Q&A: ABC’s Michael Bellaman on critical issues facing construction

Michael Bellaman, president and CEO of Associated Builders and Contractors

The ravages of Covid-19 are no secret to anyone in the world, let alone to construction contractors trying to make a living in the age of quarantines and social distancing. Add the changes that might be handed down by an incoming Democratic administration which, depending on your political point of view, could be construed as less friendly to business than the outgoing leadership, and you have a lot of uncertainty on the table.

To get an expert opinion on critical issues facing construction in 2021, Conexpo-Con/Agg 365 talked with Michael Bellaman, president and CEO of Associated Builders and Contractors (ABC), to get his take on some of the matters keeping you up at night.

CONEXPO-CON/AGG 365: Covid-19 has changed the way the world does business, and continues to threaten the economy. What are some less-obvious effects of the pandemic on the construction industry?

Bellaman: ABC contractor members are committed to safety and making sure all their workers go home safely every night. Covid-19 has obviously introduced another unsafe condition, and the industry has done a commendable job in advancing management methods and proper safety protocols to combat this risk.

One nuance Covid has highlighted in the safety culture is the concept of total human health. When you think about safety in construction, you traditionally think about the practical jobsite aspect. But Covid has shed light on mental safety and the effects of anxiety and stress. Until this year, workers have been worried primarily about their own physical safety, but now they are taking new safety concerns home, such as fears over getting infected with the virus and spreading it to family and loved ones.

The concept of total human health includes physical health, social health, spiritual health and of course, mental health.

There is an emerging issue related to mental health that’s really important in our industry, and that is the death by suicide rate. Many are unaware that in construction, you are five times more likely to lose a worker to death by suicide than from a safety-related jobsite incident. [According to the Centers for Disease Control & Prevention (CDC), construction has the highest suicide rate (53.2/100,000) across all industries.]

You always hear the slogan, “safety first,” and leading organizations do not compromise on safety, but we must also pay attention to suicide prevention. The new challenge in the midst of a global health crisis is not just sending our workers home safely, it is sending them home healthier, happier, wealthier and better in terms of total human health.

CONEXPO-CON/AGG 365: What’s your prediction for the US construction economy in 2021?

Bellaman: When we started the year in 2020, our forecast estimated we were going to need another 400,000 or 500,000 workers to meet demand, as we estimated we were going to record construction spending of $1.3 trillion. Obviously, when Covid hit, so did the fear of the unknown. No one knew what we were dealing with.

As a result, the industry lost 975,000 jobs in April alone. Combined with March numbers, we lost more than a million jobs in two months. Big picture: more than 20 million jobs were lost in the United States due to Covid-19.

Construction rebounded significantly in May with about a half a million jobs created, and we have added jobs since, but we are still down a couple hundred thousand jobs.

The introduction of vaccines gives us a light at the end of the tunnel, and there is a lot we now know about how to stay safe. We know the protocols and the right things to do. People are starting to feel better about things turning around, but in the near term, there are big questions facing contractors.

The ABC Construction Confidence Index asks participants how confident they are in sales, profits and staffing increasing over the next six months. The February survey, conducted pre-Covid, reflected 70% confidence that sales and staffing levels would increase over the next six months, while confidence in increasing profits was at 62%. For perspective, we had been at or around those levels since the beginning of 2017.

The following survey, conducted in March, showed confidence plummeting to below 40% on all counts. Basically, more than 60% of respondents believed sales, profits and staffing would decrease over the next six months.

In contrast, our November 2020 survey, which we just reported in December, showed 53.8% responding they believe staffing levels will increase over the next six months. Those who believe sales will increase over the next six months went from a low of roughly 37% up to about 50% currently. A total of 43.4% have confidence that profits will increase over the next six months. The numbers show respondents are not highly confident, but the findings are encouraging.

The ABC Construction Backlog Indicator is currently at 7.2 months. That number was at 8.9 in March of 2020. For some perspective, the highest backlog we have recorded was 9.9 months in the second quarter of 2018. The low was 5.8 months in the fourth quarter of 2009. What the currently dropping CBI means now is that work is being delayed and/or postponed, while new jobs are not coming down the pipe.

To get back to the original question, the most critical issue facing North American contractors is getting work. There is a lot of uncertainty there.

