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Sunday, 30 March 2014 22:00

Construction market ‘gaining steam’ but hiring could lag

Written by  Joe Boomgaard and Elijah Brumback
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Wolverine Building Group is in the process of building a Whole Foods Market in Meridian Township near East Lansing. The firm says its biggest concern for 2014 remains the supply of labor. Wolverine Building Group is in the process of building a Whole Foods Market in Meridian Township near East Lansing. The firm says its biggest concern for 2014 remains the supply of labor. COURTESY RENDERING

The construction sector in West Michigan is poised to make modest gains in 2014 after pulling off a strong finish to last year.

Across the six West Michigan metropolitan statistical areas (MSAs) last year, construction employment increased 6.5 percent, up 1,730 jobs to 28,520, according to a quarterly outlook report compiled by the W.E. Upjohn Institute for Employment Research. The sector was second in terms of the percentage of jobs gained to the leisure and hospitality industry, which saw employment spike 6.7 percent, the report stated.

Statewide, construction employment was up 2,970 jobs or 2.4 percent to 128,100.

Despite the gains across the region, the employment in the construction industry remains in recovery mode compared to prior to the last recession, Senior Regional Analyst George Erickcek stated in the report.

The biggest concern for executives at Grand Rapids-based Wolverine Building Group remains manpower. That strain ranges from a need for in-house qualified workers to subcontractors who are also unable to find enough skilled tradesmen. Sources at the firm said the reasons are in part because young people have been discouraged from construction as a vocation and also because many qualified people left the industry during the recession.

Additionally, both general contractors and subs are getting accustomed to working with leaner crews and hiring back employees at a more conservative pace, said Alexis Macaluso, communications and marketing coordinator for Wolverine.

Across West Michigan, construction employment was flat in Battle Creek and in the Holland-Grand Haven MSA and was up 6.7 percent or 130 jobs in Muskegon-Norton Shores. Firms in Grand Rapids added 1,060 positions, a 7.8-percent increase. Meanwhile, construction employment was up 16.2 percent in the Kalamazoo-Portage MSA on the addition of 670 jobs, the report stated.

Looking ahead to this year, the Upjohn Institute is taking a tempered approach to hiring in the construction industry and is not expecting to see “significant hiring” over the year in West Michigan.

“There are growing signs that the region’s construction sector is gaining steam, although we are still calling for only modest employment gains,” Erickcek stated in the report. “The number of reports citing new residential and commercial projects is expanding, along with the concern that there is a shortage of skilled trade workers, as many may have left the industry.”

That sentiment is also borne out in the 2014 Construction Outlook Survey for Michigan compiled by the Associated General Contractors of America (AGC), which noted that all responding firms indicated their hiring plans were to add five or fewer employees this year.

Forty percent of respondents said they were having a hard time filling key professional and trades positions.

Meanwhile, work on the boards of design firms in the Midwest inched up in February, according to the Architecture Billings Index released in March by the American Institute of Architects. The index remained in negative territory at 47.6, up from 46.5 in January.

Nationwide, firms specializing in residential projects showed the strongest growth (52.5) for the month, followed by commercial/industrial (51.9).

“(T)here remains optimism that conditions will improve again with the arrival of spring weather,” Jennifer Riskus, the AIA’s manager of economic research, stated in the report.

Nationwide, the index was at 50.7, up from 50.4 in January. Any reading above 50 indicates expansion.

For construction firms such as Wolverine, new work in the retail and manufacturing and residential sectors is on the upswing, Macaluso said.

The firm recently broke ground on a new 36,000-square-foot Whole Foods Market in Meridian Township near East Lansing and is working with Art Van Furniture on a new concept they’re rolling out in the Midwest that involves teaming with appliance companies in small towns. Wolverine is also working with Burger King to update the decor of several locations in state, Macaluso said.

Nationwide, a majority of the MSAs added construction jobs in 2013, according to a March AGC report.

“It is a sign of the continued strengthening of the construction industry that nearly 60 percent of metros added construction jobs from a year earlier despite the severe winter conditions in much of the country this January,” AGC Chief Economist Ken Simonson stated in the report. “Nevertheless, the industry’s recovery has a long way to go with only a smattering of metro areas exceeding their previous peak January level of employment.”

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