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Sunday, 28 April 2013 22:00

Contractors keep tabs on shorthanded subs

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Construction crews work to complete additions to Holland Hospital last year. Increasingly, contractors say they’re running into capacity challenges, especially among the ranks of West Michigan’s subcontractors, which have been slow to add people after the recession. Some executives fear a workforce shortage could lengthen project timelines this year. Construction crews work to complete additions to Holland Hospital last year. Increasingly, contractors say they’re running into capacity challenges, especially among the ranks of West Michigan’s subcontractors, which have been slow to add people after the recession. Some executives fear a workforce shortage could lengthen project timelines this year. COURTESY PHOTO

WEST MICHIGAN — Led by a resurgence in the health care, education and multifamily markets, the construction industry in West Michigan is adding to its project backlogs at a healthy clip.

But firms are reporting the volume of work has taxed area subcontractors’ crews to the limit. Now they have to wonder if the resurgence could pose labor challenges many would not have foreseen just a couple of years ago.

During the recession, subcontractors were hit hard and many companies folded or cut crews heavily, industry sources said. As demand for new facilities or rehabilitations went stagnant, tradesmen and skilled labor left the state to find work.

Nationally, roughly 2 million construction jobs were lost when the recession hit, according the Bureau of Labor Statistics. More recently, the BLS reported the March unemployment rate in the construction industry is 14.7 percent, down from February’s 15.7 percent, yet still up from December 2012’s 13.5 percent.

The in-state industry employs about 106,800 workers as of March of this year. That’s down from 114,000 workers in 2012, according to the BLS.

Now that the local economy is finding stable ground and seasonal construction is ramping up, the talent constraints are threatening to lengthen job timelines.

“The wrench hasn’t been thrown in yet, but it has been bad in Michigan for so long, a lot of (subcontractors) downsized or closed shop,” said Mike Houseman, president of Wolverine Building Group North America. “Workers have left the industry, and now that we’re finally feeling an uptick, it’s not taking very long for the sub(contractor) market to reach capacity.”

Two key issues: There are fewer subcontracting firms in the market and a lot of them simply don’t have the manpower, he said.

Data from the Brookings Institution’s Metro Monitor report has the Grand Rapids-Wyoming metropolitan area ranked eighth overall in recovery performance compared to other cities across the nation.

With Michigan’s economy continuing to recover, a lot of industries have bounced back, Houseman said, and that is generating the need for expansions and new construction in the region.

Wolverine has roughly an eight-month backlog, which is the most work on the boards the firm has seen in the last several years, Houseman said.

“There is a lot of capacity for hiring in the market,” he said. “It should be steady opportunity for the next year to two years as long as the training is available. We’ve hired four project managers in the last six months.”

Triangle Associates Inc. is another area firm that’s hiring. The company is currently looking to fill a number of superintendent roles, said Josh Szymanski, vice president of business development for Triangle.

“We’ve hired a couple and are looking to hire more,” he said. “We’re used to carrying about a 20- to 30-project workload, but we’re starting to shift some of our focus back on paying attention to who is on three or four different jobs.”

When it comes to hiring subcontractors, Szymanski said he’s seeing a less competitive bid process due to fewer available crews and outfits being cautious not to overextend their workforce.

“You can drive around and see guys swinging hammers on Saturdays and Sundays right now,” he said. “Crews are going seven days a week.”

With summer work piling up, particularly with K-12 and higher education institutions trying to jam in work during the off months, Szymanski said the company has turned to advertising its projects more in the hopes of attracting a solid base of subcontractors. That should in turn help keep projects rolling along.

“We’ve got work out through 2015 and we’re still trying to grow the business,” Szymanski said. “The critical area for getting work done is summer through September, and everyone is saying their (workloads) are full.”

Given the situation, contractors across the region are likely to compete for the remaining subcontractors as the construction season comes into full swing, industry leaders said.

“Unlike a couple of years ago, we’re not going to have to chase every little project,” Houseman said. “We’re in a position to be a little more selective.”

One other pending issue that Houseman said he is watching is the huge unemployment liability that is still hanging out there.

“The federal government is covering the shortfall for the state right now, but that bill is coming back due, and it’s going to hit industries that had to use it the most, which are automotive and construction,” he said. “The caution is what is our unemployment insurance going to cost us? We’re not afraid of it, we’re just conscious of it. The last thing we want it to do is hurt the delivery of the projects.”

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