CONEXPO-CON/AGG 365: How do you see a Joe Biden presidency affecting construction?

Bellaman: We are looking at an overall industry contraction of about 1.3% in 2020 but within that, we see a lot of winners and losers. Some sectors, like lodging and hotels, will see a contraction of 13.4%, whereas public safety and water supply, for example, might see some big growth opportunities.

Infrastructure is front and center for almost every administration, so the question is, can they get it done? With the new administration, I think we will see more laws and regulations.

President Trump did tremendous work taking away rules and regulations that just did not add value or help create jobs. Now, we may swing back the other way.

CONEXPO-CON/AGG 365: Can you provide a specific example?

Bellaman: One of the most significant pieces of legislation related to the construction industry is the Protecting the Right to Organize Act (PRO Act), which enhances workers’ right to organize unions. It was passed by the House of Representatives last February, but the Senate did not take it up, and President Trump indicated he would never sign the bill. President-elect Joe Biden has indicated he will absolutely sign it.

The first thing the PRO Act will do is overturn 27 states’ choice to be right-to-work states. In effect, right-to-work will be completely overturned. When you think about how the federal government can overturn a decision that a state voted on, you realize it can overturn anything in that state. That’s another conversation, but obviously right-to-work gives employees an opportunity to choose. At least 87% of construction company employees choose not to be part of a union. The PRO Act is trying to flip that percentage.

ABC welcomes contractors who use union labor, non-union labor or a combination of both to compete based on merit; whoever has the best value proposition should win the project. We help our members develop their people, win work and deliver work safely, ethically, and profitably for the betterment of the communities in which they work. We recognize that diversity of ideas and thought drives innovation and value creation.

If passed, the PRO Act will limit fair and open competition, and fair and open competition is what we are all about.

CONEXPO-CON/AGG 365: What message would you like to send North American contractors going into 2021?

Bellaman: Rethink your point of differentiation. Educate and upskill your people.

Invest in your people, invest in technology. All economic indicators are pointing in the right direction and suggest that construction going forward is going to be just as good, if not better, than it was prior to Covid.

US labor law 101

The debate continues over who should pay for union advocacy

More than half of U.S. states have enacted right-to-work laws, which essentially prohibit the requirement of workers to pay union-related fees.

Right-to-work laws are separate from the provisions of the Taft-Hartley Act, which prohibits agreements between labor unions and employers that require union membership for employees. Under the Taft-Hartley Act, employees have the same right to employment regardless of whether they are members of a union.

The Taft-Hartley Act was passed in 1947 by a Republican-controlled Congress in an attempt to rebalance power between labor and management following the Wagner Act of 1935 which gave some advantages to unions. While it prohibits the requirement for union membership, the Taft-Hartley Act does allow unions to require non-union employees to pay an “agency fee” as compensation for non-political union initiatives - such as collective bargaining - from which all employees may benefit.

Right-to-work laws aim to bar employers or unions from requiring payment of any union-related fees from non-union employees. Supporters say that requirement can inhibit economic growth and limits an individual’s freedom.

Opponents of right-to-work laws claim it is unfair for non-union employees to reap the benefits of union activity, which their fellow employees who belong to the union support with union dues.

What is the PRO Act?

Pro-labor measure might be a priority for the Biden administration

The Protecting the Right to Organize Act (PRO Act) is a bill brought forth by Democrats on the House Education and Labor Committee that could significantly strengthen organized labor in American business. It was passed by the House of Representatives in February 2020, but was not taken up by the Senate. Many expect the bill to be a priority for the incoming Democratic administration.

The proposal would amend the National Labor Relations Act (NLRA) by repealing right-to-work laws designed to protect employees by preventing them from being fired for not supporting a union with which they do not wish to affiliate. There are 27 states which have voted in support of right-to-work. For their part, unions do not support right-to-work because it diminishes their influence and income from membership dues.

Other effects of the PRO Act include an end to secret ballots within company elections that determine employees’ interest in organizing a union and permission to engage in secondary boycotts.

Supporters of the PRO Act say the bill protects workers against being fired or otherwise penalized for organizing a union. They also claim it gives workers more freedom to organize without employer interference.

President-elect Joe Biden has stated strong support for the PRO Act. Only time will tell whether the bill is taken up by the Senate and ultimately signed into law.