Despite Labor Shortage, Big Season Ahead
New projects and a continued vitality in that sector of the economy have those in the construction industry optimistic. “It seems to be cranking right now,” said Steve Eveleigh, head of Northwest Carpentry and current president for the Home Builders Association Grand Traverse Area (HBAGTA).
“It’s been busy the last year or so. I look for 2016 to be just as busy or busier.”
Of course, there are always challenges in any industry. This year, one of those caveats has to do with the new construction codes. Every three years the codes are revised, and code changes in this cycle include requiring four air changes per hour in homes at 50 Pascal. Previously, the threshold was seven air changes.
In English, that means the home must be more airtight than previously, requiring not simply closer-fitting doors and windows but additional insulation.
“We don’t want wind blowing through the house, so (builders are) required to put in a barrier,” said Roger Papineau.
Papineau, the “code guy” at the HBAGTA, represents residential builders on the State Construction Code Commission. He’s served in many roles at the local HBA, including chairing the Code and Bylaws Committees for many years.
He said requiring tighter homes potentially triggers another part of the new code, mandating a whole house ventilator to ensure the home’s air does get circulated with fresh air from outdoors. “It’s improving air quality,” said Papineau.
The new code also mandates that 75 percent of permanently installed lighting must be high efficiency. That compares to 50 percent in the old code. Like the increased insulation requirements, while that may increase costs in the short term, in the long term it will save the owner money.
In fact, Papineau said the advocacy by the National Association of Home Builders and the Home Builders Association of Michigan has saved homebuyers more than $3,800 in the last code cycle.
While the new codes will take some adjusting, the biggest obstacle to building is the lack of skilled trades workers. Both commercial and residential building are trending upward, but would be even more so if there were more workers available.
“It’s on the upswing…not 2007 (levels) but it continues to get better. The big issue is skilled labor,” said Ruth Nunnelly, executive director of the Builders Exchange, which provides area contractors, subcontractors, suppliers and manufacturers reps a plan room to review project bid documents.
That lack of workers is a refrain across the state. The recession of 2007-2009 hit the housing industry especially hard as foreclosures dominated the market. That led to the massive downturn in the building industry, and many skilled laborers left Michigan for opportunities elsewhere, or left the industry altogether.
There are current openings in all the construction trades, with more likely to come as the weather improves and building season gets a boost. Building trades include carpentry, construction equipment operation, construction management, drafting, electrician, general construction, heating, ventilation & air conditioning (HVAC) services, helpers, laborers & material movers, masonry and tile setting, plumbing, and welding/soldering.
For Grand Traverse, Leelanau, Benzie and Kalkaska counties, there are 164 job postings with Michigan Works. For the northwest region, including Manistee, Wexford, Missaukee, Antrim, Charlevoix, and Emmet, there are 276. For the entire state, there are 7,271 openings posted.
Apart from the lack of tradespeople, the outlook is rosy. Jim Carey of Custom Visions Real Estate said his two Traverse City condo projects, Black Bear Farms and Stoney Creek Hills Cottages, are going strong.
“It’s typically dormant in the winter, but not this year. We’ve got 12 reservations in the spring. People are just buying dirt,” he said. “The challenge is to fulfill (buyers’ needs). It’s a good problem to have.”
Eveleigh said HBAGTA is helping to work toward a solution. It includes developing tomorrow’s skilled workers through local schools, including Northwestern Michigan College.
“Last year we started a scholarship program with NMC to get young people into the building trades,” he said.
Dan Goodchild coordinates the construction and renewable energy technology programs at NMC. He said the school currently has nearly 70 students enrolled in the different trades, and they are reaching out to area high schools in hopes of attracting more students.
They’re being assisted by local contractors, the HBA, Michigan Works, and Builders Exchange, all of which have interest in helping restock the building trades crews.
“They’re looking for people with some basic skills, not just a warm body,” Goodchild said.
Doug Mansfield, president of Mansfield Land Use Consultants, a planning, engineering and surveying company, said he’s optimistic due to last year’s strength and this year’s promise.
“It took a couple years to get things refinanced and re-permitted. We’re in the forefront of some major projects,” he said.
He points to developments on Old Mission Peninsula, with 47 new senior cottages, and Long Lake, with 27 new clustered homes, as well as more commercial development, including a new Rite Aid and a new Starbucks in Traverse City (Mansfield couldn’t provide a specific location).
He also said outlying communities are primed for continued growth, both residential and commercial. “There are a lot of good places: Kingsley, Interlochen, Fife Lake, etc.,” Mansfield said.
“Northern Michigan is booming,” agreed Judy Vajda, the executive director of the HBAGTA. “The economy has really started to spring back.”
One of the indicators is attendance at the most recent Home Expo, which took place at Grand Traverse Resort Feb. 20-21. “We had 2,700 people come through,” compared with around 2,000 last year, said Vajda.
BUILDING PERMITS UP
Another comparison is the number of building permits. For Graned Traverse County, 2015 saw a total of 1,159. That compares with 1,093 for 2014.
This year appears to be on the same pace as last year, both far ahead of 2014. For January and February of 2014, a total of 68 building permits were issued in Grand Traverse County, compared with 101 for the first two months of 2015 and 100 for the first two months of the current year.
Mansfield said he’s encouraged not only by that but by the increase of interest in larger scale developments, though he still sees challenges in multi-million dollar projects.
“What we’re seeing is projects in the $1 million to $4 million range moving ahead,” he said. “After that it’s a little challenging to get financing. We were all hoping by now that would have changed, so you have to break it (larger developments) into phases.”