These should be good times for the Texas construction industry. The state’s rapidly growing population and a pandemic-driven boom in housing sales has builders in high demand. But the industry is getting hammered by COVID-related supply shortages.
The number of construction workers out sick with the disease has “definitely picked up again from the Delta variant,” said Travis Mross, executive vice president of operations at Zachry Construction in San Antonio. That’s come as a surprise. At the start of the summer, the worst of the pandemic seemed to have passed for Texas-based companies like Zachry, which builds highways, bridges, dams, and other projects all over the U.S. and the world. Zachry had employed an array of pandemic-safety protocols and encouraged its two thousand employees to get vaccinated against COVID-19. Circumstances changed when the highly contagious Delta variant caused a surge in COVID-19 cases. In early August, Zachry quarantined about a dozen workers from a TxDOT bridge replacement project in Eagle Lake, about seventy miles west of Houston, after workers were exposed to the virus. Almost no work was done at the site for four days.
Zachry is hardly alone. Texas Monthly spoke with construction companies in each of the state’s largest markets and heard a consistent story of rising worker illnesses and supply-chain complications. National general contractor DPR Construction, which is working on the “Google Tower” project in downtown Austin, has had absences on projects throughout the state. That’s in spite of DPR’s efforts to separate workers into isolated small groups on construction sites, and other precautions it’s taken to limit the spread of COVID-19. And although Gary Frazier, president of Frisco-based CORE Construction, said the worst project delays for his company happened earlier during the pandemic, CORE is still being slowed over difficulties in obtaining supplies. Every construction firm in the state is struggling with this, in part because manufacturers and suppliers of everything from lumber to drywall are beset by worker shortages—including virus outbreaks among current staff—as they attempt to ramp up output.
That’s contributing to a statewide decline in construction jobs. According to data from the Bureau of Labor Statistics, construction employment had been looking up before Delta arrived. The construction workforce increased from 725,800 in December 2020 to 749,500 in March 2021. “The spring and even early summer felt like we were getting back to pre-pandemic times,” said Meloni Raney, president and CEO of TEXO, a trade association representing construction companies in North and East Texas.
But in every month since March, the number of construction workers in Texas has steadily declined, to 724,500 in July, according to Bureau of Labor Statistics data. That’s related to the supply shortage stifling projects, as builders balk at higher costs for materials. But it also has to do with too many construction workers remaining unvaccinated.
“You’ve got a lot of qualified, skilled craft workers who can’t work or won’t work because they’re not vaccinated, and they’re getting sick,” said Brian Turmail, a spokesperson for Associated General Contractors of America in Washington, D.C. “Or they’re worried about getting sick and transmitting it to other unvaccinated people. Or they’re vaccinated, but they have young children who aren’t vaccinated.”
Construction workers are especially hesitant to get those vaccines. This spring, a survey from Carnegie Mellon University and the University of Pittsburgh found construction workers to be the most vaccine-hesitant of those in any occupation. Roughly 46 percent of construction workers surveyed nationally said they probably or definitely would not get vaccinated. The reasons are varied. According to a June article from industry website Construction Dive, many construction workers said they didn’t think they needed a vaccine because they consider themselves young and healthy. Others expressed fear of side effects that medical experts say are rare, but that anti-vaccine activists often exaggerate on social media.
Some construction executives believe that politics plays a role, especially in red states such as Texas where vaccines have become a partisan issue. Texas has banned companies that receive any state funding or sign contracts with the state from requiring customers to show proof of vaccination, although private companies may require vaccinations from employees. In a statement to Texas Monthly, Governor Greg Abbott spokesperson Renae Eze said the governor “has strongly encouraged all eligible Texans to get vaccinated since [vaccines] first became available last December and continues to do so.” The statement came along with the expression of a sentiment that Abbott has shared for months, which plays well with the Republican party’s conservative base, a group less likely to be vaccinated than Democrats: “Vaccines will always remain voluntary and never forced in Texas.” Even as he encourages vaccinations, however, Abbott is doing everything he can to prevent city and county officials and school districts from requiring masks, which public-health authorities say could help stem the spread of the Delta variant.
