial drivers in the state. The fund pays for maintenance and modernization of the existing and future state transportation system and has worked well for decades. The construction industry will be most affected by the impacts to this fund.

Because of its central importance to the state’s economy, Oregon’s voters put provisions into the state constitution to ensure fund revenues were spent appropriately.

Oregon’s current infrastructure needs repair. The American Society of Civil Engineers (ASCE) conducts a periodic assessment of each state’s infrastructure and associated funding systems. In 2019, ASCE graded the condition of Oregon’s overall infrastructure system a C- in its Infrastructure Report Card.

One portion of the cap-and-trade legislation would create a subaccount within the Highway Trust Fund to restrict the use of funds to exclusive projects including carbon reduction programs, culverts, nursery stock, etc. These provisions appear to unconstitutionally impact protected revenue streams, open the fund to uses not provided for in Oregon law, and begin a decline in revenues available for transportation improvement projects.

If this legislation passes, the decline of revenues to that fund will mean less money to maintain and preserve our most critical infrastructure. Any risk that jeopardizes the fund and continued use of that money to maintain and preserve our infrastructure is a gamble we’re not willing to make.

Cost containment and impacts

Cumulative increases to fuel costs for cars and trucks are another reason to be hesitant. The Low Carbon Fuel Standard, passed a few years ago; the recent significant transportation funding package, combined with indeterminate market conditions; and the combination of taxes paid at the pump are adding up. The stacking of multiple carbon programs will have a profound impact on all Oregon motorists, including freight haulers, and will have downstream negative impacts on the Oregon economy.

An additional tax on our fuel will place a significant burden on Oregon’s motorists and the economy as a whole. Current projections show a 22-cent-per-gallon increase in the first year of the program alone. Over the next few years, that is expected by some to climb to nearly $3 per gallon.

Threat to future investments

The push is for Oregon’s on-road and off-road users to make the switch to electric vehicles. Unfortunately, we’re a long way from that technology being equipped to become the main mode of transportation for commercial vehicles.

The anticipated decline in revenues compromises the ability to navigate future transportation investments, debt capacity and bonding possibilities. Additionally, Oregon’s counties and cities are likely to see slimmer budgets for road and bridge maintenance as revenues decline.

Burdensome mandates

The latest draft of the cap-and-trade bill contains complex and costly mandates relating to procurement, labor and public contracting. These mandates serve no carbon reduction purpose and would only result in dramatically increased project costs and frequently increased project delays, could potentially result in other states applying retaliatory reciprocal preferences, would make it functionally impossible for most local jurisdictions in the state to comply, and would inhibit the carbon program’s capacity to achieve its stated objectives.

Increases in the costs of transportation projects based on the provisions of the cap-and-trade proposal must be examined and estimated to determine the potential increase in material costs and reduced purchasing power.

Expedited review

As currently drafted, the bill contains expedited review provisions allowing for a broad group of individuals to petition the Supreme Court regarding the question of whether revenue from fuel allowances is subject to Article IX(3)a of the Oregon Constitution and is required to be deposited into the Highway Trust Fund. It appears the breadth of expedited review could easily lead to the Supreme Court ruling that these dollars are not subject to Article IX so they can spend the dollars on electric vehicle infrastructure, electric vehicle transition and other funding priorities.

Since 1942 there have been nine separate attempts to redirect funds from the Highway Trust Fund to other uses. Each time, Oregon’s voters have upheld the structure of the fund. Expedited review of cap and trade flies in the face of nearly 80 years of clear voter intent and clearly would contradict the voice of Oregonians.

One of the biggest problems is: what comes next? What are the consequences? The impacts to each industry and the trickle-down impact that most believe will lead to an increase in costs across the board, cause us great concern. Given Oregon’s minimal impact on global emission levels (0.14 percent), we believe the Legislature should continue to look at other ways to address climate change concerns and encourage a majority of legislators to oppose this bill.

Mike Salsgiver is the executive director of Associated General Contractors’ Oregon-Columbia chapter. Contact him at 503-685-8305 or mikes@agc-oregon.org.

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91ĘÓƵ guarantees the accuracy or completeness of any information published herein.

