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Every unmet industry need creates an opportunity for manufacturers and suppliers in that segment.

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Ed Hudson, MBA
January 12, 2018

Be the Solution: New Product Strategies for Current Construction Labor Shortage

It’s no secret that there is a labor shortage in construction. Many talented workers left the industry when the housing industry crashed in the mid-2000’s and never returned. Now the industry is rebounding faster than the labor markets can supply new skilled and unskilled workers, thus limiting the pace of the rebound. An active hurricane season in the Gulf states, and extensive wildfires (and subsequent flooding) in the West have added to the burden.

Percent of Builders Reporting Labor Shortages

Source: NAHB/Wells Fargo Housing Market Index Survey

But every unmet building industry need creates an opportunity for manufacturers and suppliers in that segment of the industry. Over the past several years, Home Innovation Research Labs has conducted dozens of studies on new labor-saving materials, tools, equipment, and installation techniques. As a result, we’ve gained a great deal of insight into the dynamics of saving installation time. With each new exploration, there are always opportunities that reveal themselves.

Below are some recent insights we’ve gleaned for manufacturers on how to tap into the needs that have arisen during the labor shortage:

  • Create opportunities that encourage piece rates for installers — they find ways to work more efficiently and make more money. Make installation of a product or system “foolproof” so that that upping the installation speed doesn’t have an impact on quality or reliability.
  • Encourage ways or provide the means to shift work to the factory or shop. With framing labor near the top of the shortage list, it’s baffling that factory-built wall panels still represent less than 10% of all new home construction, and modular represents only about 2%. Panelization requires more precise coordination and scheduling, and builders we’ve surveyed have told us their supervisory staff and installation crews are not suited to the task. This has led some panelizers to offer turn-key solutions.
  • Develop new products that can allow for a single trade to do the work of two or more. We recently conducted a market study of a highly realistic and durable stone material that can be cut and installed by siding contractors instead of masons – the market feedback was overwhelmingly positive. Flooring, an area where different skills and trades are often required (e.g., tile, wood, vinyl, carpeting), may be product category that can similarly benefit from this kind of labor consolidation or elimination of specialty skills in the current climate. Traditionally, builders and contractors have been resistant to increases in cost of materials despite labor savings, but the climate has changed enough to cause them to re-think past refusals to pay the upcharge to get the job done more quickly.

These are just a few of the ideas that have come out of recent research efforts. Are these applicable for your product or product category? I’ll be sharing more ideas like these in the coming weeks. If you’d like to discuss these or how we can help you develop a custom path to “be the solution,” let me know.

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Comments

Blair Gilbert
January 12, 2018 3:55 PM
"I remain puzzled about why the industry continues in the same, age old, paradigms as it relates to construction. You mention "factory" manufacturing which has so many benefits ... far too many to mention but alas ... it doesn't happen. And to take it a step further, continuing to use wood which creates more landfill than it does finished homes. I humbly submit that until there's a total mind shift the challenges you note will not go away."