The Construction Industry Landscape
Our research identified three major components that make up the construction industry in St. Louis: consumers, contractors, and labor. Each component has its own priorities when it comes to addressing issues of equity, but some of the most effective efforts take all three into account. Learning how the three groups interact and influence each other provided a richer understanding of the landscape. This is the reason we felt it would be inauthentic to present one without the others even though in some ways narrowing the focus would have been simpler. We began to see the construction industry as a three-legged stool and we believe that it will take commitment from all three players to truly address any critical issue the industry faces.
Consumers: Consumers are the companies hiring the contractors for their building projects. Since they are paying for the project they have a significant opportunity to advocate for equitable practices from the beginning of the construction. Any size consumer can advocate for best practices and may experience the issues identified by our team but it is the largest consumers in the region who regularly lead new construction projects that can pilot new equity efforts, set positive examples and standards, and advocate for equitable construction policies and legislation.
Contractors: For our purposes the term “contractors” includes both general and specialty contractors. General contractors negotiate and bid on work with consumers. They help set the scope, timelines, and terms of the project. Then the general contractors work with specialty contractors to deliver all aspects of the agreed upon project. Specialty contractors are hired as partners to deliver specific components of the project such as painting, plumbing, and electric and are usually paid through the general contractor.
Labor: Labor refers both to boots on the ground workforce and the unions that represent them. Individuals wishing to pursue a career in construction must learn a trade through a combination of pre-apprentice, apprentice, and on the job journey hours. To become a journeyman and earn full wages a person must complete a certain number of hours and requirements set by that particular union. There are over 20 unions representing different trades in St. Louis. These unions hire and train the construction workforce as well as influence policy and legislation to benefit their members and ensure safety standards at construction sites.
We realize many of the critical issues affecting minorities in the construction industry also apply to women. Common industry language often refers to women and minority business enterprises or suppliers together as WBE/MBE’s. Several of our contacts stressed the importance of using best practices to make the industry more equitable across race, gender, and age. However, due to limited time and our objective of addressing priorities in the Ferguson Commission Report we decided to focus specifically on racial inequity. Although there are important issues specific to gender that are not explored in this document we believe that many of the best practices suggested to address racial equity will improve the benefit the industry as a whole.
Critical Issues in the Field
In 2012 The Associated General Contractors of St. Louis (AGC), the St. Louis Minority Supplier Development Council (SLMSDC) and the St. Louis Council of Construction Consumers (SLCCC) convened a meeting of over 100 construction stakeholders to form a task force to review diversity initiatives by reviewing existing data, identifying critical issues, and generating priority action recommendations. Since then some of the programs mentioned have been eliminated or improved and in some cases brand new initiatives have been launched as leaders in the industry look to address gaps in equity for minorities. However, the critical issues identified are still aligned with our current assessment of the landscape and generally fall into five categories. Some of the concerns identified by the task force are listed below.
- The history and continuing practice of racial discrimination in the construction trades has resulted in a lack of minorities in the industry.
- Minorities and women have difficulty gaining access to job interviews; are often excluded from organizational and job-site leadership roles; and are extended fewer business opportunities.
- There is a wide variance in union standards, protocols and practices, especially with regard to diversity and inclusion efforts
- The industry’s approach to recruiting minorities and women into the trades has been fragmented and largely without coordination
- Apprenticeship programs’ retention and graduation rates are too low, especially among minorities
- Minorities and women lack adequate support systems from pre-apprenticeship through employment
- Many M/W/DBEs lack construction business skills, including sales and marketing, accounting, estimating and bidding, project management and cash flow management. The complexity of operating a business, combined with these skill deficiencies, impacts M/W/DBEs’ ability to compete with more knowledgeable and established firms
- M/W/DBEs are too often pigeonholed or stuck in a caste system where they work as perennial subcontractors. As a result, they do not get enough opportunities to develop the skills and capacities necessary to become primes
- The industry is beset by high turnover among minorities and women because of retirements, terminations, resignations, dropouts etc.
- The industry is facing a pending knowledge drain due to retirements and the lack of mentoring and development of diverse talent
- Slow payments to M/W/DBEs impact their ability to cover payables. This happens most frequently when M/W/DBEs are paid by primes and not the owners/clients
- Inadequate quantity and quality of skilled labor limits M/W/DBEs’ ability to bid on large scale projects
- Lack of financial capital and the limited number of minority and women-owned banks impedes the ability of M/W/DBEs to secure loans and grow