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Dealers Face Realities, Perceptions that Hamper Construction Industry Employment

Before recession fears mounted recently, the stock market rocketed to record highs and unemployment dipped to record lows. Everyone felt good.

Everyone, perhaps, except contractors and construction equipment company owners.

Unemployment remains low, yet there were 373,000 jobs open in the U.S. construction industry as of July, according to the Bureau of Labor Statistics. 
 
In a 2015 study conducted with the William & Mary Program in Public Policy, the Associated Equipment Distributors (AED) Foundation reported that the shortage of technicians for its 500-plus members resulted in more than $2.4 billion in annual forgone revenue. The report showed a gap between the skills needed to repair, maintain, and operate equipment efficiently and the capabilities that many U.S. workers possess. Not only is the skills gap an issue, but attracting workers to the industry has been more difficult than ever before.

A recent survey by the USG Corp. and the U.S. Chamber of Commerce Commercial Construction Index shows that three misleading, negative perceptions of construction careers may be causing fewer workers to enter the industry, worsening the labor shortage. 

These myths include:

- Construction jobs are “dirty” jobs (cited by 61% of respondents)

- Construction work requires only brute strength (55%)

- Construction work is just a “job” rather than a career (52%)

In traveling across the country and meeting with distributors, I always ask every executive or owner, “How many technicians could you hire today if they were available?” Depending on the company’s size, the answers is usually from three to 50.

Think about how many distributors and rental companies there are in the U.S. and how many people could build rewarding careers in this industry. We often hear about the shrinking middle class — these are jobs that provide steady income, great benefits, and an opportunity to forgo college and its expense. Not only is finding new workers to fill these jobs important, but keeping them has become an escalating and significant task.

The industry faces two employment issues:

1. Finding New Workers

One of The AED Foundation’s goals is to help the industry attract, train and hire new technicians. It helps address professional education and workforce development in the industry. This includes supporting college programs and technical schools accredited in diesel equipment technology.

The industry has evolved, and while it still involves physical work, diagnosis of construction equipment often is done by attaching a laptop to troubleshoot the problem. Computer diagnostics is more prevalent in equipment than ever, so dealers are tasked with educating prospective employees for these opportunities.

Recruiting new technicians has become very competitive and a key for success in today’s market. Distributors benefit from AED’s assistance but cannot rely solely on the organization’s help.

In talking with some of our clients, we learned of techniques they are using to attract workers:

- Dealers target high schools with shop classes, in order to connect with students interested in technician careers. Companies court the students with offers to pay technical school tuition (most are two-year programs) in exchange for a three-year employment commitment. They are not alone, often competing with other distributors in town.

- Companies offer technical school scholarships if students are interested in applying for a job. 

- Many dealers target military veterans, as they are trained, hard workers and are considered more disciplined. This benefits both veterans and the industry, and allows dealers to assist the men and women who have served our country.

- Tools are a major expense for recently graduated technicians. Many dealers now offer free tools to new grads. Larger companies provide a company-owned truck. Companies offer these benefits with an employment contract which helps them compete with other dealers for workers.

- Technical schools need equipment for their students. Some dealers provide schools with equipment for the students’ coursework so graduates become accustomed to certain equipment brands. This entices new workers to work for the dealer of the brand.

- Most dealers offer attractive referral bonuses; if you have a friend who is a technician, recruiting for the company can be profitable for you.

2. Maintaining Current Workers

This is a driver for the success of most dealerships. Their longer-tenured employees have much more experience, and they can bill them at higher rates than newer technicians. Therefore, these workers are recruited by other dealers offering high hourly salaries and more benefits to try to lure them away. In addition, baby boomers who were hired at a young age are retiring in far greater numbers than those of millennials entering the industry today. This is creating an even larger employment gap for distributors.

In talking with our clients, we learned of some things they do to retain employees:

- Pay higher salaries

- Offer better benefit packages, including maternity and paternity leave

- Offer flex hours

- Offer management or training positions to more-seasoned technicians who can teach the newer workers

- Offer continuing education

- Help pay off college or technical school loans

- Update facilities so that workers are more comfortable while doing their jobs

- Allow Friday half-days

- Offer additional vacation time

- Offer on-site day care

- Pay annual bonuses with two- to three-year vesting periods to retain employees; offer additional vacation hours in lieu of an annual bonus

- Offer promotions to rental jobs and/or sales jobs after a set number of years. This can be a big win for both parties; the employee knows the equipment inside and out and can speak intelligently with contractors.

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