Just to show how dog eat dog the recruitment battle for available labor can be, when word spread that a framing carpenter from outside of western Washington was relocating to the Olympic Peninsula, there was a mad dash to make the first introduction. “We were on the phone with him while he was still packing his bags,” says Kevin Estes, founder and owner of Estes Builders, in Sequim and Poulsbo, Wash. “We’re trying to get to them first and lock in whoever we can.”
Every home builder is living their way through supply chain delays and the skilled labor shortage. But where production home builders can leverage their volume of starts and scheduling to promise months of steady work and pay for their subcontractors, custom home builders, who work on a single or perhaps a dozen projects at a time, must be more creative to win loyalty. They may not have the size to deliver a generous bestowal of steady work, but there are ways small companies are standing out to trades as their preferred builder.
Long Game Plays for Winning the Skilled Labor
Some tactics are low-hanging fruit, such as paying trades every 15 days, even every week, instead of once per month, while others are less obvious. A long-game move Estes uses is having house plans and specs that are complete and that trades can rely on. Estes’ design/build company has an in-house design team ensuring plans are reviewed and tweaked as necessary. Publishing a master schedule when a project goes for permit is another of his long-game tactics. Trade partners can access a schedule online and plan their work for Estes’ projects well in advance—a necessity given the area’s 45-to-90-plus-day permit-application processing window. When the permit is “firm” or has been issued, subs are alerted so crews can be scheduled promptly.
Another tactic keeping labor in the fold is sending out purchase orders for materials way in advance. Estes cuts POs for trusses and floor joists when the project is still in permit. So far, material has been available when the crews arrive. “We’ve had a four-month lag on trusses,” Estes says, “but that hasn’t held up one of our jobs yet—knock on wood. Getting out in front of materials with purchase orders has helped us keep our labor folks going on projects, so they’re more efficient.”
After lumber prices skyrocketed last spring, Regency Builders, in Pewaukee, Wis., started taking a larger $500,000 deposit from clients upon contract signing and using that money to pay subs and to pay suppliers for materials in advance, before prices rise any higher or spike. “We’re paying for most of the stuff in advance,” says Regency owner Jonathan Schoenheider, “so the trades aren’t getting hit with price increases that they would have had to absorb.”
The company has also converted from fixed pricing to cost-plus (the client pays for labor, materials, other direct costs, overhead, and a fee for services) and added a 2% contingency budget to the fee. In an inflationary climate, Schoenheider has found that explaining and showing homebuyers why costs are rising is easier with cost-plus pricing. It also doesn’t hurt that, along the way, Regency will look for vendors and subcontractors that are more competitive. He says his customers appreciate it and his relationships with trade partners are benefiting from cost-plus as well. “Ultimately, the trades know they’re getting paid on a weekly basis, and by paying their extras that they have from plan interpretations, they know they’re not losing money from me,” Schoenheider says.
Relief on the Jobsite
Staffing at Farinelli Construction, a design/build firm based in Mechanicsburg, Pa., is unique in that the company has 25 in-house carpenters who make cabinetry and built-ins. Recently they’re being deployed more often to relieve subcontractors. “If we say to a framer, ‘Hey, I know you have to get onto the next job. We’ll set the stairs and finish the windows. Get out of here because we’ve got this,’ they love working like that because it gives them flexibility,” says Farinelli Construction president Don Farinelli. “Or they may say, ‘Help us get this deck on, and then we’ll come to finish the house.’ So we’re helping our subcontractors and making their lives a bit easier. We’ve built that into our jobs, and trades want to come to our jobs because they’re clean, organized, and they get paid.”
Besides project management duties and monitoring safety on site, Farinelli’s foremen also are looking for and thinking about opportunities to make the job easier for their trade partners. They may help the painters save time by asking them to put a coat on trim before the in-house crew installs it, or they might carry a heavy 7-foot mirror to the second floor so a trade partner can send one worker instead of two for the install. Consequently, Farinelli is able to sub out more work because subcontractors want to be on his projects thanks to the help his field team provides on site.
As for creating a monster where trade partners may abuse their scopes of work because the Farinelli crew will take care of loose ends, Farinelli says any trade partners like that have already been phased out: “They have to be respectful, or they’re not going to work here,” he says.
Estes and Schoenheider also say that some things their teams would have pushed back on before, they’re letting go of now. “If there’s a little bit of pickup work that has to be done, rather than make [the trade] do it, we’ll take our own labor and do it just to keep things moving along,” Estes says. “But we have to be careful about that because we don’t want to build it into the equation. When we do something like that, we point it out to [the trade] and let them know we took care of it for them.”
Skilled tradespeople aging out faster than the pipeline can bring in new talent is a root cause of the tight supply for construction labor. Every week for years, Farinelli has run a help-wanted ad for carpenters in local newspapers and recruited several 20-somethings into his millwork crew. He tasks experienced carpenters on his crew, workers older than 40, to take younger carpenters under their wing and pays the experienced carpenters bonuses for mentoring. “I challenged these older guys,” Farinelli says. “I asked, ‘How did you start?’ And they said, ‘An old Dutch carpenter taught me,’ and I said, ‘Exactly. That old Dutch carpenter is now you, brother, so make it happen. I’m giving you this guy. Show me what you can do with him. I’ll give you six months.’”
Another tactic: hiring a foreman from a competitor. While Farinelli doesn’t advocate poaching, he was recently in a situation where a senior project manager from a competitor—a PM who had turned down a job offer from Farinelli several years earlier—reached out again to talk about joining Farinelli Construction. “If you want to add to your crew, hiring someone else’s foreman, superintendent, or project manager who has been in the trades for a while [has the benefit] that they come with their own set of subs and carpenters.”
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Estes says his company is in recruiting mode every week, networking with trades. When his field team sees a trade truck with a sign on it, they take a photo and send it to the office so managers can contact that partner prospect and start a conversation. “We try to find trades that are bored with production building,” Estes says. “The trades we’re recruiting are more motivated by unique craftsmanship, and they want the challenge of a job that’s more unique and more detailed. They’re typically a bit further along and more mature in their careers.”
Schoenheider used to walk jobsites with $100 in his wallet and hand out the cash once a month to someone on the subcontractor crew he observed working diligently or doing something exceptional. Now he does so every week. “I find that doing this on a weekly basis ... the foreman and the leaders of the subs are very appreciative that I’m recognizing the effort their guys are making,” Schoenheider says. “You just need to be nice. You need to be a lot more patient, and you need to understand these guys. You have to explain to your clients that trades are swamped right now; they’re overwhelmed; they’re overworked; and they’re only getting yelled at. We really want our foreman and leaders to be nice to our trades on site. We appreciate the fact that they’re going to be frustrated with some things trades do, but that frustration should be sent through Regency; don’t send it through the subs.”
During weekly meetings at Estes Builders, the construction team makes note of subcontractors that did something special and the owner calls that trade partner to express gratitude, which Estes says is probably unusual from the trade’s perspective because they usually get a call from an owner when they’ve done something wrong. Even though the trades have pricing leverage and can pick the projects they prefer to work on, how a custom builder treats a subcontractor can be the tiebreaker for getting their commitment.
“It’s all about relationships and our performance as a general contractor,” Estes says, “so we’ve definitely adhered to serving our trade contractors, getting feedback, and trying to be the very best contractor for them we possibly can be.”