Building Congress Chair Ralph Esposito On NYC’s Construction Recovery, Labor Shortage

He takes over the chair as the Building Congress comes to a crossroads. The organization’s president and CEO, Carlo Scissura, has kept a low profile since allegations surfaced in February that he lobbied for a developer without registering as a paid lobbyist. The news likely caused Mayor Eric Adams to drop Scissura as his pick for head of the city’s Economic Development Corporation. 

The city is also navigating an uncertain recovery from the pandemic, as residential rents rise but tourism numbers remain sluggish and the majority of office space sits empty most days. The construction industry also faces a battle in the state legislature over the 421a development tax break, a successor for which was not included in the new state budget this April.

Last month, Commercial Observer Zoomed with Esposito to discuss his priorities for the Building Congress, the city’s construction labor shortage and his hopes for the city’s incoming federal infrastructure funding.

The interview was edited for length and clarity.

Commercial Observer: When did you officially start at the Building Congress?

Ralph Esposito: So I officially took over as chair in February of this year. You typically have a passing of the torch in January. Our annual meeting was scheduled for a particular date, but we had those two horrific shootings of police officers in Harlem, and, out of respect for the funeral services, we pushed that off. So it’s probably been a month on the job.

What was your involvement with the Building Congress before taking over as chair?

I’ve been involved with the Building Congress for probably 24 years in a number of different capacities. I initially got involved early in my career with the Building Congress Foundation, which is kind of a philanthropic arm of the Building Congress that provides seed money to a lot of the not-for-profits in New York. It pays for a lot of the research that the Building Congress does about where the economy’s going, where spending is going to be. So it’s really kind of a research arm of the Building Congress that forecasts what are the agenda items that we need to focus on. 

I would say that I probably served with the foundation for four or five years. And then I went on to the board of the Building Congress, and have served in a number of different capacities, being very involved with committees, being the former treasurer and being on the executive committee. So, I’ve kind of hung around at the Building Congress for quite a long time.

Why don’t you tell me a little bit about your plans for the organization? Do you have specific initiatives or policy goals?

Sure. So, look, I would say the primary focus is working with New York leadership. We saw an unprecedented change in the political system; we have a new mayor, we have a new governor and we have an almost entirely new City Council. So one of the things that we’re particularly focused on is to help drive the city forward and the economic recovery post-COVID. I think that the building industry, probably almost more than any other, is integrally tied to the success of the city, in terms of employment, in terms of buildings, in terms of neighborhoods that get gentrified, and usually when new construction activity happens, new infrastructure activity happens. All tides rise, other things pop up, right? So you build something, and you need a dry cleaner, and you need a drugstore and you need an Equinox, right?

So, really, the community kind of benefits in a number of different ways from an economic perspective, from a jobs perspective, which is something that I’m particularly passionate about. So I think it’s helping Gov. Hochul and Mayor Adams bring the city back and being a partner with them in those efforts.

Carlo was really passionate about rebuilding the BQE. So I’m curious if you have any specific projects or initiatives like that, that you hope to push forward, or hope to lobby for?

I think that the housing issue is particularly important. So I think bringing people together on the affordability issue and how to really help kind of solve the housing crisis that we have. I think that the debate is too much around tenants and landlords. And my view is that both arguments kind of miss the point, right? So, when entitlement processes are slowed down, programs like 421a get eliminated and we have this whole kind of NIMBYism dynamic that happens — we wound up with no inventory, which makes rents more expensive because we have a lack of affordable units. 

But I think that most importantly it eliminates the tens of thousands of jobs, good-paying jobs for the middle class, that could have been working on construction projects throughout the city.

Sure, a lack of lower-priced housing is a significant factor for construction laborers here.

Correct. I think that they kind of missed the point. And so what happens is we build nothing, right, and we have this kind of stalemate — 421a is not going to get extended, and we’re not going to build anything. And I think then developers go, “Okay, we’ll go to New Jersey and build product.” And the city really suffers in that regard.

So, at Suffolk, you’re effectively running the New York operations for one of the city’s biggest contracting firms. Would you say that there’s still a significant construction labor shortage here in New York City?

I think there’s enough capacity. But I think for the city to really, truly rebound, I think that it would be a struggle. So we haven’t seen a lot of office inventory come back, right? If you look around the city, with the exception of Disney’s headquarters, there’s not the usual number of tower cranes building office buildings that I’ve seen during the course of my career. So I think that labor is adequate, given the fact that the city really hasn’t kind of come back fully.

Okay, construction activity is still slow. So, if there is a construction labor shortage, it’s not as acute as it would be? 

Correct. 

But, in general, if we were building at the rate of 2019 or 2018, would there be a labor shortage?

Yeah, after the global financial crisis recovery, in like 2012, 2013, I think that when you looked at Billionaires’ Row, when you looked at Hudson Yards, when you looked at some of the work that was still continuing at Ground Zero, I think that we would be challenged to keep up with the demand. And, I think that as we look forward to the stimulus money that’s going to come into the region, we may be similarly challenged. 

One of the good things is that most of the money that’s coming in is not vertical construction, right? So it’s going to be a lot of civil work, it’s going to be the BQE, it’s going to be a lot of infrastructure work. So I don’t think that we’re really fighting for the same pool of workers. But we did have an appreciable decline [in workforce], with people that either left the city or people that left the industry during COVID.

Do you think because of the pandemic, people may have wanted jobs where they were not interacting with as many people? Do you think that that may have been a factor, or was it just overall economic insecurity created by the pandemic?

