Skyrocketing diesel prices are reverberating through the construction industry, leading contractors and subcontractors to boost their bids as well as project cost increases.

“It’s significant,” said Mike Salsgiver, CEO of the Associated General Contractors‘ Oregon-Columbia chapter. “(Diesel) prices have effectively doubled or more since March. So, it hits the economy overall and the industry badly.”

For contractors and subcontractors, the costs are unavoidable. Diesel runs nearly everything on a typical jobsite, from backhoes and excavators to dump trucks and cranes. Diesel also powers the cargo ships, trains and trucks that bring building materials to a site.

Diesel fuel in Oregon averaged $6.04 per gallon at retail on Tuesday, according to AAA‘s Fuel Gauge Report. That’s up 46.5 percent from a year ago, when prices hovered close to $4 a gallon. Retail prices have dropped recently, down about 21 cents per gallon in the past month.

There’s little that contractors can do to avoid paying higher diesel costs, Salsgiver said.

“The work is the work,” he said. “We’re always making strides on making equipment more efficient, but (for avoiding costs), the immediate answer is not really.”

Project owners are noticing the effects. In April, the Oregon Department of Transportation paid contractors about 1 percent more than expected if fuel prices had remained unchanged.

ODOT uses a “fuel escalation/de-escalation” clause in its contracts. Contractors do not have to build in extra costs to cover fuel price increases after they submit a bid. Instead, ODOT adjusts payments after a project begins construction based on a monthly fuel price index.

“We expect prices to change, and our contracts make allowances for price fluctuations,” ODOT spokeswoman Katherine Benenati stated in an email message.

ODOT paid $4.66 per gallon in May, up from $2.51 a year earlier — a nearly 86 percent increase.

If prices remain high, the situation could eat into project budgets for major multibillion-dollar projects such as the Interstate 5 Rose Quarter Improvement Project, and the efforts to replace the Interstate and Burnside bridges.

Diesel price spikes are likely to hit large road and infrastructure projects the hardest, said Macrina Wilkins, director of market insights for AGC of America. That’s because diesel is used in the manufacturing processes for road materials, in addition to the work itself.

So far, AGC is tracking a modest escalation in costs.

“What we’re seeing is a slight uptick in the price of a bid or project,” she said.

Energy prices grew 10.1 percent in March and 7.8 percent in April, according to the Bureau of Labor Statistics‘ Producer Price Index.

“I would expect — as with any supply shock — you might see it begin to trickle into other areas,” Wilkins said.

Adding to contractors’ caution is the uncertainty of the United States’ ongoing conflict with Iran, industry officials said. It’s not clear when oil will resume flowing through the Strait of Hormuz at normal rates.

Salsgiver said he expects this price spike to endure longer than the 2022 disruption caused by Russia’s invasion of Ukraine.

“This one is dragging out a lot longer,” he said. “Certainly, as long as the situation in Iran is what it is, it’s going to last a while.”

Salsgiver added, “I’m not an economist, but I talk to economists, and they do not see an early end to this price spike.”

Contractors have so far largely taken the increased costs in stride. Dan Drinkward, vice president at Hoffman Construction, said the effects are hard to discern by general contractors. Subcontractors may notice the price spike first, he said.

“I would expect it to be a driver of escalation,” Drinkward said, adding that it’s only one component of increased costs across the industry. “For the most part, it’s a second-degree driver of escalation.”

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By Ethan Duran
91��Ƶ Newswires

Stephen E. Sandherr, the CEO of the (AGC), on Monday announced he will retire in spring of 2024 after serving in commercial construction leadership for nearly 30 years. The association’s chief operating officer, Jeffrey Shoaf, will step in as the next CEO.

Sandherr has been CEO of the association of the commercial construction industry for 27 years and served it for 37 years in different capacities, AGC officials said. His retirement will be effective March 31, 2024.

AGC National President Lester Snyder, who also serves as executive vice president of Brightline West in Las Vegas, shared a farewell message.

