Construction Labor Woes are Wearing on Region

Article is by Crain's Cleveland Business, Stan Bullard.

Ripples from a tightening supply of workers in the building trades are starting to surface in Northeast Ohio's construction market.

Doug Price, CEO of Willoughby-based apartment and office owner K&D Group, said he considers the labor shortage in the building business part of the region's construction scene.

"Contractors are clearly pressed," Price said. "They're having more trouble meeting deadlines."

Gary Naim, president of Broadview Heights-based Petros Homes, said the builder now calculates it takes five months to finish a new home, while in the past it could turn the property in four. He has a one-word answer for the change: labor.

However, for the most part, construction contractors are planning their jobs more carefully and looking for hiked efforts to attract younger workers to replace a graying workforce the next few years.

Gareth Vaughan, president and CEO of Cleveland-based Albert M. Higley Co., said that at the moment builders are getting pulled in two ways at once on the labor front.

"We have increased demand because of a building boom in Cleveland," Vaughan said, "and we're seeing diminished interest from the next generation of workers." Vaughan said he believes that as a union contractor, his firm is seeing less impact from the changing labor outlook than its non-union, and lower-paying, competitors.

AM Higley's approach for now is to quiz subcontractors looking to work on its jobs about labor supply more than in the past. It also hopes to be an employer of choice to keep trades people coming back to its jobs.

At Fairlawn-based Welty Building Co., Chris Burns, chief operating officer, said the first item in the company's "daily huddle" about that day's work in the field includes an evaluation of the outlook for workers on the job. A decade ago, that was not an item of discussion.

Burns said Welty is responding to the concern by using lean production methods such as having suppliers drop off supplies on wheels so they can be easily moved around and let the trades focus on their work more than moving materials around a job site.

"In the past, if you were not financially liable for a staffing problem," Burns recalled, "You could say, get 10 guys out here to fix your problem. Now (subcontractors) will not have the resources. You can only yell at somebody so much."

On one job, Burns recalled, the painting crews on a job were being delayed because a drywall contractor's crews were not finishing installations in time for drywall (which requires taping and sealing) to dry before it could be painted. "We used a national vendor to help them bring in supplemental labor," he said. The issues, he said, tend to crop up in different trades at different times.

Ken Simonson, chief economist for the Washington, D.C.-based trade group Associated General Contractors, said examples of labor shortages or rising costs scuttling projects are few.

"The industry is not crying wolf about concerns over labor, but it is finding ways to get around it," Simonson said, noting he queries contractors about how they are handling labor issues. He said he has seen data showing that, nationally, the number of openings in construction exceeded new hires.

"That's something I have not seen before," Simonson said in a phone interview last Wednesday, Feb. 13. "But I am mystified how the industry is handling this problem."

Several contractors point out there is more overtime available to meet production requirements.

However, David J. Wondolowski, president of the Cleveland Building Trades Council, a consortium of 27 different unions, said he knows how contractors are getting the work done.

"When construction is strong, non-union construction workers will go with the union," Wondolowski said. "Why work at a $10- or $12-an-hour job when you can make $30 or $40 an hour? You're ahead even if you are on an apprenticeship pay schedule." Workers who went into nonconstruction jobs during the downturn may also come back, he said.

Wondolowski estimates the council's unions have almost 12,000 members after gaining 1,000 new members last year. The council serves Ashtabula, Cuyahoga, Lake and Geauga counties. However, he also said that apprenticeship programs are starting without full student rosters — a sign of the challenge the business faces recruiting workers from younger groups. He said the trades will be able to handle the strong construction outlook of the next two years. After that, the construction boom may ebb.

There's one solution to the problem of what Wondolowski termed the "alleged" worker shortage. "Pay more," he said.

Welty's Burns said even if firms recruit more workers there will be a problem finding the passion for the building business of times past.

"It's not your first choice," Burns said. "Your attitude is different."

It is truly an unexpected situation if worker availability concerns grow. A surfeit of building workers in a downturn is generally the concern in the region.

"During the downturn," Burns said, "I remember there were 5,000 electrical workers sitting on the bench in Pittsburgh. Those days are definitely gone."

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