Even though many construction workers are choosing not to be vaccinated, nearly three-quarters of them told Construction Dive that they believe people in their industry are at high risk of catching COVID-19. Indeed, construction workers may be at especially high risk of getting seriously ill. A 2020 report from the University of Texas found that when Texas construction workers contracted the virus, they were five times more likely to be hospitalized than people in other professions. That was partly because construction workers tend to work close together on job sites, but also because many construction workers also “belong to racial and ethnic minority groups” that have a higher prevalence of serious health complications from COVID-19 exposure. In Texas, about 70 percent of all construction workers are Hispanic. And a 2020 University of Texas report found that in Travis County, more than half of the COVID-19 related hospitalizations and deaths were among Hispanic people, even though Hispanics account for just 34 percent of the county’s population.
Meanwhile, firms like DPR and Zachry are asking, but not requiring, workers to get vaccinated. “It’s a tough issue because there’s definitely different personal beliefs and different thoughts on it,” said Ryan Krogstad, the central region operations leader for DPR. Houston construction company Tellepsen has gone a bit further in its efforts. In April, it co-hosted a vaccination clinic for all construction employees in the Houston area. Some two hundred workers from dozens of different companies attended.
Construction firms also still must worry about COVID-19 infections among workers in the supply chains that feed their projects, although not as much as they used to. “We learned how to work with COVID,” said Tony Bennett, leader of the Texas Association of Manufacturers. “We’ve learned how to use protocols the best you can.”
In fact, the Federal Reserve Bank of Dallas, in its monthly survey of Texas manufacturers, found that production grew strongly in August, even as Delta spread. At the same time, the manufacturers expressed their lowest level of confidence in their general business outlook since January, citing concerns over labor and material shortages and the Delta variant.
Krogstad said those kinds of shortages are already causing problems for builders. There are “delays in materials because manufacturers don’t have them . . . or they don’t have enough truck drivers to get from point A to point B,” he said. Companies have had issues obtaining metal studs, circuit breakers for electrical panels, PVC, and many other items they usually take for granted. “We actually had a delay the other day where we couldn’t find roof fasteners: screws to screw the roof down,” Krogstad said. And Frazier, of CORE Construction, said his company usually gets metal deck materials within twelve to fifteen weeks. Right now, the estimated delivery time is six months.
Prices for many materials are also much higher. Lumber costs reached historic highs earlier during the pandemic, but are now falling at historic rates—the producer price index for softwood lumber tumbled 29 percent from June to July, the biggest monthly dip since tracking began in 1947, according to the BLS data compiled by the National Association of Home Builders. But steel-mill products, gypsum, and concrete have reached their highest prices of the pandemic this summer. The price hikes and volatility are not purely a consequence of the Delta variant. Supply-chain issues started last year when manufacturing facilities closed across the state and the rest of the world, just as demand for construction picked up with millions of stuck-at-home Americans seeking to modify their dwellings. “They stopped making materials and producing inventory, and we were selling homes like crazy,” said John Schiegg, vice president of supply chain for Houston-based David Weekley Homes. The electric grid’s failure during the February Texas freeze made everything worse. Chemical plants on the Gulf lost power, halting production of the raw materials that go into insulation and PVC pipes.
That’s starting to put a chill on demand. Homeowners unable to afford higher materials and labor prices have delayed moves or repairs. Officials in Texas City, near Galveston, turned down every bid for a firefighters hall in early August, believing the rising supply costs had made the project too expensive. In Hutto, outside Austin, construction on a local elementary school’s cafeteria and administrative offices was supposed to be over by summer but is now expected to continue through Thanksgiving. If that trend continues, “it could be really messy” for the state’s economy, said Peter Rodriguez, an economist and dean of the Rice University Jones Graduate School of Business.
As the pandemic slogs on, Rodriguez believes construction firms will be less able to plan ahead because they’ll fret over future supply shortages and the price spikes that accompany them, and because virus outbreaks could continue to postpone building projects. “Uncertainty,” he said, “is just toxic to growth.”