Construction industry faces labor shortages - East Valley Tribune: Business

Construction industry faces labor shortages

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Posted: Sunday, October 10, 2004 7:32 am | Updated: 6:01 pm, Thu Oct 6, 2011.

Construction is booming in the East Valley, and those in the industry say success is a double-edged sword.

With housing starts at record levels and new homes being snatched up by eager buyers — many of whom are entering lotteries or camping outside developments awaiting lot releases — the construction industry has been given a lesson in popularity.

The sizzling market translates into a shortage of workers skilled in the construction trades, from carpenters to masons to brick and foundation layers.

As contractors across the East Valley say they’re desperate for dependable, experienced and qualified workers, developers say they’ve had to institute different methods to handle the thirst for their prime product — a new home.

"The skilled labor pool out there is almost nonexistent. It’s at full capacity, full employment," said Rob Cross, Phoenix division president for Ryland Homes and a board member of the Arizona Home Builders Association.

Data from the Arizona Department of Economic Security backs Cross up, revealing the construction industry’s conundrum.

During the month of August, the industry added 1,400 jobs, bringing the number employed in the field to 195,400. While that’s a substantial number, it means that there are fewer than 200,000 workers of all types and trades to build homes in one of the fastest growing housing markets in the nation.

Analyst RL Brown said the Valley housing market continues to break its own records. From January through August of this year, 40,700 singlefamily residential building permits were issued across the region.

That marks "a 30 percent increase over the same time last year, which was an alltime record," said Brown, publisher of the Phoenix Housing Market Letter.

"At that rate, the total number of permits could run from 55,000 to 60,000 for the year if we keep the same pace."

"It’s really ironic. We’re up at a record level in the construction industry right now both nationally and in Arizona," said Mark Minter, executive director of the Arizona Builders Alliance. "But we’re hearing from our members that they’re having a hard time finding people for any kind of position."

FEWER BITES

John Krecek of JFK Electrical, a commercial and industrial contracting firm in Gilbert, said the response to classified ads is just one indication of how tight the labor market is for both residential and commercial jobs.

"In 1988, we’d run an ad for electricians and we’d get 35 to 50 from a weekend ad. Now, if we get 35 to 50 in six months, it’s surprising," Krecek said.

With about 70 employees, the firm specializes in commercial and industrial work. including Arizona State University’s new School of Agribusiness at the ASU East Campus on Williams Field Road in Mesa.

Michelle Flynn, of Mesa’s ASL Construction, said even a strong bite from a want ad doesn’t guarantee success.

"We need carpenters with custom home experience. Dependable. Reliable. We’ve had people answer our ad, get hired and then get directions to a job site. And then, they don’t show up," she said.

While Krecek said he’s got a continual need for electrical journeymen and foremen, he’s tapped into temporary agencies when he’s got more work than workers.

Using a temporary electrician that’s already been vetted by an agency "is really more of a six-week interviewing process," Krecek said.

Dennis Porter, president of Porter Brothers Construction in Gilbert, said he would love to add a dozen carpenters to his employee roster. But at this point, that’s pie-in-the-sky thinking.

"It’s increasingly becoming a more and more difficult issue to find carpenters that are qualified — that have the experience and the expertise to do a job right," Porter said.

"It seems like there’s just so much work going on, that all the good ones are busy. They’re certainly not looking for new jobs," Porter said.

Because of the crunch, Porter has subcontracted out work on some jobs, something that he doesn’t want or like to do. Subcontracting doesn’t always solve his labor problem, because "the subcontractors are having the same problems that we’re having," Porter said.

Flynn, who co-owns ASL with her husband, Michael, said they’ve had to juggle projects and workers like a circus act.

"It’s hard to keep our generals happy. We’ll pull from one job to get another one finished. We’re doing the best we can," Flynn said.

DOMINO EFFECT

The record number of housing starts and a shortage of skilled labor has combined to create a domino effect in the industry. While contractors juggle jobs, developers say they’ve had to pace buyer demand.

"You can’t sell double the number of houses and automatically assume that you’re going to double the labor force," said Scott Coleman, vice president of Toll Brothers and its designated broker.

A highly competitive industry, builders were hesitant to speak in detail about turnaround times. Most agreed, however, that the labor shortage and strong demand for their products mean that a new home is taking about two months longer to build over last year.

"What’s really occurred is that because so many houses have been sold, it takes your foundation longer to be laid and for your house to be framed because basically you’re waiting your turn," Coleman said.

Developers also want to balance the number of sales with the number of scheduled housing starts so buyers can move into their new home in a palatable time frame — anywhere from six to 10 months.

"We are really trying to keep it under the seven-month time frame. We’re not trying to sell beyond that," said Rick Carpinelli, executive vice president for the Phoenix division of KB Home.

Builders, including Ryland’s Cross, said they could sell all the lots in any given development throughout the East Valley in one clip, but that’s not a preferred way of doing business.

"We could sell way beyond our ability to build these homes, but all that does is lengthen the time that it takes to start the home and complete it for our buyers. . . . If we can’t get the homes built, we’re not going to sell way out," Cross said.

Instead, they are trying to pace demand by instituting lottery systems, slowing sales of new lots to weekly releases or establishing waiting lists.

"With a lot of builders right now, you can’t just walk in and buy a house. You have to go to a waiting list or get into a drawing. That’s a fairly common scenario in the Valley right now," said Dennis Herrig, designated broker and vice president of sales and marketing for Standard Pacific Homes.

"If you go to any Standard Pacific subdivision right now, in order to buy a house 90 percent of the time, you would have to come back on a Saturday to enter a drawing," Herrig said.

But drawings, waiting lists and lottery systems aren’t a cure-all for the pent up frustration of contractors who would love to take on more jobs, developers who want to sell and build more homes and new home buyers anxious to pull into their driveway.

"We are all really trying to balance that. There’s probably not a good answer as far as what the best business practice is. There’s not many times you experience a market like this," KB Home’s Carpinelli said.

THE FUTURE

Developers say they’ve instituted quality assurance and quality control policies, new ways of working with contractors and have strengthened communication with buyers to deal with the hot housing market.

Meanwhile, contractors and trade associations say they’ve started recruiting more heavily and are more likely to take on and train an inexperienced, yet goaloriented worker through apprentice and formalized training programs.

"It’s really the ability of the market to gear up in a given period of time. And it’s going to take time. There’s a lot of jobs available to people in the construction field, good paying with job security. We want them and we’re looking for them," Carpinelli said.

Arizona Builders Alliance Executive Director Mark Minter agreed.

"This is still an industry that when you’re 35, you might own your own business. We’re looking for those kind of people, with a little bit of entrepreneurial drive," he said.

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