June 2019 Magazine

Arkansas’ Hammering Economy

Arkansas

Construction remains strong in NWA, improving across the state

by Curt Lanning

NORTHWEST ARKANSAS REGIONAL AIRPORT PARKING GARAGE. Photo courtesy of Nabholz. Photo credit: Ken West

Most would agree the national economy is chugging right along. That means construction jobs are up around the country, and that includes Arkansas. 

Mervin Jebaraj, director of the Center for Business and Economic Research at the Sam M. Walton College of Business, has been studying the construction industry in Arkansas for 12 years. He recently spoke on the state of the construction industry in Arkansas at the Northwest Arkansas Business Forecast Luncheon. He presented data that showed the construction industry did well in 2018, though not as well as initial predictions. 

Despite a recent softening of Northwest Arkansas’ population growth that has an impact on some parts of the construction industry, he said the region still leads the state in construction employment. 

“I think it affects the demand for homes slightly. The population is still growing pretty fast, just not as fast as it did in the last three or four years,” Jebaraj says. “We’re still adding quite a few people.” 

When population growth was at its highest rate in the last few years, Jebaraj says the region wasn’t building enough homes. 

“I don’t know if that’s improved a lot,” he says, but added a sustained loss of newcomers  will apply pressure if there is less need for new homes. 

While residential building could see further impacts, commercial construction remains strong. One of the biggest problems facing the industry is a lack of skilled workers in the region. 

“I think that’s one of the biggest challenges we’ve had in the construction industry,” Jebaraj says. 

He added migrant construction workers went away during the last recession, and most never came back. 

Steve Lockwood has spent most of his life in the construction industry and now works with Cameron Smith & Associates a Rogers-based firm that recruits talent for leadership positions in the construction industry across the United States and Canada. He agrees that shortage of workers is an issue for the industry. 

“[One of the] biggest issues [is] shortage of good talent in the construction industry,” Lockwood says. 

He’s recruiting talent primarily in the areas of project management and superintendents, but he said there’s a shortage of skilled labor as well.

“With all the projects in Northwest Arkansas, there’s going to be a major shortage of skilled trades and management in construction as a whole,” he says. 

Mervin Jebaraj, director of the Center for Business and Economic Research at the Sam M. Walton College of Business, says Northwest Arkansas’ slowing population growth could impact the construction Industry. Photo by Beth Hall

The region is already experiencing some of that right now, he adds, especially with all that’s going up in the Pinnacle area of Rogers – hospitals, government buildings and other projects. 

Jebaraj says fewer skilled workers means project price bids go up as labor gets more expensive. 

Lockwood said HVAC, lighting and security systems, plus technical equipment and more go inside new buildings and older ones as well. He’s concerned a lack of supplies could lead to an increase in materials costs. 

“There’s going to be a drain on all these supplies if it’s not planned out well,” he says. 

Planning will be crucial for projects over the next three to five years, according to Lockwood. Otherwise projects will be challenged to not only get started but also completed. 

Walmart’s new headquarters in Bentonville will be one of the biggest commercial construction projects in state history.

Jebaraj said tariffs on imported goods like lumber, steel and aluminum are also a very real concern and challenge for the construction industry as they increase supply costs.

Cameron Smith, founder of Cameron Smith & Associates, says Walmart’s new headquarters will have a big impact on the construction industry in Northwest Arkansas. 

“That is going to drain resources from all the construction companies involved in this,” Smith says. “There’s just not enough talent and experience here to handle the amount of demands for this job.” 

Jebaraj says temporary workers from outside of the region will likely be brought in.

Smith says it’s not difficult selling Northwest Arkansas and all it has to offer to people relocating to the area for construction jobs.

“When we recruit somebody here, what I say to them, is, ‘I have an opportunity I want to run by you, and the best part of this opportunity is where it is,’” Smith says.  

Lockwood says he’s looking to fill construction superintendent jobs with people who have a two or four-year construction management degree and a minimum of three to five years of experience. Additionally, companies are also looking at what construction-related internships an applicant worked while getting their education. 

Steve Lockwood, a talent recruiter in Rogers, says shortage of skilled workers remains an issue. Photo by Meredith Mashburn.

While Northwest Arkansas has been a construction hotbed, other areas of the state are heating up, as well. Lockwood says he’s recruiting people for Little Rock and Fort Smith where hotels, government buildings, schools and hospitals are being built.

With casinos gearing up to make their way into Arkansas, construction projects will bring jobs to Hot Springs, Pine Bluff and West Memphis. 

Jebaraj said the industry is booming in the northeastern corner of the state, bolstered by   construction projects in Jonesboro, and is the second fastest growing metropolitan region in Arkansas. In the south, El Dorado is continuing to see construction projects focused on improving the downtown area. 

Still, no other region in Arkansas is seeing the level of construction projects like NWA. There are even construction companies from other parts of the state looking to bid on jobs or open an office in the region, Lockwood says. 

“Contractors are asking themselves, ‘Where is the work?’ And they’re finding it in Northwest Arkansas,” he says. 

Despite how good things look right now, the construction industry in Arkansas hasn’t recovered to pre-recession levels in any part of the state. Northwest Arkansas is the closest, but it’s still not at its peak like in 2006 and 2007. Still, given the economy’s current pace, the construction industry in Arkansas is right about where it needs to be, Jebaraj says.

“It’s sustainable right now.” 

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