“While we support Steve moving on to the next phase of his life, our members are grateful for his strong leadership for more than a quarter of a century. He has built a fantastic team at AGC, elevated our advocacy efforts and committed the organization to address all issues affecting the construction industry,” Snyder added.

“I am grateful to have retained the confidence of AGC’s officers and Board for these many years,” Sandherr said in a statement. “I am also fortunate to have had the opportunity to work with smart and talented colleagues to advance AGC’s mission throughout my career.”

The association selection committee named Shoaf the new CEO, and he brings nearly 30 years of experience to the new position, officials said. Shoaf served as COO since 2017 and joined AGC in 1994, officials added.

Shoaf graduated from James Madison University in Virginia, officials said. Before joining the AGC, he was a staff member for the U.S. House Transportation and Infrastructure Committee. Shoaf oversaw AGC government relation activities before his promotion.

“This is a great honor for me and a heady responsibility. Steve has enhanced AGC’s stature within the construction industry with key decision makers for more than 30 years,” Shoaf said in a statement. “We will continue to utilize that stature and the skilled people who work here to innovate and advocate for the industry.”

The selection committee is made up of seven former AGC presidents. Dan Fordice, the 2022 president, is the chair and serves as vice president of Fordice Construction in Vicksburg, Mississippi.

“Our selection committee viewed our responsibility to choose a new CEO who would maintain AGC’s status as ‘The Construction Association’ while protecting the staff culture that has contributed to many successes. Jeff’s background, experience and dedication to our mission made him the right choice for the job,” Fordice said in a statement.

AGC has 80 chapters and over 27,000 member firms, according to officials.

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The Associated General Contractors (AGC) announced the construction industry added 19,000 jobs in July while the sector’s unemployment rate increased, according to a recent data analysis. Employers are bumping pay levels up in search of labor which has drawn previously employed workers back into the job market, AGC officials added.

“The construction industry continues to add workers at a steady clip as demand for many types of construction remains strong. Firms are boosting pay to cope with tight labor market conditions, which is bringing more former workers back into the job market,” said Stephen E. Sandherr, chief executive officer of AGC.

As of July, there were 7.9 million people employed in the construction industry, an addition of 19,000 compared to June, AGC officials said. That number is seasonally adjusted. Construction added 198,000 jobs (2.5%) during the past 12 months, officials added.

Nonresidential construction, which includes nonresidential building and specialty trade contractors and heavy and civil engineering construction firms, added 10,600 employees (3.1%) in July, according to AGC. Residential building and specialty trade contractors grew employment by 7,800 (1.8%).

The construction unemployment rate was 3.9% in July, an increase over June (3.6%) and May (3.5%), according to the Bureau of Labor Statistics (BLS). That’s a higher year-over-year rate compared to 3.5% in July of 2022.

According to AGC analysts, a separate government release reported there were 378,000 openings at construction firms at the last day of June, close to the record high for June set in 2022.

The average hourly earnings for production and nonsupervisory employees in construction, including most onsite craft workers as well as many office workers, jumped 5.8% year-over-year to $32.24 per hour, AGC officials said. In July, Construction companies provided a wage “premium” of just over 18% compared to the average hourly earnings for all private-sector production employees, officials added.

Labor shortages in construction still loom over federal investments in infrastructure (Infrastructure Investment and Jobs Act), semiconductor chip plants (CHIPS and Science Act) and green energy construction, association officials said. AGC, which lobbies to the U.S. government, urged federal officials to boost funding for construction education and training programs.

Officials noted the federal government spends five times as much encouraging students to attend colleges as it does on career and technical education programs.

“Unless federal officials begin to narrow the funding gap between college prep and career training the construction industry will continue to struggle to find workers. It is great that federal officials want to invest in construction projects, they also need to invest in construction workforce development,” said Sandherr.

