Subcontractor shortage threatens construction business

Pity the construction industry, it just can't catch a break.

Throughout the recession, the cyclical industry lost thousands of jobs as residential and commercial building ground to a halt. Companies closed up, filed for bankruptcy or fled the region in search of more lucrative building grounds.

Those that managed to stay afloat laid off workers, took every small job they could get and hunkered down for a miserable few years.

Today, construction jobs are plentiful with abundant commercial and residential bulding. But the workers? Those who left stayed gone, leaving the industry with a severe shortage of subcontractors, such as drywallers, plumbers, framers, masons and electricians.

"It's a critical threat to my industry and the problem is here right now, today," said Doug Dohn of Dohn Construction, one of Fort Collins' largest contractors. "There's a huge shortage of tradesmen."

Dohn said he doesn't have one job that is adequately staffed with the trades."When you can't adequately man your projects, it puts you in a very hard spot for time. Deadlines are very serious and there are very big consequences for not meeting the deadline."

That means construction companies are forced to increase both wages and what they bid for construction jobs. That translates into higher construction costs and higher home prices for buyers. In certain segments, like apartments, construction costs have gone up 25 percent in the past year, Dohn said.

And in a city with rock-bottom vacancy rates and rising rental and home prices, a 25 percent price hike is unwelcome news. "Affordable housing is a thing of the past," he said. "The costs don't work."

According to labor statistics, Larimer County lost more than 3,300 construction jobs between its peak in 2006 and its lowest point in 2011. Employment rates bounced back to more than 8,000 in late 2013, but remain well short of the 10,440 construction jobs in 2002, before Larimer County went through its housing bubble, said Colorado State University regional economist Martin Shields.

"Many of those jobs were filled by Hispanic workers prior to the recession and that's a pretty migratory labor force," he said. "When the demand for housing falls they move somewhere else. A percentage of the workforce that was here before then was no longer available."

Builders who tried to weather the recession but couldn't find work in construction found something else to do.

"It's not like a spigot of water that you can turn off and on and the labor force will still be there," Shields said. "The industry did a lot of retrenching ... It's still trying to get its feet under it. When you're trying to rebuild your business or industry, having a labor shortage doesn't help."

Dohn said many who left construction are not eager to return. Some have fled for the oil and gas industry where they can earn twice as much, others have found work in less cyclical fields. "Everyday we're losing trades to the oil patch ... electricians, truck drivers, pipe fitters can all work in the oil fields."

The market is recovering faster than the supply of labor, but companies remain wary of the economic recovery, said Greg Miedema, executive officer of the Home Builders Association of Northern Colorado. "No one wants to hire four people (and) then lay them off. They're all working at their maximum to make sure it's sustainable."

In less than a year, the industry went from not enough work to too much work and not enough people, Dohn said. "It's different challenges overnight."

The shortage is effecting every construction project."We're taking from one job to put a fire out on another job," he said.

Six years ago, L&L Acoustical employed more than 75 workers.

Today, the second-generation Fort Collins drywall company employs only 50. CEO Gery Lockman said he could increase business 50 percent if he had more drywallers.

"I could easily go out and get the work, but then it's just pulling my hair out trying to get guys to come in."

At Bucking Horse, a housing project on Timberline Road between Prospect and Drake, developers are bringing in two and three different crews to finish projects on time, said Michael Campana of Bellisimo Inc., which is developing Bucking Horse.

"There was a time when we could have one crew go and do the whole project, now we're working with multiple crews doing the same trade just to keep the project going."

Bellisimo brings in crews from Denver to keep projects on track, but "they all want 50 to 75 cents more per square foot to come to Fort Collins," Campana said.

For plumbers like Dan Ormesher of Independent Plumbing Solutions, the recession depleted reserves of manpower and cash. Even if he could find more plumbers to hire, the business doesn't have the money to ramp up with new trucks and equipment to support a larger payroll.

"We've all gone through what reserves we have. Now we're having to borrow money and that's even a scary thought," he said. "If I had the money to buy trucks and tools I could double my staff."

Ormesher opened his own business in 2006, just as the recession was about to hit. Like Lockman, he can't find enough skilled workers to do the jobs.

"A lot of plumbers specifically got out of plumbing when everything tanked," Ormesher said. "I know a lot of guys who went to CSU, the school district or Vestas because they've gotta feed their families, and they're not ready to give that up and come back to plumbing."

It takes at least four years for an apprentice plumber to become a residential licensed plumber and move on to a journeyman plumber who can work on commercial or residential projects. "The hardest part is there aren't as many qualified people here at this point," Ormesher said. "I've luckily had good luck finding good apprentices."

Five years ago, he cut his rates by 25-30 percent just to stay in business; his workers also agreed to take pay cuts. Now, they've made it through the roughest patch and he's raising pay and prices again.

"The reality of what we do, we are a labor-based industry," Ormesher said. "If you don't take care of people you don't have a business. ... The most important part is for guys to feel like they're part of something, not just another employee."

Ormesher and Lockman worry the shortage of skilled tradesmen will only get worse as older workers retire.

Most of Lockman's workers are 40 to 50 years old and in another 10 years "their bodies won't be physically able to do it anymore," he said. Without a younger group of employees coming in now to learn from experienced co-workers, "there will be a big gap," he said. "We will be in trouble pretty soon."

Lockman points fingers at high schools that have no programs for those who might be interested in construction-based jobs.

"They push a lot of the new-age stuff, computers, office work. I just don't hear them talk about construction and building homes. ... It's obviously hard work," he said. "We're out there physically working ... outside in the freezing cold or hot months of July and August. What they don't understand is if they learn a trade, they can make up to $20 an hour and have a good life."

Larimer County construction jobs

(Figures from third quarter of each year)

* peak

Source: Colorado Department of Labor and Employment-Labor Market Information Quarterly Census of Employment and Wages

Fort Collins building permits

Source: City of Fort Collins