Large Manufacturing Projects Trigger Labor Competition

In 2020, chip giant Taiwan Semiconductor Manufacturing Company (TSMC) found an ideal site in Arizona's "Silicon Desert" for its next-generation $40 billion semiconductor manufacturing plant. Three years later, however, the Taiwanese chipmaker is struggling to find enough workers to staff the project.

TSMC is not an isolated case, as it turns out. Industry sources point out that with billions of dollars in public and private funds pouring into manufacturing reshoring efforts, labor shortages are threatening the manufacturing boom and other construction activity in these heartland areas.

States such as Arizona, Ohio, New York, and Texas are rapidly becoming centers of American manufacturing. This concentration is putting immense pressure on the local construction workforce, according to Anirban Basu, chief economist at Associated Builders and Contractors.

"The sheer scale of these projects means extraordinary demand for subcontractors and workers," Basu told Construction Dive. "Bringing together so much talent in one place at the same time is extremely costly."

Anirban Basu

Image courtesy of ABC

Brian Turmail, vice president of public affairs and strategic initiatives at the Associated General Contractors of America, noted that many of the skills needed to build electric vehicle battery plants overlap with the trades required for other manufacturing projects such as semiconductor facilities. In other words, large projects in these regions are competing for the same pool of already scarce labor.

"Many of our member companies working on automotive manufacturing and semiconductor construction are struggling to find enough workers to meet very tight schedules," Turmail said. "The pressure to build these plants is enormous."

Special considerations

Turmail said that multibillion-dollar manufacturing projects require special construction techniques, including complex electrical engineering and the need for "ultra-clean spaces," which differ from ordinary building projects. These facilities must use air pressure changes to prevent particles from entering rooms, adding another layer of complexity for contractors. Basu added that many of these structures must also be resistant to vibration and other environmental factors.

Turmail also mentioned that some projects, particularly those of General Motors, Stellantis, and Ford (the Big Three automakers in North America), carry additional union worker requirements, further limiting the available worker pool.

For example, Ford announced in February a $3.5 billion investment to build an electric vehicle battery plant in Marshall, Michigan, as part of a broader $50 billion plan to grow its EV business by 2026. General Motors, meanwhile, announced in January nearly $1 billion in investments across four manufacturing sites.

Such massive plants are not easily built. Intel's $20 billion semiconductor manufacturing campus in Licking County, Ohio, for instance, will require about 7,000 construction workers, according to the Associated Press.

Basu said the nationwide demand for construction workers highlights the tightness of the skilled construction labor force. "I emphasize 'skilled' because this is not ordinary construction; it is precision construction. You really need a highly skilled workforce, and we simply do not have enough of those people." He added that subcontractors may work on these projects for years, so they must have the financial strength to complete the work.

"Because the stakes are so high, such as global market share for computer chips, the potential liability is also extraordinary," Basu said. "Contractors must deliver to specification, or the consequences could be extremely severe."

Positions remain unfilled

Manufacturing construction has been booming since the passage of the CHIPS Act in August 2022, but labor shortages could affect this rapid momentum.

Plant name	Location	Investment amount
Samsung chip plant	Taylor, Texas	$25 billion
Intel semiconductor plant	Licking County, Ohio	$20 billion
Texas Instruments semiconductor wafer plant	Lehi, Utah	$11 billion
LG Energy Solution battery complex	Queen Creek, Arizona	$5.5 billion
Hyundai EV plant	Ellabell, Georgia	$5.5 billion

TSMC's situation is a case in point. TSMC Chairman Mark Liu said during the company's second-quarter earnings call in July that there was a "shortage of skilled workers with the specialized expertise required for semiconductor-grade facility equipment installation." As a result, the semiconductor giant sent technicians from Taiwan to Arizona to train local workers. However, due to the skilled labor shortage, the company ultimately delayed the start of production at its Arizona chip plant to 2025.

This lack of specialized labor is part of a broader trend of job openings in the U.S. construction industry, which had 374,000 open positions as of June. Turmail said that to fill the gap, member companies of the Associated General Contractors of America are redesigning plants to cope with the labor shortfall.

Brian Turmail

Image courtesy of Associated General Contractors of America

"(The labor shortage) is really changing how plants are built," Turmail said. "To some extent, it may affect cost and schedule, but I think it is still evolving." Turmail also said that due to labor shortages, member companies of the Associated General Contractors of America have extended timelines and raised bids.

Short-term responses

Ken Simonson, chief economist at the Associated General Contractors of America, said owners of these multibillion-dollar projects are offering higher pay to attract workers. But Dorsey Hager, executive secretary and treasurer of the Columbus/Central Ohio Building and Construction Trades Council, told Construction Dive that this further exacerbates labor shortages for other builders, who may not be able to compete with those higher wages.

As a result, smaller contractors are offering various benefits beyond pay to attract and retain workers, including hot meals and heated restrooms on site, as well as paid volunteer time and educational opportunities that may even extend to workers' families.

Calls for immigration reform

Despite these short-term adjustments, both Turmail and Basu advocate for some form of temporary worker visa program to alleviate labor shortages. "Because we have this short-term emergency need, we really do need more global talent to help us bring these manufacturing plants online, not just semiconductors but also batteries, alternative energy, and EV projects," Basu said. "(The U.S.) needs these skills, whether from Taiwan, South Korea, Germany, France, or anywhere else—we can use them all."

Carlo Scissura, CEO of the New York Building Congress, said such a move would help fill hundreds of thousands of vacant construction positions across the U.S. However, Turmail added that immigration reform is not currently a priority for lawmakers. "Frankly, we are not optimistic that the political climate can drive responsible immigration reform," Turmail said. "Both parties find it too easy to demagogue this issue rather than take real action."