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By Dan Heilman
91��Ƶ Newswires

Rule changes proposed by the U.S. Department of Labor would seek to clarify the personal protective equipment (PPE) standard for the construction industry. The proposed change would clarify that PPE must fit each employee properly to protect them from occupational hazards.

As it now stands, the standard does not state clearly that PPE must fit each affected employee properly — as general industry and maritime standards from the Occupational Safety and Health Administration (OSHA) do.

The proposed rule clarifies the existing requirement, which states that protective equipment “shall be provided, used, and maintained in a sanitary and reliable condition wherever it is necessary.”

Local observers applauded the proposed changes with some reservations. While the Labor Department says that OSHA does not expect the change to increase employers’ costs or compliance burdens, Polly Friendshuh, academic dean of construction sciences and business with Dunwoody Institute, wonders how that’s possible.

“As a woman who has worked in the field, I can say that having better-fitting equipment would be huge,” she said. “But looking at the flip side, I can see the economics of it. For owners, there’s an added cost, including manufacturing. You can’t eliminate those things. There are some unintended consequences to the proposal.”

OSHA’s cost analysis of the proposal said that the one-time cost of it to the construction industry, attributable to potential changes in employer behavior, would be around $545,000.

According to the Bureau of Labor Statistics, of the approximately 7.7 million people employed in the U.S. construction industry, about 14% are female. An announcement of the proposed revisions noted that failure of standard-sized PPE to protect physically smaller workers properly, as well as problems with access to properly fitting PPE, have long been a source of safety and health concerns.

“The choice of PPE is as important as how the PPE fits,” said Matt Semerad, director of safety services and education at Associated General Contractors of Minnesota. “Much of the equipment that we bring to the job site for personal protection, if it doesn’t fit correctly, it doesn’t protect the employee.”

One potential hang-up pointed to by Semerad is enforcement of any new rules. The Construction Industry Safety Coalition has noted in the past that in many cases, whether PPE properly fits would be hard for employers to assess.

“[T]he subjective nature of this standard would greatly increase the potential for enforcement actions without giving employers fair notice of what is required,” CISC wrote to OSHA in 2017.

“As I read the proposal, I think of not only gloves, but also respiratory protection, hearing protection, hard hats and safety vests,” said Semerad. “There are different degrees of severity among violations, and I don’t know how they’ll be punished.”

Semerad said he couldn’t cite figures reflecting how often poorly fitting equipment leads to injuries but could anecdotally recall such instances from his days on the job.

Likewise, Friendshuh said that at least once her ears were rubbed raw by an ill-fitting hard hat, to the point where one employer special-ordered a hat that would fit her.

“I know that when I would show up at a shop, they would have mainly medium, large and XL,” she said. “People come in so many different shapes and sizes. You’re less apt to wear equipment that doesn’t fit right.”

Despite misgivings about the details, Semerad said he supports the proposed changes.

“It’s important that we look at this thing,” he said. “I’ve seen video of people with loose safety vests getting caught in machinery, which is terrifying. It should be acknowledged that safety equipment that doesn’t fit properly can create a hazard. I’m on board with it; I’m just not sure exactly how it’s going to pan out.”

Those concerned have until Sept. 18 to submit comments and hearing requests via the Federal eRulemaking Portal, and are asked to refer to Docket No. OSHA-2019-0003 l. The entire proposal can be seen at .

“We look forward to hearing from stakeholders on this issue as we ensure that construction workers of all genders and sizes are fitted properly with safety gear,” stated Doug Parker, assistant secretary for occupational safety and health at the Labor Department.

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Construction jobs rose nearly 4 percent compared to last year and wages had their biggest year-over-year increase in 40 years, analysts for the Associated General Contractors of America said.

Construction employment added 19,000 jobs last month, a Bureau of Labor Statistics report showed. Jobs totaled 7,719,000 in September, a 3.9 percent increase (292,000 added jobs) compared to 2021, the AGC analysis said. The analysis pulls information from research firms, industry indexes and national surveys.

