The 50 States of Construction: Tight labor and big jobs keep IA contractors busy
Editor's note: This article is part of Construction Dive's 50 States of Construction series, in which we talk with industry leaders across the U.S. about the business conditions in their market.
Many Americans only see the state of Iowa from 30,000 feet. But the heart of "flyover country" plays a critical role in aspects as disparate as the nation's politics, its agriculture and, more recently, critical functions like data storage.
Contractors in the state are involved in these sectors and more, and the activity is keeping them busy.
Construction Dive checked in with Mike Tousley, executive vice president and general manager at The Weitz Company, headquartered in the state's capital, Des Moines, to see how Iowa's low unemployment rate is impacting the company's ability to find workers, and how prefabrication and lean management practices are being put to use.
This interview has been edited and condensed.
Where are you seeing the strongest activity in Iowa?
TOUSLEY: We're seeing the strongest activity in central Iowa and the Des Moines metro in particular. Insurance and other financial services companies are driving that development. The biggest trend in the last five years has been data centers. Facebook and Microsoft have done multiple big-box data centers here, with more planned, and Apple just announced they're going to build here. Agricultural bioscience and advanced manufacturing have also been strong in central Iowa.
Why do you think these sectors — data centers, agricultural bioscience and advanced manufacturing — seek out Iowa?
TOUSLEY: A lot of it has to do with the culture and work ethic in Iowa. It's a very stable, very predictable workforce, and companies find that attractive. For data centers, for example, the low cost of electricity, an abundant supply of water, a knowledgeable IT workforce, and that the state is not in the crosshairs of any potential security threat are major drivers. It's in the middle of the country, away from the attention on bigger cities.
There's been growth in smaller rural communities throughout the state. How is that impacting your business?
TOUSLEY: Critical access hospitals and clinics have been strong in the last 10 years or so. Most of the rural activity we're seeing is around agriculture-related manufacturing, and that has been steady.
Iowa has a very low unemployment rate right now. What effect is that having on construction?
TOUSLEY: That's a huge challenge. We've started to see things softening a little bit in the last 90 days. A year ago, you could not find skilled tradesmen, so you had to figure out how to do more with less. It's always been hard to find workers in Iowa. The available pool of workers is small. And not unlike a lot of other states, high school kids are attracted to other industries and don't see construction as a great long-term career path.
What are you doing to bring in new workers?
TOUSLEY: A lot of our efforts have been focused on telling a better story about careers in construction. The trades offer a good opportunity for people who don't necessarily want to go to a four-year institution. We need to attract kids into apprenticeship programs and offer more vocational classes for high school students.
On the professional side, Iowa State University is less than 40 miles north of us and it has one of the top construction engineering programs in the country. We hire interns, do co-ops and participate in many different programs to support the construction engineering program. We regularly hire out of that program.
Beyond labor, what other challenges are you facing in Iowa right now?
TOUSLEY: We're seeing an inadequate supply of specialty contractors that have the experience and ability to do extremely large projects. As a result, we've started looking at carving up the scope of work on some projects so one part of the building is done by one sub and another part of the building is done by a different sub.
Last year we were having issues with drywall contractors and so we split a job into two components. We did the same thing with a tile package on a hotel project, so two subcontractors were involved instead of just one. It was all a function of manpower and the number of projects that were going on. We've always looked at this as being a possibility, but we never had to go there until last year.
How does construction in Iowa compare to elsewhere Weitz is building?
TOUSLEY: I don't know that it's any better or any worse, really. I talk to my peers across the country within Weitz and we're all dealing with some of the same things: a shortage of manpower and a shortage of subcontractors. We need to keep our eye on a shortage of material in the near term with all the natural disasters that have occurred in the last month or so in Houston, Florida and the Caribbean. We've started to see it a little with drywall, in that certain suppliers are limited in the amount of product they can actually get. I don't know that we've seen the worst of it yet.
What are you learning in Iowa that you’re applying on projects elsewhere?
TOUSLEY: A couple of things. One is the utilization of technology and the other is the utilization of lean tools. On the technology side, it has to do with 3-, 4- and 5-D modeling. For the new Hilton Des Moines downtown hotel [slated for completion in April 2018], we used models to help prefabricate bathroom pods offsite. The pods were shipped to the site basically finished and hoisted up to the floor, rolled into place, connected, done. We're also able to do a significant amount of prefab with piping systems and electrical distribution. It all helps reduce the amount of onsite labor. The whole technology piece is something we're seeing more of in this market as well as nationally.
For lean tools, we use lean scheduling the most. We call it "last planner," and it's really just a disciplined process for scheduling the work. The beauty of it is that it involves the foremen from all the different trades to figure out the sequence of work, the phasing, the hand-offs from trade to trade, and then committing to manage that with a very disciplined daily and weekly process. We're seeing schedule reductions by up to 30%. We've been doing this for over 10 years and we do it on every project.
What do you think sets construction in Iowa apart from other states?
TOUSLEY: It comes down to the work ethic. It's who Iowans are, and a lot of it stems from the state's heavy emphasis on agriculture and the hard work that farmers go through. In a lot of places across the country you don't get eight hours of work for eight hours of pay. In Iowa, you get eight hours of work for eight hours of pay, if not more. It's just who we are, and that's what attracts a number of companies here.