For the trades that survived the worst of COVID-19, demand for work has increased, but so have costs. “The biggest stories for subcontractors are materials price increases of more than 20%, materials delivery delays and managing their fixed price bids to general contractors and then having to honor those bids and cover the increased cost of those materials,” says Michael Gifford, president of Denver-based AGC of Colorado, which has 260 specialty contractors among its 680 members. “The close second story is managing the great resignation or great reshuffling and having to increase pay rates to labor and also managing that dynamic while delivering fixed-price contracts. The good news has been the strong market in Colorado and that new bid/proposal prices have risen to match true costs, which is helping contractors stay profitable.”

David Smith, executive director of the AGC chapter Montana Contractors Association, says the area’s major construction issue is price instability. “One glass contractor learned in early June that there would be a 30% price increase effective July 1.” The Helena-based chapter includes 65 specialty contractors.

With labor another top concern, the group has begun a program to teach high school students how to operate heavy equipment. “We know not every young person gets excited about a construction career, but if we can just find 10, 50 or 100 every year and set them up for success, we’ll see good results. We didn’t get here overnight; we can’t fix the labor problem overnight.”

Looking at Utah

In Utah, Rich Thorn, president and CEO of the AGC chapter in Salt Lake City, says, “By all indications, 2021 and 2022 have been busy years for our specialty contractor community.”

Firms have “enjoyed a lot of work in nearly all sectors, and we’ve had demand that we’ve not had in several years. In many cases, they are now busy enough that they can and are being very selective on the projects they bid or propose on,” he says. The Utah AGC chapter includes about 500 specialty contractors and service-supply firms working in all trades.

The state has experienced steady growth in areas such as commercial, energy and transportation, he says. “When you add in a super-strong residential market, Utah’s construction industry for subcontractors has at least met pre-pandemic levels. With that being said, in the recent few weeks, our residential markets have slowed.”

Thorn says, “Runaway inflation and interest rate increases are the main causes. Even with the slowdown, Utah still has a big gap between those needing a place to live and what is available.

“The No. 1 issue by far is workforce,” he adds. “We need more people across all sectors. Inflation is also having a negative effect in the state, and materials supply is a concern.” He says that “some of the current political discussions are also rising to the top of Utah construction discussions,” noting that while COVID-19 is still an issue, it’s “not nearly as big of a challenge as in the past two years.”

SME Steel ironworkers install a 44,000-lb bottom cord section of the hat truss for the 111 So. Main office tower in downtown Salt Lake City.
Photo by Monet Johnson

Trades Battle On

For MTech Mechanical, “The key word is ‘unprecedented.’ We heard it numerous times in 2020 during the onset of COVID-19 and it continued in 2021 and 2022,” says John Falzone, COO of the Westminster, Colo.-based company, which designs, builds and maintains services for commercial and industrial clients across the state.

He notes that after overcoming pandemic uncertainties and settling into a “new norm, unprecedented times surrounding price escalations and material and equipment procurement and a tight labor market” brought new challenges in the last two years. In 2021, “project schedules were delayed, and teams had to navigate through budgeting and work-productivity challenges and supply chain issues and material delays,” Falzone says.

Although optimistic, the executive is concerned about “all of the factors outside our control affecting the uncertainty of the construction markets and projects, including inflation, geopolitics, commodity escalation, supply chain issues, a potential recession and a tight labor market.”

Ranked second on the ENR Mountain States regional list, Logan, Utah-based Cache Valley Electric reported regional revenue in 2021 of $441.5 million, a 1.86% increase from the previous year. “We were fortunate to have a strong backlog going into the pandemic and, with the exception of one or two projects, all of them continued,” says Bryan Webb, company COO. “Federal dollars that were infused into the economy to help infrastructure have been beneficial to our organization.”

Workforce and supply chain issues are continuing concerns. “We need more individuals—specifically, recently graduating high school students—to enter the trades,” he says, adding that the supply chain “has to be fixed. The lead times on equipment and gear are unsustainable; it makes it nearly impossible to plan a schedule and be successful.”

SME Steel posted a 22.71% increase in regional revenue, reporting $113 million for 2021.

The company’s CEO and president, Dieter Klohn, attributes this hike in large part to a record year achieved by its Corebrace Division fabrication plant in Pocatello, Idaho. Still, he says, “Our greatest concern is the availability of qualified team members in the office, plants and erection.”

MTech Mechanical completed the 100-ft-tall atrium of the Anschutz Health Sciences Building in Aurora, Colo.
Photo courtesy of MTech

Addressing Strengths, Challenges

Strong markets for Colorado subcontractors continue to be mixed-use; warehouse-industrial; public buildings; hospitals and related medical, bioscience and pharmaceuticals; multifamily and single family; townhomes for rent; and, also surprisingly strong, office construction in a few submarkets, AGC’s Gifford says. In addition, more infrastructure and COVID-19 funding for Colorado should increase demand for work.

“Our main concern for specialty contractors going forward is labor, as it remains difficult to retain talent in a tight labor market,” he says. “The second is occasional delay or cancellation of planned project starts as developers either lose financing or projects come in over their planned budget.”

In Montana, subcontractors are looking at wind energy, particularly in the central and eastern parts of the state, AGC’s Smith says. In Big Sky and other western areas of the state, ultra-high-end housing is keeping trades busy. Basic housing is also still strong despite slowdowns nationally.

Funding from the Infrastructure Investment and Jobs Act also will generate an extra $200 million per year for highways—basically a 50% increase in the construction budget for the Montana Dept. of Transportation. Airport and hospital work is also very robust.

Smith notes that more than 4,000 construction jobs have been added in the state since February 2020, the second-highest increase in the country, much of that among specialty firms. “We have observed many who have relocated from other Western states and are immediately busy,” he says.

“From what we’re hearing from AGC of Utah, members remain optimistic about future work,” Thorn says. “Utah is positioned well for any potential challenges that a sluggish economy may bring. Good backlogs of work are on the books and, as we close 2022 and enter into 2023, our members feel pretty good.”

MTech is thriving in a variety of sectors in Colorado, including health care, life sciences and government. “In our scope of work, we are also seeing a large influx of building energy retrofits, with a renewed focus of opportunity as we head into 2023,” Falzone says.

In the Denver metro area, bio-life science and multi-family residential sectors continue to grow. The Electrify Denver program, which expands EV charging, is also opening up opportunities.

MTech recently completed construction on the Anschutz Health Sciences Building at the University of Colorado Anschutz Medical Campus in Aurora. The 390,914-sq-ft, seven-story building features a 100-ft-tall atrium, data center, laboratory and research spaces, mental/behavioral health research clinics and offices.

In Utah and Idaho, SME Steel sees improvements in life sciences, data centers and airport construction. The company completed a major football stadium in Los Angeles in 2021 and a building in Los Angeles called “The Wrapper” in May. A major casino and large data centers will be finished in 2023.

Cache Valley Electric has been busy working at the new Salt Lake City International Airport, completing electrical construction and adding redundant power systems, physical security systems and runway lighting. The firm is a current trade partner on SLC North Concourse East, Phase 3.

Commercial office new projects have declined in the last few years, but the company anticipates continued interest in data centers and semiconductor manufacturing facilities, transportation projects and upgrades to the electrical grid.

“Those sectors require a significant amount of energy, so our transmission line and substation groups are very busy,” COO Webb says. “The influx of federally funded projects, along with the CHIPS Act and energy bills recently passed, will continue to keep electricians busy into the foreseeable future.”