Thursday, November 15, 2018

Where have all the trades gone?

Growing number of freelancers

According to one of the most comprehensive studies completed on the independent workforce*, the number of freelancers (or independent workers) will surpass employed workers within 10 years. Some studies predict independent workers will represent in excess of 60% of the workforce by the end of the next decade. To put this into perspective, historically freelance has represented 10% of the workforce.

This is predicted to impact most professions, but to hit construction, manufacturing and retail the hardest.

*(“Freelancing in America” is the most comprehensive study of the independent workforce, commissioned by Freelancers Union and Upwork. Click here to see Infographic

In addition, a Canadian study undertaken by Business Development Bank of Canada (BDC) predicts a steady decline in the workforce over the coming 10 years as baby boomers retire.

The pain is real

This shift in the labor force, both the entrepreneurial trend, as seen in the growth of freelancers but also the workforce demographic shift, is one of the single greatest obstacles to business growth and is only beginning to have a serious impact on small to medium size businesses (SMEs). 

This is impacting all business sizes, with SMEs being the hardest hit.

According to the Maru/Matchbox Survey in Canada 2018, on the impact of the labor shortage:   56% of the respondents stated that employees work more hours, 47% stated wages and benefits increased, 43% saw growth limited.  Additionally, they were unable to fill current orders, were less competitive and saw quality deteriorating.   Labor shortages are especially difficult in construction, likely influenced by the interdependence of trades on site readiness. Where trades can be delayed for unpredictable periods because the site is not accessible. Employees may work long hours, short staffed, manage multiple sites in a day and endure interruptions in detailed workflow, all creating challenge and often delays in the critical final stages of the work.

Inefficiency in the industry

“The construction business is one of the largest industries in the world, with an annual market capitalization exceeding $10 trillion. Despite its tremendous potential, many firms are struggling due to a shortage of skilled workers, weak productivity growth, and new data showing that the industry generates immense waste, both in terms of human productivity and physical materials.”  (Posted on August 28, 2017 by Tyler – see original article here)

Estimates suggest that only 25 minutes out of every hour is billed in construction. Without seriously rethinking construction processes, especially as it relates to the labor shortage, there is little hope for improvements in efficiency.

The pain is growing

To add to this, fewer people are choosing construction as their life vocation. As the boomers retire, the gap between supply and demand is going to grow. In the best scenario, businesses will look inward to improve efficiencies, but this will only address some of the problem.

Both the US and Canada are struggling to keep up with demand. The future of labor in the construction industry is uncertain, but more importantly, the industry is ready for change. The question is what that change might look like. Automation might be one opportunity, but few of the trades lend themselves to this. Investment in robotics, process flow and systemization are underway to find ways to improve efficiencies, however, many trades such as electricians, carpenters, plumbers are challenging professions to automate and process flow and systemization are difficult across disparate trades.

Firms are already undermanned, with demand exceeding supply in increasing numbers. Those who will succeed and grow, will understand the need to rethink the labor paradigm. They will find ways to improve their efficiency, and therefore billable hours, to offset, if only in part, the challenge of finding and retaining talent.

Not moving with technology

The BDC study noted that the firms hardest hit, as a rule, have not updated their operating systems, many still using old processes, like running on excel spreadsheets for example. Few have invested in internal technologies to track ordering and parts, ensure thorough and accurate sales details, manage service or track project logistics. These systems may seem expensive; it is those who do not invest who are the most likely to see declining returns and continue to struggle to manage their businesses.

What you can do

Following is food for thought, possible ways to grow efficiencies and/or billable time, without adding people or over stressing existing staff:

  • Track everything. Take the plunge and implement an operating system. There are a growing number of specialty offerings designed for your sector. Not having this in place is a handicap.
  • Partner with a local firm that provides services you don’t currently offer to expand offerings.
  • If applicable, find partners for out of town work. Or better yet, don’t take out of town work if you are not properly staffed to do so. Refer or partner.
  • Identify your core talents and invest more in them.
  • Ensure you pay your staff well and work hard on your culture, no one leaves if they love what they do and are paid well to do it.
  • Find ways to employee your staff in quieter times.
  • Make friends with the local colleges or trade schools, offer your firm for their practicums.
  • Find ways to locate freelance or available talent for peak periods. Look at labor platforms such as LincEdge.  There are many entering the market to help optimize labor.
  • Make friends with your competitors. They are the least of your worries.

Conclusion

Labor dependent businesses are going to be increasingly challenged over the coming years. The survivors and thrivers will not be those who do business as they do today.

We’d love to hear what you are doing to deal with the current and growing labor shortage. It is time for all of us to up our game.

 

Marilyn Sanford is CEO of LincEdge and Co-Founded and operated a Custom Installation business in the Audio Video Industry for over 23 years in the Vancouver Market.

www.lincedge.com

 


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