The 50 States of Construction: Why the NE market aims to attract, retain talent
Kiewit Senior Vice President John Sibley discusses Nebraska's work ethic and sectors with the most growth potential.
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.
Nebraska wants more people.
The desire to grow doesn't apply just to construction, which is experiencing a labor shortage hindering markets across the U.S. It also applies to companies, young people and the overall talent pool.
However, demand in the state, especially in the major cities of Omaha and Lincoln, is still strong, according to John Sibley, senior vice president at Kiewit Building Group. Sibley joined the Omaha, NE–based company — which is one of the nation's largest contractors with 2015 revenue of $9 billion — in 2000 and worked his way up through the healthcare division to his current position as senior VP.
Construction Dive spoke with Sibley about Nebraska's evolving market, the burgeoning commercial mixed-use sector and the benefits of what he describes as a strong "Midwestern work ethic."
Editor's note: This interview has been edited and condensed.
How do you think the Nebraska market differs from that of other states?
SIBLEY: Our state is unique from others in that the Omaha and Lincoln areas are more urban, then as you get into the lesser two-thirds of the state, it becomes a lot more rural and sparsely populated. So you end up with different markets, going from rural to urban. I would describe the industry here as really relationship-based and collaborative [with] that Midwestern work ethic.
Can you further explain that 'Midwestern work ethic?'
SIBLEY: It all ties together as far as relationship-based business, not only between ourselves and our clients, but also ourselves and our subcontractors. We work with a lot of the same people and a lot of the same trades. As you develop those relationships, you want to help each other succeed. That’s probably a real differentiator. It’s a reputable community. Everybody sees the big picture.
The uniqueness of our marketplace is also how much philanthropic activity there is. That ultimately helps local businesses and local nonprofits and universities and community events. That helps get back to construction. It benefits our industry when there’s a lot of philanthropic activity that helps a lot of local businesses and nonprofits succeed.
Which sectors are seeing the strongest demand?
SIBLEY: Healthcare is probably the biggest and the fastest-growing market here. Looking forward, the commercial mixed-use market — or work-live-play developments — are showing some real promise. Education I would put next. Several bond issues with local school boards have passed, and a growing population is driving some of that construction. And then government work is also a strong sector.
What are some of the most significant challenges that Kiewit faces in the market?
SIBLEY: Our biggest challenge right now is subcontractor availability and craft availability [amid a] healthy construction market. Just being able to staff the projects with the right number of and the right caliber of subcontractors and crafts is probably the biggest challenge we see. And I don’t see it getting much better in the near future. I’m sure this is the case across the country. Locally, [there is] a renewed focus on training facilities at local community colleges, union halls and just recruitment of craft workers. There are solutions getting put in place.
From a market perspective, for Nebraska, just attracting new business to the area is another challenge for us as a community. [That's not] a Kiewit thing or a construction thing but a community thing.
Why is that?
SIBLEY: There are probably lots of reasons. If I were going to lean out, I would say just labor availability. We are a pretty small-population state. We have a population based around urban areas. But being able to recruit and keep young, skilled workers would be a potential reason why a corporation or new business might be challenged to come to Nebraska.
Are there any state regulations that have a significant impact on your business?
SIBLEY: The state gas tax and how that affects some of the infrastructure funding are good things. On building work, there’s definitely some things on the positive side. The use of TIF, or tax increment financing, helps development get started. The state has employed a few other techniques, license and occupation tax incentives and sports arena and convention center incentives, where if you’re building around those attractions, there’s an incentive that helps. There are probably more proactive state regulations than there are prohibitive ones that are affecting us.
Is there a strong union presence in the state?
SIBLEY: There is. It is a right-to-work state, and it’s pretty balanced between union and open-shop trades. It would not be unusual for us to have both union and open-shop on any one project.
Do you expect market demand to continue growing in the coming years?
SIBLEY: Forecasts show fairly consistent growth for the next five years. Different market sectors are showing different growth. Healthcare, for example, continues to show fairly steady growth. I think the commercial mixed-use [sector] is going to show more growth over the next five years, but it’s going to be tempered by the availability of labor and escalations.
Can you delve further into the commercial mixed-use market, and explore why the live-work-play trend is taking off in Nebraska?
SIBLEY: It’s large acreage, anywhere from 30- to 500-acre sites that get developed with full amenities. Most of them have some kind of residential component, there’s usually some kind of retail component, either in the same buildings or not, and sometimes a civic component. There are three or four of those in the Omaha metro area right now that are in the planning stage. The reality of a development like that is you don’t develop 500 acres in four years; it’s going to take 20 years. As those developments start and get inertia, it is pretty good, slow, sustained construction growth as they finish out.
That’s not atypical for other parts of the country, but Omaha is just at a point now in its growth and development where we’re starting to see more and more of those kinds of opportunities coming to fruition through different developments.
Is Kiewit working on one of those projects currently?
SIBLEY: Aksarben Village is one I would label a mature development — it's near the end. We’ve been working on it for 10 years. We didn’t build everything in that development, but we were successful on a number of the projects. It’s a good example of [a project featuring] housing, retail, park space and community areas that we're starting to see more of here in Omaha.
Do those mixed-use developments target a younger demographic?
SIBLEY: That one happens to be adjacent to University of Nebraska Omaha's campus, but people who aren’t students have the opportunity to be in those apartments. It’s exactly where we’re at as a community, wanting to attract that younger labor force and keep some of the young professionals in the community through some of those types of amenities.
Has Kiewit utilized any alternative project delivery methods?
SIBLEY: We use CM/GC, CM-at-risk and design–build in private sector work, and those delivery models are becoming more and more accepted. But we do still have a little bit of a traditional mentality on some of the publicly funded projects. Maybe this just goes back to the Midwestern insulation. It’s a good thing the economy doesn’t affect you as much, but we do have some of those traditional methods that we’re trying to move away from on publicly funded work.
Do you foresee that changing in the future?
SIBLEY: I do. As people have success with those delivery models, they become more and more accepted. We’ve worked in this marketplace with private sector owners in those delivery models for decades. It’s not that it’s brand new here, it’s just that some of the jurisdictions haven’t adopted it yet.