During a question and answer session at a recent industry conference, a home builder asked Moody’s Analytics chief economist Mark Zandi for his thoughts about the labor
The Table: Picking Teams
Yes, it’s tough for builders to find quality labor, but it’s out there. The homes we feature in this magazine are only a minuscule sample of the top-notch luxury housing in this country.
Yes, itÆs tough for builders to find quality labor, but itÆs out there. The homes we feature in this magazine are only a minuscule sample of the top-notch luxury housing in this country. Enough skilled craftspeople are out there to build billions of dollarsÆ worth of homes a year. So once youÆve found them, you need to keep them.
Whether you build one custom home or 50 spec homes per year, whether you keep your own crew for all or most of the work or you contract everything out, keeping your labor force satisfied is paramount to your business success. The builders featured here have varying backgrounds and philosophies, but they all recognize the contributions of their workers and the importance of keeping them.
Steve Morgan of Morgan Builders in Park City, Utah, subbed out all his work several years ago but saw an opportunity to hire a talented carpenter, and soon his method changed. When his favorite contractorÆs company was reorganizing and he heard the man would leave, Morgan hired him as project superintendent.
ôI knew his abilities and built a crew around him, person by person,ö Morgan says. ôNow I have three highly skilled guys who can do just about anything and four guys as support. There are always some that come and go, but the core has stayed intact.ö
Now that he employs his own carpentry crew, Morgan says his scheduling is much smoother than before. His guys are there throughout the project ù from foundation to finish materials ù getting things ready in time for the other trades and handling any surprises as they arise.
Scheduling simplicity also appeals to Gerrit Dykstra of Dykstra Construction Services in Lynden, Wash. He employs 18 people and puts most of them in the field to make sure his elaborate homes progress smoothly.
ôOver time, I found that [subcontracting a lot of work] is more hassle than itÆs worth,ö says Dykstra. ôItÆs easier to monitor the progress and quality of these high-end homes when you do it yourself. If we make a mistake in the beginning, weÆre going to make sure itÆs fixed or weÆll be fighting it the rest of the way through the house.ö
While Morgan and Dykstra both use only the plumbing, electrical, drywall, insulation and other specialized trades, Ken Bernhard of SeBern Homes in St. Charles, Ill., prefers to sub out all of his work. He employs only four full-time people aside from himself and his wife, with one project super and one laborer to cover the 15 homes he builds each year.
ôWeÆd have to have 30 people on staff to do the kind of work weÆre doing now,ö says Bernhard. ôBut it would be too costly for me to keep them busy ù IÆd end up paying some of them $20 an hour to sweep floors.ö
These three builders operate a bit differently, but they still look for the same qualities in their labor force and manage the workers in much the same way. They have spent a lot of time looking for employees and tradespeople who might not be the cheapest but just might be the best.
The trick, of course, is finding them. Morgan has this problem licked because, as he puts it, he has been building in the same relatively small town for nearly 30 years and knows practically everyone. But every once in a while, when a client specifies something particularly unusual for the Park City area, even he has to search for a specialty trade.
ôWe sometimes have to look pretty hard for those with expertise in different or unusual materials and techniques,ö says Morgan. ôWe go about it like anyone would: checking references and looking at their past work to find out as much as we can about them. But there are times when we have to take some things on faith.ö
Bernhard hasnÆt been in business nearly so long, but by staying active in his local HBA, he can put the combined experience of the other members to use when seeking quality tradespeople. ôI know most of the trades in the area, but I can always check with other builders in the Fox Valley HBA to help me find some of the more obscure ones,ö Bernhard says. ôStaying active in the industry has been a big help in my finding the right labor.ö
There are a few distinct characteristics of ôthe right labor.ö All three builders quickly named craftsmanship, reliability, timeliness and scheduling flexibility, but they emphasized value. They rarely hire the trade with the lowest bid because they recognize that excellence often costs more.
ôWe rotate among the same two or three companies for each trade because of the quality of their work, not because they have the lowest bids,ö Dykstra says. ôWhen you pay a little extra for work that truly satisfies a client, you reap more rewards than double that dollar amount in advertising.ö
Even with the right labor, problems arise. How builders handle these problems can go a long way in keeping a good working relationship with their labor. Dykstra handles these situations ù whatever they might be ù by first isolating and identifying the problem.
ôWe design a plan and work it out to everyoneÆs benefit,ö he says. ôWe donÆt hold our trades out there to take a big financial hit. WeÆll go to bat for them if we need to.ö
Morgan concedes that sometimes, no matter how hard a builder tries, some labor problems canÆt be fixed. Even though he puts everything in writing to ensure that all are on the same page, he has gotten burned. Trades have disappeared from his job site to work somewhere else, sometimes for only a few days, but that has nearly wrecked his entire schedule. He says in that case, a builder is better off to look for someone else next time.
ôI suppose a builder could draw up some sort of agreement that says the trade will promise to be on site for the specified days or pay some sort of penalty, but by that time, youÆre at the point of divorce anyway,ö says Morgan.
Dykstra and Bernhard agree that finding the right employees and tradespeople might be tough, but once you find them, you know it.
ôFor me, choosing a trade is similar to æchoosingÆ a client,ö Bernhard says. ôYou know pretty quickly if youÆre going to be able to work well together.ö
Dykstra says that the first time you work with a crew you can tell how competent it is and how willing it is to work within your schedule. That kind of intuition has worked well for him. ôIÆve had to go to court over problems with trades only two times in more than 40 years in the business,ö says Dykstra. ôAnd both times the lawyers were the only ones to make any money.ö