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In a few short weeks, the Oregon Legislature is scheduled to convene for about 35 days, in what is known as a short session. As in recent years, the session will be complex and dynamic as our elected leaders go head-to-head on policy ideas and goals while putting their fundraising and campaigning on hold.

This year’s short session will then open the door to what is likely to be one of the most intense and combative election cycles in modern history. Our state’s political structure may become further imbalanced, possibly adding to the supermajorities that exist in both the Oregon House and Senate.

Since statehood, Oregon’s legislative assembly has met in multi-month sessions every odd-numbered year. During those sessions our state representatives and state senators have gathered to consider, debate, pass and enact legislation deemed to be in the broader and long-term interest of the people.

The interim, the gap between “sine die” and the next session, was the period when our legislators returned to their communities, families and jobs. And during the interim, hearings were held, work groups met, budgets and fiscal conditions were reviewed, and the budget was rebalanced if necessary. Everyone – legislators, the governor, special interests and regular citizens – had time to pause, reflect, work together, improve proposals or prepare new ones. Then the process started all over again in January of the next odd-numbered year.

In those now seemingly long-ago days, the interim frequently led to meaningful conversations on any number of issues. Details were tweaked and problems dissected. Deep dives into policy allowed legislators and influencers to develop real ideas for positive change and real progress. The interim gave those involved in the legislative process the chance to catch their breath, to reflect, to cool down from the passions of the long legislative journey. The interim served to reboot the system, and it was where substantive work set the stage for the following session in the next odd-numbered year.

In 2010, Oregonians voted to adopt Measure 71, also known as the Oregon Legislature Annual Sessions Amendment, by a 68 percent to 32 percent margin. This vote changed the political and legislative landscape of the state. Because of it, Oregon joined many other states by adopting what is effectively an annual legislative cycle.

We’re now entering our fifth short session since 2010. Beginning on Feb. 3, the Legislature will once again be facing an agenda overflowing with ideas, and legislators – in much the same fashion as actors in Monty Python’s “100 Meter Dash for People with No Sense of Direction” – will be pulled in a myriad of directions. Bills will quickly pass the House and Senate and be signed, and some will make their way back to Salem in the 2021 long (six-plus months) session for additional tweaks and improvements.

In a calmer climate that would be tolerable, because legislators would work together to advance bills that enjoyed a consensus, and limit bills that were controversial or did not enjoy a clear majority of support from both parties.

And while there are advantages to a short session – increasing likelihood of avoiding special sessions and allowing legislators to stay focused and prepare for the long session – the environment of is most effective when it is used primarily as a budget rebalancing tool. Revenues and expenditures can be evaluated and reassessed accordingly, to deal with true emergencies, or address technical changes that may have been required from legislation passed in the previous long session.

Unfortunately, now we’re experiencing short sessions where heavy-hitting legislative concepts are introduced and expected to be vote-ready in less than a month. The deep dive that ought to partner such substantial legislation now rarely occurs because there simply isn’t sufficient time dedicated.

Our industry is likely to see several bills with the potential to impact the day-to-day bottom lines of our companies. These bills reflect issues that, if not properly vetted, may have extensive consequences. As reported last week, front and center will be the reintroduction of a bill to create a cap-and-trade system – the issue that led to the nationally-infamous walkout at the end of the 2019 regular session. This is precisely the kind of legislation that is not suited for a 35-day gathering.

Legislative proposals that impact our industry will affect small companies – those that form the backbone of the state’s economy – across the state. These proposals should be considered carefully and thoroughly. Under no circumstances should such sweeping legislative proposals be jammed through by supermajorities of either party and put into law in such a short period of time.

Making good laws and supportable policies is not a process that lends itself to quick decisions. The legislative process is supposed to work slowly to allow the many interests that make up our state the opportunity to understand what is being proposed, support those proposals if they can, and oppose them if they must.

We owe it to the people of our state and to the success of Oregon’s bottom line to take our time on issues relating to major policy installations. Limiting the scope of the upcoming legislative session – and all future ones – would be one giant step in that direction.

Mike Salsgiver is the executive director of Associated General Contractors’ Oregon-Columbia chapter. Contact him at 503-685-8305 or mikes@agc-oregon.org.

The post OP-ED: The danger posed by Oregon’s short legislative sessions appeared first on Daily Journal of Commerce.