Residential building and specialty trade contractors rose by 6,400 last month, leading to a 3.6 percent increase (110,500 jobs) compared to 2021, the analysis said. Employment at civil engineering construction firms, building and specialty trades climbed by 13,100 for the month and led to a 4.2 percent (181,500 jobs) year-over-year increase.

Average hourly earnings were $32.83 per hour for production and nonsupervisory employees in construction, or a 6.7 percent increase compared to 2021, the analysis said. Wages had the largest increase for the first time in 40 years and exceeded the 5.8 percent increase for all private sector employees, the AGC added.

Unemployed jobseekers in the construction field fell by 98,000 or 22 percent year-over-year to 346,000, the analysis said. The industry’s unemployment rate fell from 4.5 percent to 3.4 percent without adjustment for seasonal work.

At the end of August, there were 437,000 job openings in construction. The report said hiring increased by 4,000 or 1.1 percent year-over-year to 378,000 and layoffs fell by 33,000 (20 percent) year-over-year to 129,000. The number of people quitting jumped by 46,000 or 20 percent to 281,000.

Many contractors reported their lead times worsened, according to a survey where 93 percent of 602 respondents said they were facing long lead times for construction materials. Respondents said they were unlikely able to locally source materials like steel, nonferrous metals, plastic products, electrical equipment and HVAC systems.

On the flip side, aggregates and concrete producers said they had additional price increases for the past two to three months, according to a report from Thompson Research Group. Investment research firm officials said price increases over the fall were a mixed bag and fall aggregate prices would be implemented on a market-by-market basis. Fall cement pricing actions will be pushed to January, officials added.

Economic activity in the services sector grew in September for over two years, a report from the Institute for Supply management said. Meanwhile, construction delays affected 90 percent of multifamily owners and developers, a survey from the National Multifamily Housing Council showed.

The Dodge Momentum Index, a monthly report of nonresidential building project plans, rose 5.7 percent in September from August and 26 percent year-over-year, the analysis said. While the institutional part of the index rose 12 percent for the month and 28 percent year-over-year, the commercial component increased 2.9 percent and 25 percent respectively.

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A national survey of contractors has found those who use lean construction methods on their projects are more likely to complete their jobs on time and under budget and achieve other goals such as having safe jobsites and producing high quality work.

The survey, conducted by the Associated General Contractors of America, polled 336 contractors about how lean construction methods can be used to bring about better outcomes on various types of projects. The survey sought to identify specific ways in which lean methods could turn a typical project into an exceptional one.

Ashley Phelps, assistant director of supply chain management at Gilbane Construction, said during a virtual webinar on the survey results that working directly with employees to identify and solve problems on jobsites can lead to better results. The AGC’s survey found that 59 percent of the respondents who had worked on what they deemed exceptional projects had taken steps to engage their workers in problem-solving.

“Get those people involved in making decisions on the job, that will yield you better project outcomes,” she said.

The AGC’s survey collected responses from 187 general contractors or construction managers,  108 specialty contractors and 41 heavy civil firms. It asked the respondents to compare the results on their best projects with those from their typical projects in an attempt at identifying how lean construction methods can lead to improvements.

According to the results, 51 percent of the respondents’ best projects came in under budget, whereas only 23 percent of their typical projects did. Likewise, about three-quarters of the respondents’ exceptional projects were completed with zero safety incidents, whereas 48 percent of the typical projects had no safety incidents.

The survey also found that strong profits resulted from 60 percent of the high-intensity lean projects, but only from half of those on which lean methods were used sparingly.

Phelps said there were several practices that appeared to produce the best “bang for your buck.” Contractors, for instance, were most successful at avoiding injuries when they kept their jobsites clean. The survey found that cleanliness was a priority on 51 percent of the projects deemed exceptional but only on 35 percent of the typical projects.

Contractors who made early contributions to design work also delivered better projects. And those who talked to clients at the start of a project to try to understand what would make them happy were also more likely to complete successful projects.

