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Homebuilders face labor shortage as industry booms

Posted on June 7, 2013
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A shortage of subcontractors is plaguing Michigan homebuilders, but it’s a welcome sign in an industry that’s recovering from a shortage of work in general, according to contractors.

The Homebuilders Association of Michigan recently released figures showing that many builders and remodelers are having difficulties finding skilled workers, thus delaying projects in a housing market that’s on the rise.

According to the HBA Michigan Housing Index, 34.3 percent of builders and 24 percent of remodelers are having trouble finding workers, with 15.4 percent of builders and 50 percent of remodelers having difficulty finding general laborers.

Sam Palazzolo of Sterling Heights-based Palazzolo Brothers Construction and president of the Homebuilders Association of Southeast Michigan, said the shortage of workers is due to a general sense of unease among subcontractors about getting back into an industry that betrayed them just a few years ago.
“The subcontractors were not ready for this big boom,” he said. “A lot of them were skittish to hire. They just went through five years of hell.”

It’s also due in part to a lack of confidence that this housing boom will remain consistent.

“How long is this going to last? We don’t know,” he said. “It’s great right now; we foresee it being great for the next few years, but beyond that it could be anybody’s guess.”

The lack of skilled subcontractors, which includes rough and trim carpenters, plumbers, electricians and roofers, isn’t all gloom and doom but rather an indicator that the industry is seeing growth, albeit more rapid than expected, Palazzolo said.

“What really happened is we had a sudden surge in sales,” he added, noting that his construction company’s sales are projected to climb almost 40 percent from the previous year. “A lot of our contractors weren’t ready for that. This is a problem we’re glad we have because that means business is doing great.”
Howard Fingeroot, managing partner of Farmington Hills-based Pinnacle Construction, said that while other contractors are facing issues tracking down skilled laborers, the company has been successful in maintaining its own talent base.

“We were able to keep a lot of the trades busy during the downtime,” he said. “We had a lot of loyalty. While there are shortages, it’s not affecting our ability to build homes because we have such a strong loyalty base with our subcontractors and suppliers.”

Figures from an analysis released by the Associated General Contractors of America shows construction growth in 170 out of 339 metro areas in the U.S. The data shows that Michigan on the whole has lost almost 7,200 construction jobs between April 2012 and April 2013. But that’s not discouraging contractors.

“The Michigan marketplace is positioned for a good run,” Fingeroot said. “There’s a good five-year run ahead of us, locally.”

And the challenge many contractors will face other than the lack of skilled laborers, he said, is the lack of available land to build on.
“The biggest deterrent to growth in housing in Southeast Michigan is not the demand, but it’s the supply,” he said. “And there’s just not a large supply of developed lots out there.”

ANDREW KIDD

June 02, 2013

http://www.theoaklandpress.com/articles/2013/06/02/news/local_news/doc51abf0e959c4f888100666.txt?viewmode=default

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