Local Talent Show
U.S. Developers are Learning to Cope with Local Hiring Requirements for Public Projects
U.S. cities are increasingly turning to community benefits agreements (CBAs) to boost residents' employment opportunities—thereby infusing more money from project budgets into the local economy. The CBA wave, strengthened by the economic recovery, now stretches across the country, including in Detroit, Michigan; Cleveland, Ohio; Portland, Oregon; and San Francisco, California.
But local hiring requirements can create talent problems for project practitioners. (Hiring requirements are often, but not always, part of CBAs.) These challenges include the need for more rigorous recruitment efforts and more intensive safety and technical training.
“We've seen residency mandates grow throughout the state of Ohio,” says Chris Runyan, president, Ohio Contractors Association (OCA), Columbus, Ohio, USA. “Percentage requirements were getting so high that our contractors were concerned about their ability to complete these jobs. It's a very mobile workforce—construction workers go where the projects are.”
Sagamore Development Co. has committed to spending US$25 million to train local workers as part of a US$5.5 billion waterfront development project.
When project leaders are scrambling to find employees to fill local hiring requirements, safety becomes a growing concern, Mr. Runyan says. “When a contractor bids a job—especially a unionized contractor—they don't know the individuals who will be working on the job. But they can count on them having been trained through the union,” he says. Untested talent hired to satisfy CBA requirements can require additional safety training and project oversight—“which drives up project costs.”
That's one reason businesses have pushed to ban local residency requirements for workers on publicly funded projects. Last year, Ohio's state legislature passed a law to do just that. But the city of Cleveland sued the state, challenging the measure's constitutionality. As of December, the law hadn't been enacted.
To help ease safety concerns, some municipalities require that project contractors fund training programs in addition to meeting local hiring requirements. In Baltimore, Maryland, USA, for example, the Sagamore Development Co. has committed to spending US$25 million to train local workers as part of a US$5.5 billion waterfront development project.
Garth Solutions, a firm focused on large-scale construction projects, is working on the SoLe Mia project, a US$4 billion mixed-use development in North Miami, Florida, USA that will take at least five years to complete. As part of its project contract, the company has built training programs to help hire North Miami residents and businesses. “It's not too challenging to do outreach and get people to bid on a job or apply, but if they don't have the knowledge or the skills to be successful, it's a moot point,” says Yvonne Garth, president and CEO, Garth Solutions, Miramar, Florida, USA. “So for the SoLe Mia developer, it's not only about meeting hiring goals, but it's about developing the skills of residents by setting aside US$2.5 million for vocational training.”
Since the creation of a scholarship-based training program in partnership with project developer Oleta Partners in March 2016, more than 100 students have graduated from the initiative, Ms. Garth says. And because this training program was scheduled before the project entered the construction phase, trained talent was ready when the project team broke ground. “Residents still have to apply for the job after graduating,” she says. “But at the very least, they're walking away with a new skill set for future projects.”
Mr. Runyan says he and his team at OCA are enthusiastic about training programs: “We want more individuals in the construction workforce, period.” But he sees potential cracks in the talent pipeline. “A lot of individuals may think construction sounds like a great gig, but once they get out there and realize they're working in 90-degree weather or 30-degree weather in the rain and snow, they often decide it's not for them after all,” he says.
The reliability of newly trained talent isn't the only wild card. Construction project contractors sometimes hesitate to hire people even if they have passed through training programs, says Ms. Garth. “One of the biggest objections is contractors not wanting to put someone new on their payroll,” she says. They often hesitate to hire someone who is unproven full time, especially if it's for a short-term role. Recently, she and her team have created alliances with local labor agencies and staffing companies to make it easier and more affordable for local contractors. “We can negotiate competitive rates for these staffing agencies, and contractors can hire folks without putting them on [the payroll]. If you anticipate the project needs and think strategically, you won't end up in reaction mode.”
“If you anticipate the project needs and think strategically, you won't end up in reaction mode.”
—Yvonne Garth, Garth Solutions, Miramar, Florida, USA
Ultimately, Ms. Garth says, CBAs present opportunities for project managers to identify, engage and develop much-needed talent. “Unfortunately, many people fall into the trap of stereotypes about community benefit programs and lose sight of the value and potential benefits,” she says. “It is really no different than [other ways of] finding and hiring new talent.” —Kate Rockwood