As I mentioned in my March column, there are nearly 110,000 workers employed in the construction industry in Oregon (www.qualityinfo.org), and the outlook continues to be positive.

Over one-fifth of those workers are over the age of 55 and will retire within the next decade, according to Clackamas Workforce Partnership. With this looming decline in available workers, AGC worked with the governor’s office in Oregon to proclaim October “Careers in Construction Month … to increase public awareness and appreciation of construction craft professionals and the entire construction workforce,” to promote the hard work and dedication of craft workers, and narrow the skills gap by guiding youth and displaced workers into opportunities that lead to “rewarding, long-term, high-wage and high-demand careers in construction.”

Throughout October and into November there were several events that included employers, training programs, associations and schools that were designed to raise awareness of the vast opportunities within construction and other employment sectors, and the skills needed to enter those careers. National Manufacturing Week took place Sept. 30–Oct. 4, and nearly 1,500 students were exposed to the many and varied positions within this economic sector. Field trips, classroom speakers, and small group job shadows around the state made students aware of opportunities they may not have considered previously.

National Apprenticeship Week (Nov. 11–15) concluded recently, and once again students and instructors around the state visited employers and training centers, and invited speakers into their schools.

Rosendin Electric in Hillsboro is very invested in the future workforce. It invites schools in to hear an overview of the company, take a tour of its Building Information Modeling (BIM) lab, hear from employees about their pathways, and use virtual reality to see wires along with a hands-on project.

On Oregon’s north coast, EC Companies will be sending employees to Neah-Kah-Nie High School to discuss their career pathways and the skills needed to become an electrician. The Pacific Northwest Carpenters Institute will host several groups of students to learn about carpentry through a tour and hands-on project.

These are just a few of the many outreach efforts that employers and training centers around the state will be doing to inform students about careers in the industry specifically, but also skills needed, in general, to enter the workforce.

In addition to a focused week of information, high schools around the state are partnering with registered pre-apprenticeship programs to prepare students for apprenticeships in conjunction with community colleges. According to Megan Cogswell, director of apprenticeship at Chemeketa Community College, the Chemeketa Pre-Apprenticeship Program, approved by the BOLI Apprenticeship and Training Division, is active in 10 high schools in the mid-Willamette Valley and prepares students for registered apprenticeship and skilled trade careers. Their apprenticeship program supports four registered apprenticeships in a variety of ways: Mid-Valley Sheet Metal; Mid-Valley HVAC/R; training courses for plumbing apprentices registered with Area II Plumbers JATC; and related training coordination with IEC Oregon inside wire electrical apprentices.

Chemeketa is committed to recruiting diverse populations into the skilled trades and hosts groups of all ages in its Trades Information Center at its Salem campus. Chemeketa will be offering a winter Trades Skills Fundamentals class, including hand tool use, power tool use, blueprint reading, jobsite safety, and employability skills. Students will take first aid, CPR and OSHA 10 training, and there will be employers and job placement specialists to guide students in job searches and application at the end of the course.

Workforce partners around the state also recognize that the emerging workforce needs to be “skilled up,” and are collaborating with employers to introduce desired skills, and to help them understand how best to mentor and train workers. Clackamas Workforce Partnership is holding a one-day summit for employers on how they can benefit from hosting student interns. Elevate Lane County recently held a similar summit connecting educators and employers. Clatsop Works is yet another workforce investment board that has collaborated with local schools and employers to bring students into summer employment while providing entry-level employability skills.

The challenge for employers has been finding a workforce ready for employment with technical and work-readiness (employability) skills. It is encouraging that these collaborations and partnerships are being carried out across the state. With the anticipated retirement of a huge segment of the workforce over the next seven to 10 years, it is vital that we work together to expose, inform and train the incoming workforce.

Mike Salsgiver is the executive director of Associated General Contractors’ Oregon-Columbia chapter. Contact him at 503-685-8305 or mikes@agc-oregon.org.

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Each fall, AGC’s board officers and I travel to Washington, D.C., for the annual National and Chapter Leadership Conference, which is hosted by AGC of America. For years, the event has been held at the historic Willard Hotel, just two blocks from the White House. Among its many claims to fame, the Willard was the hotel at which Abraham Lincoln stayed the night before his first inauguration as president in 1861.