Look, I think that a lot of people lost their jobs and decided that they would take retirement early and they would move someplace that was more affordable. I think a lot of people got an opportunity to kind of reassess if this is something that they wanted to do. Construction is a particularly challenging career; it’s a hard career, particularly if you’re a superintendent, if you’re working on a site. The summers are hot, the winters are cold, the days are long. So, I think that COVID gave them an opportunity — whether they liked it or not — to reassess whether or not this is something that they’re really particularly passionate about.

I do think that with some of the new technologies that are kind of entering the industry, and some of the things that we need to be more mindful of, like data and analytics and supply chain and logistics, I do think that there are different opportunities in the construction industry than there were 15 or 20 years ago. But we did see a number of people leave the industry and leave New York.

Do you have a sense of kind of what’s going on in terms of the supply chain issues and the price of materials? Those have been a big topic of discussion during the pandemic. And I feel like there’s a lot of stuff in flux right now, with oil prices and everything. Do you have a sense of how that’s impacting the construction industry? 

Well, it’s certainly making the predictability of projects much more of a challenge with the uncertainty around the prices of oil, prices of nickel. Are these really kind of temporary? Or are they more permanent? I think those are some of the things that we’re kind of struggling with. We do try to go more domestically than internationally with building products, just kind of as a risk mitigation plan. But I don’t think that we really have a very clear handle on that at this point. 

Certainly the war in Ukraine complicated things. And oil is something that affects everybody, from manufacturing to transportation. So, that’s kind of the hard one. And, even for our own staff, and people that just live and work in New York, it’s very hard to keep up with inflation — what we’re seeing in supermarkets, what we’re seeing at the gas pump.

Absolutely. I was just curious, because I was hearing a lot about the price of metal roof tiles, timber, steel, concrete, and how those increases in prices were affecting people’s choices, in terms of where they were getting their materials, what materials they were using. I remember when the price of timber had sort of peaked. I spoke to a bunch of timber suppliers, and they were like, “Yeah, it’s kind of crazy. Our domestic timber supply is really kind of messed up right now, because the entire West Coast has been on fire for two years.” So they were getting timber from Central Europe. But if gas there costs like $200 a barrel, that’s going to be a complicating factor for people who are trying to transport things from there.

Correct. And we saw nickel go up, I think, 250 percent in one day recently. So you don’t know if that’s just kind of an artificial spike, and if it kind of corrects itself. But, typically, when you see something go up that much, it doesn’t come down by the same amount in a relatively short period of time. It would be more transitional, where it would come down incrementally. Rather than it went up 250 percent one day, and it comes down to 50 the next day — we don’t typically see that. It’s more kind of a progression. And I think that we’ll see that with steel in particular. We’ll see a leveling, not a retrench to where things were.

Do you have any other big plans that you’re thinking about as you move the organization forward? And how do you feel like you’re going to maybe approach it differently than your predecessors?

I think there are a couple of things that are important to me on a personal level that I will try to move the ball on. Diversity and inclusion in particular — I think there are a lot of wonderful associations that are all kind of working on the same thing. And I think what’s kind of unique about the Building Congress is, it’s really the one kind of place where we have the design community, we have the development community, we have the construction industry and we have labor, all in one association. And, while we may not agree on everything all the time, it’s really a great place for us to build consensus on particular issues and really kind of move the industry forward. So as it relates to what different associations are trying to do with diversity, inclusion and trying to create more opportunities, I think that the Building Congress can be a great place to bring those ideas together, and perhaps expand the agenda more fully and move it forward. 

I think little things like making the workday easier for the men and women that work on our construction projects is really important. I think that in 2022, it’s unconscionable for me to think that it would be hard for somebody to wash their hands before they eat lunch. So, really, just some little things that we can do to make the experience of the workers more attractive would be important. 

And then really making sure that the unprecedented amount of capital that is going to come to New York in the next several months really gets appropriated and used effectively and judiciously. And that the elected officials understand some of the technologies that are available to implement on some of these public procurements, different delivery methods — like design-build and looking at artificial intelligence [AI] and lasers, and all the things that we can do to make things better, safer, cheaper, faster, would really be important, right? 

And having that relationship with the electeds. It’s kind of the first step, was kind of where we started the conversation — is that you can have a conversation with the mayor’s office or the governor’s office, and say that the industry has found a way to do these things more effectively. And we can deliver more product for the finite number of dollars that we have, and we can deliver it faster. 

Wait, what about lasers?

Well, there’s a lot of predictability that you can get in building a building virtually doing kind of renovations, right, and using technology to understand what’s there versus using an old transom. So, all the technologies that are at the advent of AI — really kind of making sure that we’re taking advantage of those and that the federal infrastructure bill, those dollars are stretched as far as they possibly can and will have a big impact on the city for a long period of time.

How are you bringing your experience at Suffolk and LendLease to bear at the Building Congress?

Well, look, I think just a kind of sensitivity to the industry, of having been through kind of challenging moments in the city’s history of construction. So having been involved with 9/11 and the global financial crisis, I think I understand the ebb and flow of how the city comes back. I think, as it relates to the Building Congress, having an understanding of what’s important to our development clients, what’s important to the design professionals, what’s important to the construction professionals, what’s important to labor. I think that I have a really good confluence of experience of the interdependencies that exist for the industry to kind of succeed. 

And, certainly, probably most importantly, are the relationships that I have with people in those respective firms within labor. To really kind of bring the group together in a more cohesive and collaborative way. Not necessarily that that hadn’t been done in the past, just that I think I have really strong relationships given my tenure in the industry.