By Marcia Jedd
June 5, 2006—Hurricane season 2006 has begun, but the construction industry has yet to put the effects of last year's catastrophe-ridden season behind it. Hurricanes Katrina and Rita ravaged communities throughout the Gulf Coast in August and September 2005, resulting in the largest national disaster in U.S. history. Direct and indirect results of the storms were bottlenecks in labor and materials all over the country. Some were already in short supply before the big hurricanes; the last things the super-busy building industry needed were increased demand, reduced supplies production and a displaced workforce in the areas that needed help the most.
Katrina left some 200,000 homes destroyed beyond repair or completely uninhabitable in Louisiana, Mississippi and Alabama, according to recent estimates by the Red Cross. Another 500,000 dwellings were damaged by winds, water and flooding. Following the monstrous Katrina, Hurricanes Rita and Wilma hit Texas and southern Florida respectively, destroying another 9,000 homes.
Particularly in the New Orleans area, significant cleanup work remains before building can begin. "In terms of real new construction and rebuilding in hurricane-impacted areas, very little has been rebuilt," says Michael Carliner, economist with the National Association of Home Builders in Washington, D.C. "There's almost no rebuilding yet in New Orleans."
Tight labor market
Currently, some 60 percent of New Orleans' pre-Katrina population lives elsewhere. Many former New Orleans residents have taken up temporary or permanent relocation in cities such as Houston and Baton Rouge (which doubled in population after Katrina) and in many parts of Mississippi, Carliner says. That means nearly two-thirds of the city's workforce has left town, at least for the time being.
On the construction labor front, though, Carliner says the Gulf Coast region has benefited from an influx of skilled and semi-skilled laborers. "From the regional perspective, Hurricane Katrina has changed the labor landscape. Builders in Florida are telling us their subs have gone to Louisiana and Mississippi to make higher wages than builders are paying in Florida." That may be good news for the Katrina-stricken areas and for the trade contractors who are making extra money, but it's bad news for the Florida homebuilders, who are still in a growth market and stretched thin for qualified subs.
While plenty of overall labor remains widely available in most parts of the country, qualified and skilled workers are in short supply in select regions, particularly in the southern and western states, where the boom in residential and commercial construction has been strongest, NAHB reports. According to the association's national survey in May, the most prevalent nationwide shortages of contractors and subcontractors are in these skilled trades:
- Rough and finish carpenters
- Framing crews
- Roofers
- Plumbers
- Bricklayers
Some materials in short supply before Katrina
However, Carliner emphasizes that most of the labor shortages pre-dated Katrina and the 2004 hurricanes in Florida. And that wasn't the only shortfall builders faced. "With residential construction at record levels, supplies of labor and materials have been tight for the past several years," Carliner says. "Costs for building materials have increased much faster than overall inflation in recent years. The devastation of the 2005 hurricanes created new pressures on materials, such as those for repairs like roofing and those made from petrochemicals, although shortages in petrochemical-based products like asphalt and PVC pipe are easing."
Moreover, tight supplies on a spot, regional basis have resulted from limited or disrupted production capacity—some a result of the hurricanes—at plants making products such as wood panels, drywall, insulation, cement and brick. Carliner notes that new facilities aren't expected to come online until 2007 or 2008.
Building industry professionals give the Gulf Coast rebuilding effort at least 10 years, especially in cities facing infrastructure issues and the myriad policies that need to be worked out in rebuilding levees.
Administrative and political hassles are heightening the delay in rebuilding, Carliner says. "There's a lot [of people] just waiting for regulations to be determined and fighting with insurance companies. It's not just a matter of not enough construction workers and materials, but getting through a lot of private and public red tape."
Marcia Jedd writes frequently about design and construction issues.
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