The first two days of the visit to Washington are spent attending the conference. Association leaders provide an overview of the operations, goals and activities at the national level. The conference also offers excellent educational breakout sessions, many opportunities for networking, and exposure to national-level speakers.

The trip in the fall is highlighted by visits with each of the Oregon and Washington members of the congressional delegation. This year, the Oregon-Columbia chapter team was able to meet with Sen. Jeff Merkley and Reps. Kurt Schrader, Suzanne Bonamici and Greg Walden. We also had excellent conversations with the very talented and informed staff representing Sen. Ron Wyden and Reps. Peter DeFazio and Earl Blumenauer.

In a week that was punctuated by political drama surrounding an announcement that the House of Representatives was proceeding with an impeachment inquiry, as well as the disruption caused by a citywide protest about climate change, the focus of the AGC team was on two primary topics: the need for federal investment in national infrastructure, and the need to train and place the workforce that will build that infrastructure.

One of the challenges facing the industry (indeed, the entire country) is reinvestment in our national infrastructure. Often, that word is thought to mean just transportation, and it’s true the need to build more roads and highways, make our bridges safer, and maintain and modernize the system is certainly great.

However, public infrastructure also has a variety of other meanings. Public buildings, communications systems, water and sewer systems, schools and public ports are in desperate need of a long-term, sustainable and predictable stream of funding.

One of the topics of discussion was urging the congressional delegation to work quickly to enact legislation to avoid a $7.6 billion rescission in funding for the Fixing America’s Surface Transportation (FAST) Act, which was passed by Congress and signed into law in 2015. Such a reduction would have a very negative effect on each state’s ability to fund transportation system improvements.

The FAST Act was the first longer-term transportation funding act passed in over a decade. It provided $305 billion in funding from federal fiscal years 2016 through 2020 for the nation’s transportation system. However, part of the FAST Act included provisions to reduce the cost of the bill by allowing $7.6 billion to be rescinded in 2020 unless Congress chose not to do so.

Each member of Congress was well-briefed on the rescission challenge, and each was committed to work to overturn the rescission before it takes effect in July 2020. AGC will continue to actively work to support legislation to overturn the rescission. It is possible such legislation could pass before the end of 2019.

The other focus of discussion with the delegation was on workforce development. The construction economy – particularly the industry’s vertical side – continues to perform at near-record or above-record volume levels. This achievement is more remarkable in that there are approximately one-third fewer commercial construction companies doing the work.

One of the major challenges facing the industry is the lack of sufficient skilled and trained workers. It is estimated that in Oregon alone, 5,000-10,000 additional construction workers could be put to work immediately to build the projects that are currently on the books.

In response to this challenge, AGC is beginning a study that will evaluate Oregon and Southwest Washington’s construction workforce training systems. The purpose of the study is to understand what programs exist, how they work together, and determine where they do not, and develop recommendations for improvement, better coordination and optimization of the system overall.

The study is under way and expected to finish by spring 2020. AGC’s leaders briefed the congressional delegation on this work. Every member was interested in being kept apprised of the outcome of the study upon completion.

The other highlight of the trip in September was the first AGC Government Relations Summit. This meeting was attended by over 60 AGC chapter executives and lead lobbyists. The purpose of the day was to compare information on issues and challenges being faced by AGC chapters across the country, and to begin the process of developing best practices to deal with these issues.

As the construction industry faces ongoing policy and political challenges across the nation, we are also heading into what will likely be a very contentious election year in 2020. The trip to Washington is always a good opportunity to better understand these challenges, compare notes, and gather energy for the work ahead of us next year.

Mike Salsgiver is the executive director of Associated General Contractors’ Oregon-Columbia chapter. Contact him at 503-685-8305 or mikes@agc-oregon.org.

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While discussing safety in most of my previous columns, my focus has been on traditional safety-related matters: work zone safety, accident prevention, workplace safety, and similar topics.

This month’s column is going to take a different turn.

About a year ago, a reporter called to ask if I had been hearing about, been aware of, or had any comment on increased incidence of suicide in the construction industry.

Frankly, the question caught me completely off guard.

For someone who is responsible for knowing as much about what is happening in the construction industry as possible, I was completely unaware that suicide was an issue at all, let alone a major issue.

