While state and city-based shutdowns of construction sites due to COVID-19 have thrown a wrench into projects in many areas of the country, another factor is impacting general contractors: a lack of available specialty contractors, according to panelists in a Associated General Contractors of New York State webinar earlier this week. A decrease in the number of available specialty contractors could be devastating to the industry, which was already low on skilled labor before the spread of the coronavirus outbreak.
In light of the threat posed by the pandemic, there are several reasons why subcontractors can’t or won’t report to a job, AGC of New York State CEO Michael J. Elmendorf said during the presentation.
First off, employees at some specialty firms have been exposed to COVID-19, which has led to the temporary quarantining of not only the exposed worker but anyone he or she has come into contact with.
“The smaller the contractor, the more susceptible they are, especially if they are a family-run business, where if one person gets sick it’s quite likely going to impact many of them,” said presenter Jennifer Kavney Harvey, a partner at Albany, New York-based law firm Couch White. “That’s a real struggle for the smaller subcontractors.”
In other cases, subcontractors and suppliers have shut down their operations if they can’t meet health guidelines. For instance, she said, a small fabrication shop may not have the ability to separate workers by the required six feet.
In addition, some subcontractors are proactively pulling back from jobs that they see as having an unacceptable level of health risk, Elmendorf said. This happened recently at a Cornerstone Managing Partners location in San Diego, where most subcontractors have been running at full capacity, but one closed for 14 days out of concern for employees’ health, Alissa Thompson, Cornerstone vice president of operations, told Construction Dive.
”The shop felt that if their employees got sick, it would be more detrimental to their business than closing for a period of time, and we support their decision to do what is best for their employees,” she said.
To ward off any subcontractor shortage, her company is carefully monitoring any legislation that calls for the closing of the nearby border with Mexico, where many subcontractors live.
Making sense of shutdowns
Another factor leaving subs on the sidelines is that in the confusion of state and citywide shelter-in-place orders, trade companies sometimes believe they are are nonessential and need to halt work, even though that’s not usually the case, the panelists said.
For instance, California Gov. Gavin Newsom's shelter-in-place order announced March 19 caused a good deal of confusion for Cornerstone and its subs, Thompson said. At first, company leaders thought they would have to shut down all projects, which turned out not to be the case.
"We originally expected all construction to stop because the rumor was that the city of San Diego was going to close," she said. "If this happened, it would not allow us to obtain inspections on our work."
For the most part, contractors’ fears of being cited for continuing work when a state or city has shut down are unfounded, said Kavney Harvey. Like in California, in most cases companies that provide supplies or services to the construction industry are exempt from statewide shutdowns of nonessential businesses, she added. State AGCs and union groups are a good source of information on this topic.
A focus on prevention
With work is continuing in most areas of the country, it's important for construction company leaders to realize that they are responsible for making sure that construction sites are safe and do not constitute a zone for infection, attorney Steven Lesser, chair of Becker’s construction law practice, told Construction Dive. They can do this in several ways, including carefully scheduling trades to avoid having more people on site at one time than is necessary.
It’s also important for GCs to be transparent with their employees, subs and suppliers about jobsite safety, to have safety representatives and medical personnel available to take workers’ temperature and to consider cashless transactions such as electronic payments to cut down on the need for exchanging money.
In this time of high anxiety among laborers and tradespeople, construction managers must show they are vigilant and taking the threat seriously.
“They need to maintain strict standards so workforces will actually come to work if they are permitted to do so,” Lesser said.
For example, Michael C. Brown, Skanska USA Building's executive vice president, told the workers at the company's $92 million St. Pete Pier replacement project in St. Petersburg, Florida, that he will maintain a zero-tolerance policy regarding anyone with symptoms consistent of the virus, according to the Tampa Bay Times. Anyone who is sick for any reason should stay home, he said.
Reassuring trades that it's safe to come to work will go a long way, Lesser added, but GCs should be prepared for shortages.
“They will not come to work no matter what if they are caring for family members that are high risk or paranoid of catching the coronavirus,” he said. “So, even where work is permitted there appears to be a shortage of trades.”
What can GCs do to keep projects moving if a subcontractor throw s in the towel? Attorney R. Thomas Dunn, writing in the National Law Review, recommends a few first steps, including:
- Reviewing the contract.
- Responding to the sub in writing.
- Looking for a replacement company.
- Letting the owner know about the issue right away.
Like many contractors, Thompson said she is navigating two main goals, which can feel like they are at odds. The first is to keep clients and employees healthy; the other is to keep teams employed now and into the future.
“We expect it to be a slow ramp back up to full construction mode,” she said.
It’s a topic that GCs should get familiar with as it will most likely be affecting them for a while, Elmendorf said. “We suspect if this lingers on we’re going to see more of this sort of thing."