2024 Construction Industry Outlook: Skilled Labor Shortage Identified as a Major Challenge

Marcum LLP Survey Highlights Resilience Amid Economic Uncertainties and Emerging Opportunities

Marcum LLP, a leading national accounting and advisory firm, has released its 2024 Marcum National Construction Survey, offering an in-depth analysis of the current state of the construction industry. This comprehensive report, based on insights from industry leaders nationwide, reveals a blend of cautious optimism and significant challenges, as the sector navigates economic uncertainties and emerging opportunities.

The survey indicates that while construction executives are generally optimistic about the future, their confidence is tempered by concerns related to the economic and political landscape, particularly in an election year. Key federal initiatives, including the Infrastructure Investment and Jobs Act (IIJA), CHIPS Act, and Inflation Reduction Act, are expected to drive growth in crucial areas such as infrastructure, semiconductor manufacturing, and clean energy projects.

However, the persistent shortage of skilled labor remains a critical issue, with nearly 29% of respondents identifying it as the most significant threat to their businesses. This shortage is compounded by a noticeable decline in office construction, attributed to enduring shifts in white-collar work environments. In contrast, sectors like healthcare, education, and renewable energy continue to experience strong demand.

Despite challenges like inflation and rising living costs, the construction industry has demonstrated remarkable resilience. Healthy project backlogs and reduced competition—reflected in fewer bidders per job—highlight sustained demand for construction services. However, emerging concerns such as cybersecurity are gaining attention, with industry leaders recognizing the increasing sophistication of cyber threats. This has underscored the need for companies to enhance their cybersecurity measures to protect against potential attacks.

Financial hurdles also pose challenges for the industry, particularly due to higher interest rates and tighter credit conditions. These factors have led to delays and cancellations of projects, with 38% of respondents reporting difficulties in securing financing. The survey also reveals that many construction firms are not fully utilizing available tax incentives, with 37% of participants failing to take advantage of any of the eight tax incentives highlighted in the report.

Succession planning emerges as a key priority, with nearly half of the respondents emphasizing the importance of preparing for leadership transitions. The competitive landscape is also evolving, with 65% of respondents reporting just 1-4 bidders per project, marking a notable decrease in competition.

Joseph Natarelli, Marcum’s National Construction Industry Leader, reflected on the findings, noting that despite the challenges, the overall outlook for the industry remains positive. He expressed surprise at how many firms are not leveraging valuable tax incentives and encouraged industry leaders to explore these opportunities, along with new technological advancements, to bolster their businesses and prepare for future uncertainties.

Marcum Partner Roger Gingerich, who leads the firm’s Midwest construction practice, highlighted the practical significance of the survey’s findings, emphasizing its role in helping firms of all sizes strategize for the future. He encouraged the adoption of more efficient financial practices and the utilization of overlooked incentives to improve competitive standing in a rapidly evolving market.

The 2024 Marcum National Construction Survey provides a comprehensive overview of the challenges and opportunities within the construction industry, offering stakeholders valuable insights to navigate the sector’s shifting landscape effectively.

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