I recently read articles in Construction Dive and the Stratus 2025 State of MEP report, which got me thinking about workforce challenges and where the market may go in 2026. Thinking about the future always leads me to thinking more about using technology and fabrication, which makes sense since it is the focus of my job. It’s my nature to try to look for early signals, then plan two moves ahead.

The one leading indicator called out in the Construction Drive article was labor demand (https://bit.ly/49HyRvT). In January, it was reported that construction job openings surged in November 2025 to 292,000, up 90,000 from October 2025 and up 15,000 from the same time last year. The Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS), which defines a job opening as an unfilled position for which an employer is actively recruiting, confirms the figures and other data referenced in the report (www.bls.gov/jlt).

To me, that bounce-back hints that project pipelines are starting to move again. Obviously, we all know it does not mean the labor problem is solved. We all know that while demand firms up, labor will likely remain scarce, meaning the performance gap between high-maturity contractors and everyone else will widen quickly.

The Construction Dive piece captures this paired tension of a rebound in openings and cautious hiring pretty well. According to the article, even with openings climbing, many contractors are standing with a guarded “low hire, low fire” posture, and hiring remains historically sluggish. The data suggests demand for workers accelerated in November 2025, yet hiring remains slower than at any point on record prior to 2020.

From what I am hearing among my connections, this is what many of you are living. There are advertisements for capacity, but hiring is being done very carefully because owners remain hesitant and selective about starting their projects. The result is a market where work can ramp in pockets faster than labor can respond, which raises the value of predictability and throughput.

Prefabrication: The performance differentiator

I now turn to the Stratus 2025 State of MEP report (www.stratus.build/state-of-mep-2025), which was compiled from input from 144 leaders across mechanical, electrical, plumbing and sheet metal companies. This document highlights that labor shortages remain structural, especially in fabrication shops and field installation.

When asked whether labor availability improved, worsened or stayed the same in 2025, the overall results leaned negative: 48% of respondents said it worsened, and only 17% said it improved. That helps explain why rising openings do not automatically translate into fast hiring. It’s obvious to me that many contractors are already operating in a tight labor environment.

The Stratus report also calls out the pressure from inputs. Material inflation, which was cited at 8%, continues to outpace labor inflation. This tightens margins and reduces tolerance for rework and inefficiency. In this environment, staffing is not the only lever companies can pull; operational discipline matters more.

In my view, the State of MEP report describes an industry continually striving to shift away from paper, spreadsheets and other analog or disconnected tools toward model-driven workflows, centralized fabrication, connected planning systems and field-ready digital tools. Contractors need real-time insight to build with greater performance, predictability and profitability.

The prefabrication numbers give that logic weight. The report calls prefabrication “one of the most powerful differentiators in contractor performance” and links higher prefabrication levels with stronger growth. Companies reporting that more than 60% of their work was prefabricated saw a median revenue increase of 14.5%, versus an overall median of 4.5%.

I think that spread reflects a delivery model that does three things well. 

First, it moves more work into controlled environments where repetition is possible. Second, it makes labor more productive by reducing variability and limiting idle time, not to mention increasing safety. Third, it tightens the link between design and installation, reducing rework sooner or catching mistakes/changes before they hit the field.

The report’s closing summary lays out what the best shops are already doing, becoming the central hub of the project. I have said this for a while, and continue to feel that the companies leading the next five years are those treating fabrication as a coordinated workflow, not a production silo or contract requirement and added burden. The winners will also invest in data and systems, unifying design, shop and field operations into a single measurable process.

Here now is a direct labor implication. Given workforce scarcity, the cost of a missed or inaccurate handoff is higher. A field team waiting on the right cart, a corrected assembly or an updated layout burns the most expensive resource on the job: skilled hours.

The Stratus research also highlights what could be a major visibility gap. Financial outcomes are widely tracked, but operational known performance indicators tied to virtual design and construction (VDC), fabrication, logistics and field productivity remain large. Most companies know how well or poorly projects turn out, but aren’t fully able to understand the drivers behind performance and variance. If you cannot measure where time and material are going, you cannot systematically fix it. Or said another way, you can’t manage what isn’t measured.

Technology budgets are rising because technology is now the capacity strategy.

The power of measurement and analytics

In the closing section, Stratus flags what I hope is a defining shift heading into 2026: operational measurement and analytics are becoming a competitive advantage. This includes investments aimed at creating intelligence loops across estimating, VDC and building information modeling, shop production, field installation, purchasing and inventory, and logistics. Overall, 68% of companies reported increased investment in metrics, data and visibility.

Respondents also ranked the technologies expected to drive the greatest profitability gains over the next two to three years. They list several operations-focused initiatives, namely model-based estimating, digital field installation tools, shop production tracking, purchasing and inventory management, and data science and visualization. 

For me, the takeaway is clear. Direct profitability is moving upstream toward planning, data and coordinated execution, not downstream firefighting. This points to what I’ve often said and heard throughout the MEP sector: We do better when we get involved earlier.

And of course, artificial intelligence is being pulled into that conversation. The report shows that AI adoption is accelerating, with 62% expecting either significant or transformational impact by 2027. Some earlier findings point to practical use cases that align with the labor challenge, including estimating and forecasting, automated takeoffs, schedule optimization, shop productivity tracking, and document or model interpretation.

Building capacity for 2026 and beyond

Looking at the report, most contractors are not predicting a boom; they are predicting stable, moderate growth. It summarizes demand expectations for 2026 as moderate and steady, and notes that growth is increasingly tied to firms with higher levels of prefabrication adoption, digital maturity and the ability to scale. That framing aligns with the job openings rebound in the Construction Dive article. Early demand signals can strengthen while hiring stays cautious because capacity is constrained and project uncertainty has not fully disappeared.

When I look at them together, the story becomes even clearer. Job openings rebounded, signaling that demand is looking to pick up, even while hiring remains cautious. And of course, labor availability continues to feel worse for many contractors, and the shortage is most acute in the places where projects are physically built in the shop or the field, though there appears to be more struggle recruiting office staff.

The winners are not only the companies with the best recruiters; they are the contractors who build operating capacity through prefabrication, automation and coordinated, measurable execution. The winners standardize where it makes sense, measure the drivers that shape outcomes and connect design, shop and field so fewer skilled hours are wasted on avoidable friction.

If 2026 is the year more projects start to move again, which I believe it will be, the labor shortage will show up faster than many owners expect. This is why the most forward-looking contractors are investing now in workflows that make labor more productive and systems that make those workflows repeatable. 

The market is giving a signal; we should listen. The contractors who can execute with predictability, not just headcount, will be the ones who turn that signal into momentum.

 Travis Voss is the director of innovative technology and fabrication at the Sheet Metal and Air Conditioning Contractors National Association. In this role, he aids member contractors in identifying the critical technological trends within the industry and assists them in remaining at the forefront of these developments. Before joining SMACNA, Voss worked for Helm Mechanical as its leader of innovative technology. He serves his local community as a volunteer firefighter.