West Michigan construction industry executives believe some of their recent worker training efforts have started to pay off.
For Erhardt Construction Co. President Ben Wickstrom, finding workers has been perhaps his gravest concern for the industry as a whole. Companies like his have long discussed the need to share the industry’s “good story” with parents, high school students and youths, with whom the message of high-paying skilled jobs — many of which don’t require a college degree — should resonate.
Wickstrom and other local executives now believe their intended audience has started to notice.
“The work we’ve been doing in workforce development is starting to take hold,” said Wickstrom, who’s also a founding member of the Construction Workforce Development Alliance, a group consisting of three local construction trade associations. “We’re seeing more young people come in. We still have a ways to go, but we’re starting to get some traction.”
As evidence, Wickstrom points to the many local high school students that are job shadowing these days with Erhardt’s project managers. Additionally, events organized by the West Michigan construction sector such as MI Career Quest and the Jumpstart Program continue to attract students interested in learning about the industry, he said.
“There’s good stories of what we’re doing to solve the problem, but everyone knows it’s still a challenge,” Wickstrom said.
All told, Erhardt plans to grow to about 75 employees in 2017 by hiring around 10 people, mostly carpenters, but also a couple of project managers and estimators, he said.
Wickstrom joins a few West Michigan construction executives in feeling optimistic that some of the workforce development initiatives have started to pay off.
Jennifer Boezwinkle, executive vice president at Grand Rapids-based Rockford Construction Company Inc., the region’s largest general contracting firm, shared a similar sentiment.
“We’ve been banging (the workforce development) drum for some time,” Boezwinkle said. “I think people are listening. The pieces took a while to get in place, and now they’re falling into place.”
From a statewide level, members of Associated General Contractors of Michigan also say they’re not feeling quite the same pinch when it comes to finding workers, said President Damian Hill. As a result, many members have shifted their focus to ensuring the workers they’re bringing on have the right training and skills for their positions.
“The fact that the concern is waning a bit would suggest that there’s more people available than a couple of years ago,” Hill said. “But that brings the concern about people having the qualifications you want. I wouldn’t say we’re flush with people, but I think the results of concentrating on this have helped put more people in the industry.”
FINDING NEW MARKETS
Executives’ optimism about talent recruitment comes at a good time for the industry.
With Michigan’s economy outpacing the rest of the Great Lakes region, according to a recent report from the Federal Reserve Bank of Chicago, the area’s general contractors now find themselves with an abundance of work.
At Erhardt Construction, projects in the religious and senior living markets accounts for a bulk of the company’s current work, Wickstrom said. However, the company has noticed a spike in industrial projects in recent months as manufacturers expand or move to the region, he said.
“Now we’re seeing an uptick in the industrial market and I think that’s a sign of health in our region,” Wickstrom said, declining to name Erhardt’s industrial clients. “New manufacturers coming to the region need to build.”
Meanwhile, other macroeconomic trends are leading to new opportunities for Rockford Construction, according to Boezwinkle.
She cited the largely consumer-driven economy as creating increased demand for hotels and other hospitality-related construction projects. Additionally, as consumers continue to shift away from brick-and-mortar retail in favor of e-commerce, demand for warehousing and distribution centers has increased, Boezwinkle said.
“(That growth is) really directly related to the e-commerce movement,” she said. “It’s certainly not the death of retail, but it’s a shifting of retail. We still have many clients in traditional retail, but huge growth in warehouse and distribution.”
BUSY TIMES AHEAD
Both Boezwinkle and Wickstrom expressed relative optimism for their respective businesses at least through 2017, with each citing a strong backlog of work through most of the year.
Their sentiments largely align with the most-recent Construction Backlog Index (CBI), released in December by Washington, D.C.-based Associated Builders & Contractors Inc.
The quarterly report found the overall backlog nationally expanded to 8.7 months, up 2 percent from the second quarter on a year-over-year basis.
Southern states showed the lengthiest backlog, according to the CBI findings. So-called “middle states,” which includes Michigan, had the second-longest backlog at 8.3 months, according to the report.
“Despite growing concern that certain commercial segments in a handful of major U.S. cities are on the path to overbuilding, commercial construction backlog improved during the summer of 2016,” ABC Chief Economist Anirban Basu said in a statement. “The ongoing expansion of spending on health care has also helped to expand institutional construction volumes.”
The next CBI report will be released in mid March.
Another key construction industry indicator also continues to show positive momentum.
The Architectural Billings Index (ABI) released by Washington, D.C.-based American Institute of Architects in late-January showed that Midwestern states led the country in overall architectural billings, a key economic indicator of nonresidential projects for the next nine to 12 months.
Erhardt’s Wickstrom, who closely monitors the ABI reports to guide his company’s projections, told MiBiz that the positive momentum continues to improve his overall optimism for the industry locally.
“I talk to my friends in architecture and design, and they’re still busy and still hiring people,” Wickstrom said. “Downstream, that’s what it comes down to for us. I think the leading indicators still indicate a positive 2017 at least.”