At AGC’s recent summer convention earlier this month, a number of educational breakout sessions were held to provide training and education for construction industry professionals. One of these breakout sessions focused on the question of suicide in construction. This session was at once sobering and inspiring.

The course instructors, Cal Beyer of Lakeside industries and Mandy Kime of AGC of Washington, provided a thought-provoking, in-depth, and compassionate look at the challenge facing the industry in this previously taboo area.

According to Mr. Beyer, in 2016 there were more than 44,000 suicides in the United States. That year, the Centers for Disease Control released information studying suicides by occupation. Construction had the most total suicides and the second-highest rate of suicide of any industry sector. This rate turns out to be four times higher than in the general population. Suicides by men in the industry constitute almost 80% of the total.

For a variety of reasons, a collective response from the construction industry to this growing crisis has been picking up steam. Companies such as Lakeside, through the efforts of Mr. Beyer, have begun to lead the way.

The first step is to acknowledge the problem. As is the case with much of the rest of the industry, the first steps begin with management. Company leaders need to understand there is a problem and acknowledge it.

The second step is to adopt a concrete health and safety roadmap that includes suicide prevention. If a company already has programs in place to support a culture of care in the workplace, they are already ahead. Companies without such a culture face a much more challenging situation.

Once the issue is acknowledged and a health and safety roadmap is in place, company management and safety professionals must begin the arduous task of communicating the problem to their employees, as well as embarking on communicating resources available and suicide prevention strategies.

Most of us would ask: why is this a problem in the construction industry?

While there is no single answer to this question, there are a number of variables that begin to present themselves.

While its basic nature is changing, the construction industry is dominated by males. Construction employees work in an industry that can experience turbulent economic cycles, which can subject construction workers to significant financial and family stress. Men are also notorious for “stuffing“ mental or physical health challenges. In short, they are reluctant to ask for help.

Another challenging factor is the nature of the construction business. There are significant budget, productivity, schedule, quality, and safety challenges. These conditions can create an enormous amount of pressure, and individuals who are facing other serious challenges in their lives can be at risk for suicidal thoughts and behaviors.

Fortunately, the industry is beginning to rise to the challenge that suicide presents. Joining forces with other organizations around the nation, there are a number of resources available to individuals in the industry who are wrestling with thoughts of suicide, to their families, and to business owners and colleagues trying to help.

Suicide is preventable. The national suicide prevention lifeline is a free, confidential service that is available to anyone 24 hours a day, seven days a week. It provides crisis intervention for people having thoughts about self-harm or who are considering taking their life. Their telephone number is 800-273-8255.

Given the stresses of everyday life, combined with the challenges of dealing in a high stress, high risk industry, it is perhaps to be expected that suicide is a rising challenge. But it does not have to be a foregone conclusion.

AGC salutes individuals like Mr. Beyer and Ms. Kime for the work they are doing to educate construction industry workers and professionals, and the public at large. Significant progress has been made, but more must be done.

Industry leaders often say, with respect to safety, that their highest priority is getting their employees home safely at night. To accomplish that goal, we must be aware of and take steps to prevent, every challenge, every threat to someone safety.

Suicide prevention efforts are one more step toward accomplishing that goal.

Mike Salsgiver is the executive director of Associated General Contractors’ Oregon-Columbia chapter. Contact him at 503-685-8305 or mikes@agc-oregon.org.

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After the 2018 elections, there was a lot of talk about what a double supermajority would mean for business. After battles over taxes, environmental regulations, workplace laws and other business issues, challenges were to be expected in 2019.

Business lobbyists knew an uphill fight was ahead. We had no idea just how uphill the fight was going to be.

After some 3,000 bills were considered during one of the most contentious sessions in recent history, the Oregon Legislature adjourned the evening of Sunday, June 30. And now, it’s time to take stock of how construction fared in 2019.

Oregon’s commercial construction industry will undoubtedly be affected by a host of bills. In many cases – particularly with the imposition of a gross receipts tax – the effects will be harmful to almost every small business owner’s bottom line.

And yet, in many ways, our industry fared quite well. Given the political landscape and dominant supermajorities, a tight focus on key priorities allowed our industry to navigate what was otherwise a very stormy legislative session.

Here is a snapshot of the bills that failed to reach the governor’s desk and those that did.

