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Scaling the Construction Labor Shortage

“The construction industry is ripe for disruption,” according to Trevor Schick, head of Katerra’s materials organization. He cited data from McKinsey Global Institute that found about $10 trillion is spent globally on construction-related goods and services every year.

“With the industry’s productivity trailing that of other sectors for decades, there is a $1.6 trillion opportunity to close the gap,” he told Colorado Builder by email.

Katerra is an offsite construction company that calls itself a “technology company at heart.” Just four years after it was founded, Katerra now has more than 5,000 employees around the world, with more than 700 projects in progress across the construction sector and $3.7 billion in new-build project bookings, Schick said. The company’s first factory opened in Phoenix in 2017, followed by a factory in Spokane, Washington. A third factory is under construction in Tracy, California.

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When it comes to home building, Schick noted that despite the exponential growth in the need for housing, innovation has been lacking.

“People are building homes today essentially the same way they did in the mid-1800s,” he said. “Economies of scale just don’t exist: Most sites/projects are designed, planned, quoted, bought out and built as one-off projects. Yet they all have many standardized materials, labor skills, design components, processes in common.”

Katerra responded by vertically integrating the construction life cycle, providing supply sourcing, design, manufacturing and construction services across the industry.

Modern solutions for construction labor shortage

Offsite construction can help fill the skilled labor gap by shifting some of the labor off the jobsite and into a factory setting, Schick said. Panelization and modular building limits the number of workers needed on a jobsite and the time they spend there.

“Offsite construction can help modernize the construction labor force at scale, while also providing new avenues for cost and time efficiencies by avoiding weather delays and fabricating building components with greater precision,” he noted.

Increased adoption of modular building could have a trickle-down effect on trades, as well. “Offsite construction has the potential to grow the construction industry as a whole, offering the opportunity to generate net-new construction jobs because more construction projects would be economically viable, and the construction labor market would be more stable overall.”


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