The Roundtable: The Builders
The building market might be down significantly, but there's plenty going on. Increased material prices, the green building movement, the arrival of downstate builders on the scene, and more. We tapped a diverse group of area construction leaders to talk through the issues.
Included in the roundtable were:
Marc Burkholder, Burkholder Construction
Marty Easling, Easling Construction
Dennis Fedorinchik, Hallmark Construction
Angie Machin, Machin Contracting
TCBN: Tell us about your business, prominent projects, and what makes you different.
Machin: I'm Angie Machin from Machin Contracting. We've been in business for five years, doing mostly new construction. I just have a passion for building. I was a stay-at-home mom, and we built our own house. Pretty soon people started calling me asking me 'hey, can you do this or do that?' My husband Pat, who is an engineer and designer, now works with me. I think one of our advantages is that we work well with women. After all, women make so many of the decisions…so instead of sending our customers out to shop, I often tag right along and provide advice and make it more personal.
Fedorinchik: I am the president of Hallmark Construction. We began in 1977 as a general contractor, beginning with single-family residential, and now we are in the hard-bid commercial world. I think we've worked on every school in the Traverse City area over the last 31 years, and I suppose our more signature projects were the new Cherry Capital Airport terminal and the Traverse City Area District Library. Now with the next generation of Hallmark, we're doing several LEED projects, which are becoming a very popular way of building and incorporating energy efficiency. I have three sons, the oldest is a site superintendent, the middle serves as an architect and works in design/build and marketing, and the youngest is taking time off from school and working in the field. My wife also works in the office, so we truly are a family operation. We'll handle small retail build-outs up to $23 million projects.
Easling: I'm the president of Easling Construction, which started in 1976. We do primarily residential, but have done some commercial over the years. I'm a civil engineer by education. Most of our work is done with in-house employees as opposed to subbing out. We started in Traverse, and then moved out to Leelanau County in 1979. We also will do everything from hanging a door or building a deck to the largest home we've built was just under $5 million.
Burkholder: I'm Marc Burkholder, vice president of Burkholder Construction. My grandpa started the company in 1955 as a roofer then became a builder, and my dad is president and looking to retire in the next few years. We handle residential, light commercial, and remodeling. We've done some large commercial/grocery, and we dip once in a while into the hard-bid market, but not often. We also do a lot ourselves, and sub out most of the trades but do all of our own finish work.
TCBN: Let's begin by talking about residential. Is anybody building right now? Who?
Easling: Well, we're having one of our best years right now, with remodeling and new-builds. I guess what's different is that before a lot of our market was people who moved up here from Detroit. Now we're mostly doing work for people who are from out of state.
Machin: We are too…a lot of out-of-town, out-of-state people, people building second homes. We're doing a nice, big home on Elk Lake that's going to be their summer home. They found us through the Parade of Homes. Basically word of mouth.
Burkholder: Like everyone else, I think it's still a lot of word of mouth…we're doing a lot of remodeling and not a lot of new-build. Word of mouth is still the best way of getting business.
TCBN: So what changes are you seeing in this tough market right now?
Easling: We're not seeing any changes.
Burkholder: We're bidding against a lot more people. It used to be three maximum bidders, and now anything that goes out to bid, there will be eight or more bidding.
Easling: I will say that when we do bid a contract, there's often a downstate contractor bidding who would use downstate labor. And they'll undercut you.
TCBN: Denny, is commercial any different? Seems like there aren't many big projects going on.
Fedorinchik: It's similar. The bid list could be 7-20 bidding, whereas five years ago it was four. What's happened is there's not much private work going on. Manufacturing has diminished to almost zero, the State of Michigan is in trouble, so there's not much revenue sharing. There's a little bit of school work; we have six schools we were working on.
TCBN: I'm curious about the arrival of downstate builders, either bidding on projects here, or in the case of Rockford Construction and others, actually opening offices here.
Fedorinchik: Commercially we've been in a downturn for three years, and they've been in trouble longer than us. It was about two years ago that we first noticed them.
Easling: And many are operating right out of a pickup with no employees, and they can undercut people who have been here. That can hurt, because homeowners are price shopping rather than looking for quality.
TCBN: So customers want the very lowest price…and meanwhile, your costs are going up, right?
Fedorinchik: Everything. Wood, plastic, steel, rigid insulations.
Machin: And now, fuel surcharges, delivery fees.
Fedorinchik: Right. Those were unheard of years back.
Easling: It's a way out for them!
Burkholder: I priced a house out a year ago. Now we're looking at it again, and just material prices alone have raised the overall price, and not just five or seven percent, but like fifteen!
TCBN: Switching gears…without pointing fingers, how's our local government – laws, ordinances, codes, permits?
Fedorinchik: Wow, you opened a can of worms! Thirty-one years ago to get a building permit we walked into the office, and walked out with a permit in our hand. Today it literally takes weeks for almost any project. You've got the DEQ, Department of Labor, Fire Marshal, and sometimes more. The rules and regulations increased dramatically, some good and some frivolous. What customers don't realize is that's very expensive…somebody has to pay for that.
Easling: Just to reiterate what Denny said, it was easy to get permits before, and the codes are a lot stricter and more strictly adhered to and interpreted today. And to make things worse, the rules vary from county to county.
Burkholder: You become part builder and part permit shuffler. It's all part of an important team effort with the officials, but I would say it would be nice to have more consistency from county to county.
Machin: We're finding that because there aren't as many permits being pulled, the offices are able to turn them around more quickly.
Easling: I don't know about that…now they have less buildings, so more inspections! And the direct trade-off is cost to the customer, absolutely.
TCBN: What about 'green building?' Is it real? Everyone says they're doing it.
Fedorinchik: Most people would want their building to be green, of course, but there's a definite cost for green building to consider.
TCBN: What is the cost? Five percent extra? Fifteen?
Fedorinchik: We'd all like to know. Marc probably knows as much as anybody.
Burkholder: It's coming more on the market now and getting promoted more. Green building can be a philosophy, but how many people will go to the extent of every part of their project being green? Very, very few. There are so many different aspects…some very easy to incorporate and some costly to incorporate. I think energy efficiency pushed it to the mainstream the fastest, because that can actually save people money right away.
Easling: I don't hear about green building from my customers.
Machin: But you know, green is also trying to get people to live with a little bit less…not having those seventeen bedrooms and several showers and toilets that use so much water.
TCBN: So Angie, what's it like being a woman in an absolutely male-dominated field?
Machin: Some man in the industry once pulled me aside and said, 'you're in a man's world, and you'll fail.' It makes me smile; I just love my job, and one day, my husband and I decided to go for it.
Burkholder: It seems like it would be an advantage in the residential market. Women make a lot of the decisions.
TCBN: Can you all give me one good construction investment, or a tip on an upcoming hot region?
Machin: As always, around the water…
Easling: This area's forecast to grow and now we're on the map, period. Northport would be nice, but we just don't know.
Fedorinchik: I think downtown Traverse City has the greatest commercial and residential growth potential. I think it's a great time to build right now. Costs are highly competitive right now. You know, the Traverse City schools are getting more bang for their buck than they expected because it's such a competitive market.
Easling: I guess if I knew where to build next, I'd be a spec builder!
If you have a suggestion for a future Roundtable, please email Gayle Neu at firstname.lastname@example.org.