Among the other steps that were found to be effective were:

• Adopting a Last Planner System, which can help a superintendent or foreman ensure workers have the tools they need to perform a task;
• Using Building Information Modeling software, or BIM, on projects;
• Making sure that project contingencies are managed with customers; and
• Conducting post-occupancy evaluation checks at regular intervals.

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The Associated General Contractors of America, along with two other construction groups, filed a legal challenge Monday to the Biden Administration’s workplace vaccine requirement.

AGC joined the American Road and Transportation Builders Association and the Signatory Wall and Ceiling Contractors Alliance in filing a petition challenging a rule that will require employees of large contractors to be vaccinated or undergo regular COVID-19 testing.

The Occupational Safety and Health Administration published an emergency rule earlier this month calling on employers with 100 or more workers to ensure their workers are vaccinated by Jan. 4. In doing so, the AGC joins the Associated Builders and Contractors two dozen states and a variety of other organizations in mounting formal legal challenges of the OSHA mandate.

The trade group’s petition argues OSHA’s order will prompt “badly needed” employees to leave larger contractors or the construction industry at large in order to avoid the vaccine mandate. The legal action, filed in Virginia’s Fourth Circuit Court of Appeals, contends OSHA has no statutory authority to require vaccinations.

“The new rule will put many construction companies at grave risk of losing a substantial number of their workers to smaller companies, instead of leading to more people getting vaccinated in the sector,” said Stephen Sandherr, AGC chief executive.

OSHA’s vaccine mandate will affect an estimated 84 million American workers, requiring them to get vaccinated or undergo weekly COVID-19 tests. Companies that don’t comply with the order could be hit with fines running as high as $14,000 for each employee. Biden administration officials have argued the mandate is needed to avoid having a patchwork of local rules and to slow the spread of the virus.

The agency is separately requiring federal contractors and subcontractors to show, by Dec. 8, that their workers have been vaccinated.

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By Nate Beck
91��Ƶ Newswires

A year and a half into the pandemic, contractors are contending once again with a shortage of skilled labor that’s compounding supply chain delays and project disruptions.

Before the pandemic, contractors broadly faced a lack of labor, although firms enjoyed a backlog of projects. Results of a survey from the Associated General Contractors of America released Thursday, however, show contractors are facing a labor shortage along with supply-chain disruptions, materials cost increases and other problems brought on by the pandemic.

“Market conditions are nowhere near as robust as they were prior to the onset of the pandemic,” said Ken Simonson, the association’s chief economist. “At the same time, the pandemic and political responses to it are limiting the size of the workforce, leading to labor shortages that are as severe as they were in 2019 when demand for construction was more robust.”

AGC surveyed 2,100 contractors nationally — including 76 in Oregon — to gauge the ongoing effects of COVID on the construction industry. Contractors in recent months have been hampered by delays in the delivery of materials and rapid increases in the cost of building materials.

In AGC’s latest survey, however, many firms reported an acute shortage of labor as well. The shortage of labor is one factor that’s causing nearly nine out of 10 contractors surveyed to say they’ve seen project delays in recent months, Simonson said.

About three-quarters of contractors surveyed nationally said they have increased pay to attract more workers, while about one-third of respondents said they had added hiring bonuses to attract more workers.

Nationally, 75 percent of contractors surveyed said a shortage of materials was leading to project delays. Meanwhile, 61 percent of firms said a shortage of labor had led to project delays.

Stephen Sandherr, AGC’s CEO, said the trade group is calling on Congress to pass an infrastructure package that would bring the construction industry more work. AGC is also advocating for more support for training skilled construction workers.

“The federal government currently spends only one dollar on career training for every six it puts into college prep, despite the fact only one-in-three jobs requires a college degree,” Sandherr said. “Boosting federal investments in career and technical education will help attract and prepare more people into high-paying careers in construction.”

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The Associated General Contractors of America has launched a that pushes for the reduction of carbon-intensive projects.

