Does this US state have too much construction activity?

A Micron building. The US data storage producer is making a $15 billion investment in a fabrication site in Idaho, US. (Image: Reuters)

Reports said developers in the area have expressed concern over the squeeze, particularly as large projects like Micron’s US$15 billion expansion and a Meta data centre build are set to occupy a large percentage of the state’s more than 70,000 construction workforce.

That number of Idaho construction workers is nearly double the figures from 2011, but experts still anticipate some massive projects may hamper construction activities on the whole.

Wayne Hammon, CEO of the Idaho chapter of the Association of General Contractors (AGC), spoke to the state’s Economic Outlook and Revenue Assessment Committee in January.

He noted that the industry, while segmented by specialities, is affected by out-of-sector activities.

“All parts of the construction industry are interconnected,” said Hammon to state officials. “When the single-family market gets hard, it impacts [other segments], too.”

With more major projects, Hammon anticipated high labour prices and shortages. “The same guys that build roadways and bridges also build airports,” he said.

Everything combined, Hammon said the record numbers of construction employees in-state comes with a caveat. Even though labourer numbers are rising, in a growth area like Idaho’s Treasure Valley region, there are also increased salaries.

Hammon added, “We’ve seen a 15-20% increase in salaries just last year alone.”

Enormous billion-dollar Micron project will cause labour issues

Currently under construction near Boise, the state’s capital and largest city, is a $15 billion memory chip fabrication plant for Micron, a US-based computer memory and data storage producer.

“We love our friends at Micron,” said Hammon, noting approximately $5 billion of the investment will go directly into construction.

However, the massive scale and speed of the project (“They want to get it built in four to five years,” said Hammon), plus incentives provided by Micron to the project’s labourers, might accelerate a cost and worker squeeze.

“At its peak, there are 4,000 construction workers on this one job alone,” said Hammon, who said he expects max site attendance in 2025 or 2026. This summer, though, the number of workers will be approximately 1,000.

Incentives for journeymen ($10 per-hour above base pay) and for workers that reside more than 150 miles away from the site ($240 per diem, six days per week) means more workers are likely to sign on to the project, which will take labour away from other schemes. Hammon also noted the area’s housing shortage and questioned if there was enough capacity to accommodate the incoming surge of labourers.

“All problems that will impact Boise for a long time,” said Hammon, noting Micron’s ambitions to open the fab plant in five years could be ambitious. “There are not enough RV parks, not enough open apartments to house these people.

“We’re going to have a lot more people doing a lot more work at a much higher wage than what we’ve experienced,” he said.

This specific issue, Hammon noted, is compounded by industry-wide challenges like high interest rates, supply chain delays, rising material costs, and federal regulation.