Underground Infrastructure - July 2023 - 13

UTILITY&COMMUNICATIONS
Construction Update
Daniel Shumate | Managing Director, FMI Capital Advisors Inc.
As the construction season jumped
into full swing, the impacts of labor,
equipment and government regulation
on the contractor are highly impactful.
Aſt er another month in June of construction
employment gains (25,000 new
jobs) in the U.S. economy, the challenge
of fi nding labor to complete the potential
work remains high.
Th e U.S. Bureau of Labor Statistics
projects that employment of electricians,
plumbers, pipefi tt ers and steamfi tt ers
will grow 10 percent from 2020 to 2030,
much faster than the average for all occupations.
Th is growth is expected due to
the need to maintain and upgrade the nation's
aging infrastructure, as well as the
increasing demand for renewable energy
sources. Additionally, there is a signifi cant
demographic challenge due to an aging
workforce and a hesitation by current
generations to enter the fi eld.
As of May 2023, over 500,000 jobs remained
unfi lled. FIGURE 1 demonstrates
the growth in construction industry employment
post-pandemic and that att racting
new workers is becoming increasingly
more diffi cult.
Th e labor shortage creates some negative
eff ects including:
* Increased costs of construction
* Project delays for critical infrastructure
projects
* Reduced quality and productivity
due to inexperience
Th e construction industry is working
to address the labor shortage, but it is a
diffi cult problem to solve. Some of the
FIGURE 1: Construction Industry Employment, 2018-2023
strategies being used include improving
the image of the construction industry by
highlighting the opportunities for advancement
and the competitive pay and benefi ts.
Additionally, providing training and
apprenticeships helps workers develop
the skills they need to succeed in the industry.
Lastly, att racting more women and
minorities to the industry have the potential
to help close the labor gap.
Governments are also sett ing ambitious
goals for renewable energy deployment.
For example, the United States has
set a goal of achieving net-zero emissions
by 2050, and the European Union's goal
is a 55 percent-percent reduction in greenhouse
gas emissions by 2030.
Th ese goals are driving governments
to adopt policies that support the development
of renewable energy. Due to the
emission targets, investor-owned utilities
are investing in these projects. Th is is due
to several factors, including the falling cost
of renewable energy, the increasing demand
for renewable energy, and the need
to comply with government regulations.
For example, the European Union has set
a goal of requiring all new construction
equipment to be zero-emission by 2035.
As a result, the global share of renewable
energy in the electricity mix is increasing.
In 2021, renewables accounted for 28
percent of global electricity generation, up
from 21 percent in 2010. Th is trend is expected
to continue in the coming years, as
governments and investor-owned utilities
continue to invest in renewable energy.
To build the infrastructure with decreasing
impact, eff orts are being made -
by governments, manufacturers and construction
companies - to shiſt construction
equipment from gas to electricity.
Th e shiſt to electric construction equipment
is still in its early stages, but is gaining
UndergroundInfrastructure.com | JULY 2023 13
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Underground Infrastructure - July 2023

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