“There is no doubt that the climate issue is of global importance and that any ultimate solution will need to be addressed on a global scale,” AGC Chief Executive Officer Stephen Sandherr said. “That being said, the construction industry is key to any measures needed to make our economy more efficient, less carbon intensive and more resilient.”

While the construction industry is responsible for approximately 1-2 percent of the nation’s total greenhouse gas emissions, according to the U.S. Environmental Protection Agency, buildings in 2019 accounted for 31 percent. As a result, the bulk of the initiative’s effort is to push public and private project owners to build more efficient projects and discover how to support them in that process.

AGC outlined steps that public officials and the construction industry should take to address the built environment’s impacts on climate change.

One measure calls for a national strategy to invest in physical infrastructure that will make communities more resilient as well as increase investments and funding opportunities for public and private infrastructure.

The association will also push for new federal investments to modernize federal buildings and support government initiatives that encourage sustainability in the built environment. This includes expanding the Section 179D deduction for energy efficiency, a tax dedication of up to $1.80 per square foot for building owners installing energy-efficient systems and buildings.

The initiative also identified steps that contractors could take to reduce their carbon output, such as use of solar-powered trailers and energy-efficient jobsite lighting, and creation of anti-idling policies. For example, the report cited Kiewit Corp., a construction company, estimated fuel savings of more than $800,000 on just one project after introducing an anti-idling policy.

Also, the AGC says contractors should engage with equipment manufacturers to improve construction machines’ fuel efficiency without sacrificing performance.

A special climate change task force created earlier this year crafted the new initiative. Representatives of 18 member firms participated in the task force meetings and helped prepare the recommendations.

“How we build is far less of the problem than what we build,” said Les Snyder, chairman of the task force. “And while the construction industry has traditionally had very little say about what our clients – private and public – want constructed, it is time for that to change.”

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Nationally, construction employment fell in May, the industry’s formerly premium hourly earnings are diminishing, and lumber prices remain high, according to a new report by the Associated General Contractors of America.

The organization’s lead economist, Ken Simonson, recently spoke with the 91��Ƶ about the latest industry statistics and trends such as supply chain disruptions.

“The number one and two things contractors are concerned about right now (are) cost (and) the supply chain,” Simonson said. “I’d say number three, and it’s higher on some companies’ rankings, is getting the workers they need.”

Construction employment dropped by 20,000 in May from April, according to AGC’s analysis of recent U.S. Bureau of Labor Statistics data. That is the third decline in the past four months. Overall, the employment total of May was 2.9 percent below the total of February 2020.

“Residential construction employment is now higher than it was in the pre-pandemic peak month in February 2020,” Simonson said. “But nonresidential construction has declined from April to May and has then fallen more in percentage terms than in the overall economy.”

The gap between residential and nonresidential construction employment widened. Employment for residential (residential building and specialty trade contractors) edged up by 1,900 in May. But employment for nonresidential (building, specialty trades, and heavy and civil engineering construction) shrank by 21,800 in May – 5.6 percent below the total of February 2020.

“There is a huge dichotomy in construction right now, yet all contractors are experiencing these price increases and supply-chain disruptions,” Simonson said.

The Bureau of Labor Statistics also reported that average hourly earnings for construction in April were $32.59 – 8 percent more than the average for the nonfarm private sector. However, that advantage has shrunk over the past two years.

Pay has not been rising as quickly for construction as for other industries, Simonson said. This could be one of the difficulties that contractors are facing when they try to hire more employees.

The construction industry as a whole still pays more than the average hourly wage for the entire economy, Simonson said, but there is nevertheless competition for workers.

In a glimmer of good news for builders, prices for multiple kinds of straight boards have been dropping. That is not the case for oriented strand boards – though “perhaps we’re near the top on those prices,” Simonson said.

“On the whole, it’s still going to be a squeeze for contractors first to find enough projects, and then second to find the workers, and then third to get the materials and to be able to pay for them,” he said.

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