The construction industry is facing a significant labour shortage in both the United States and Canada, contributing to a housing shortage in many areas, particularly in urban areas where demand for housing is high and land prices are expensive. In Canada this was recently put into stark terms in Ontario where it was reported the province needs 1.5 million new homes over the next decade, but will need an additional 100,000 construction workers to meet that demand. The commercial and industrial real estate market isn’t spared the pain either. Let’s explore the causes of the labour shortage, its impacts on the real estate market, and how builders can survive and thrive in this new labour market.
The labour shortage in the construction industry is due to a variety of factors, but anyone working in construction can anecdotally speak at least a few of them. In the US and Canada, these factors include an aging workforce, fewer young people entering the trades, and a lack of emphasis on vocational training in schools. The COVID-19 pandemic has also contributed to the labour shortage, as it has caused disruptions to supply chains, delayed projects, and led to a decrease in the number of immigrants entering the workforce. And plenty of research backs up these observations.
The shortage of skilled workers has led to slower construction times and higher costs for builders in both Canada and the US, which is leading to fewer homes being built and higher prices for those that are constructed. In some areas, the shortage of construction workers has even caused projects to be delayed or canceled altogether, exacerbating the housing shortage. Here’s just a few examples:
One potential solution for construction companies facing a labour shortage is to use structural insulated panels (SIPs) in their building projects. SIPs—like ZS2 TechPanels™—are prefabricated building components that can be quickly assembled on-site, reducing the need for skilled labour, and allowing projects to be completed more efficiently. Because SIPs provide a high level of insulation, they can also help reduce energy costs for occupants and improve the overall sustainability of a building. Additionally, using SIPs can make construction companies more profitable by reducing labour costs and allowing them to complete projects more quickly, meaning more project completions each year. Taking advantage of alternative building solutions like TechPanels and other innovative building technologies is one way construction companies can position themselves to thrive in an industry that is facing significant labour challenges.
According to a study conducted by the National Association of Home Builders (NAHB), builders reported labour savings of up to 55% when using SIPs instead of traditional framing for exterior walls. This is due in part to the fact that SIPs are pre-cut to the exact specifications of the project, reducing the need for on-site cutting and waste. Additionally, because SIPs are prefabricated, they can be assembled more quickly and with less specialized labour than traditional framing methods.
It’s difficult to provide an exact amount a company could save on labour by using SIPs instead of traditional framing, as labour costs can vary widely depending on factors such as location, project size, and the level of expertise required for the job. However, one thing’s for certain: Building with SIPs can lead to significant labour savings compared to traditional framing. At ZS2, we’ve put together a bit of a cheat sheet to help builders figure out what kind of labour requirements they’ll need for their project, so they can make their own calculation on savings.
Building with SIPs, however, means companies need to rethink their cashflow. While building with SIPs can lead to labour savings, they may have higher upfront material costs compared to traditional framing methods. These are then offset by reduced labour costs and a higher value of the finished product due to their superior quality and increased energy efficiency over the life of the building. So, higher upfront costs can pay off down the road with lower labour costs, faster project delivery, greater volume of builds, and a higher final product price.
Want to learn more about how our TechPanels can help you adapt to this new labour market? Contact us.