The bills that didn’t survive:

• Potential raid of SAIF’s reserves: This proposal was taken off the table, saving businesses that rely on a strong, stable workers’ compensation system from the likely outcome of decreased worker safety and increased rates. A coalition representing a broad cross-section of Oregon’s strongest industries worked to ensure the importance of a financially sound SAIF Corporation was communicated with Oregon’s legislative members.
• HB 3022 (changes to workers’ compensation): After months of discussions by industry stakeholders, employee representatives and the Management-Labor Advisory Committee, the proposed changes to Oregon’s workers’ compensation system were ultimately tabled this session. AGC strongly supports the workers’ compensation system that has developed since the Mahonia Hall reforms of the early 1990s. The system has worked well to provide protections and recovery programs for injured workers, and AGC will continue to take the lead in defending the integrity of this program.
• HB 2407, HB 2408, HB 2409, HB 2414 (prevailing wage/public works): A suite of bills introduced this session would have changed the public works market. HB 2408 would have required prevailing wage on projects that receive tax subsidies, including enterprise zones, strategic investment programs, etc. This was the only bill of this suite to pass out of the House, but it died in a Senate committee. Two other bills, HB 2407 and HB 2409, would have changed the calculation formula for prevailing wage rates by reducing the number of districts and possibly eliminating the prevailing wage survey. HB 2414, if passed, would have required manufacturing facilities producing prefabricated materials used in public works pay prevailing wage.
• SB 379, HB 2655 (marijuana accommodation in the workplace): Continuing the theme of worker and public safety, AGC opposed and was able to help defeat proposals to require Oregon’s employers to accommodate use of marijuana by their employees. These proposals would have kept employers from taking any employment action against employees for their “legal substance” use during off-duty hours. Although Oregon has legalized marijuana use for medical and recreational purposes, the federal government has not. The lack of a reliable impairment test for marijuana prevents employers from knowing whether an employee is impaired on the jobsite, if they’re allowed to use marijuana in off-duty hours. This would place workers and public safety in jeopardy.
• HB 2020 (cap and trade): The proposed cap and trade program was “Ground Zero” in defining the political division of the session. The stated purpose of the bill was to establish a program that would curb carbon emissions from our state’s largest emitters. As proposed, the bill’s unintended consequences to everyday Oregonians proved to be its breaking point. Rural Oregon stakeholders made their opinions known, and it appears, for now, lawmakers listened.

Bills that passed:

• HB 2415 (retainage): Changes to Oregon’s retainage law passed this session, and after many versions of the bill, what ultimately passed is a requirement that the retainage for contracts over $500,000 be placed into an interest-bearing escrow account.
• SB 455 (apprenticeship requirements): Community and state college projects will now require contractors to be BOLI licensed training agents for projects over $8 million.
• HB 2005 (paid family leave): Oregon’s new paid family leave program allows for 12 weeks of paid leave for employees and will be funded by a 40 percent employer and 60 percent employee paid payroll tax. This bill is preferable to several other proposals from this session, one of which would have granted 32 weeks of paid family leave. The payroll tax collection begins in 2022 and the leave is permissible starting in 2023.
• HB 2007 (diesel): As introduced, the bill proposed a statewide regulation on all older medium and heavy duty on-road diesel trucks and stringent public contracting clean diesel requirements. After months of negotiations with the bill’s sponsors, a more limited HB 2007B passed with on-duty regulations restricted to the Portland tri-county area and with the public contracting requirements limited to state projects, only over $20 million, in the Portland tri-county area.
• HB 3247 (taxes): Oregon’s new gross receipts tax goes into effect Jan. 1, 2020. Until then, we’ll be working on providing technical assistance to our members. This is an incredibly complex new tax that will apply to in-state revenues over $1 million. Rulemaking through Oregon’s Department of Revenue will begin later this year.

Oregon’s legislative session in 2019 was one of the most complex and politically charged in recent decades. The construction industry, and the business community as a whole, continue to be the focal points for efforts to generate revenues.

Of course, there will come a time when the well runs dry. What will happen then?

Mike Salsgiver is the executive director of Associated General Contractors’ Oregon-Columbia chapter. Contact him at 503-685-8305 or mikes@agc-oregon.org.

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