Hard Hat Chat

Observations and Conversations about Commercial Construction, Development and Management

3 Solutions to Help Solve the Commercial Construction Labor Shortage

Englewood Commercial Construction Team

Bill Di Santo, president of Englewood Construction (second from right), and the Englewood accounting team receiving recognition from the Chicago Chapter of the Construction Financial Management Association (CFMA) for participating in their 2014 Accounting Intern Program.

Activity is setting up nicely for commercial construction in 2015, but just as the industry seems to be back on its footing, the dreary recession of years past is giving us one last gasp of annoyance and pain. Believe me, no one will be happier than me when we can stop referencing the Great Recession that rocked the general commercial construction industry and the overall economy. Unfortunately, that time has not come yet.

While activity is good, the recession still hangs over us in the form of a commercial construction labor shortage. Between 2007-2009, the construction industry lost 2.3 million jobs. In fact, it’s fair to say that commercial general construction may have been the hardest hit sector of the economy.

Now, as contracts are coming back, skilled workers are in short supply.

In the past five years, commercial construction has lost skilled labors to a wide variety of places. Many immigrant workers have returned to their home countries or taken on work in other parts of the world, experienced commercial construction workers left the industry to pursue other careers, and a lot of accomplished skilled workers just decided to call it a day and retire.

This has had an adverse effect on our industry in two ways—as projects come back, they are on a slower timetable as it is often difficult to locate adequate subcontractors for a project, and, the price for commercial construction labor is often higher as many commercial general contractors are bidding for the services of the same subs.

The commercial construction industry needs workers of all backgrounds to fill in, but most importantly, it needs experienced commercial construction managers and operators. Yes, we need skilled electricians and plumbers, but what’s lacking the most seems to be the management positions. I’ve been in the commercial construction industry for 24 years and I still have no idea how to bend a conduit…it’s magic to me. However, I know how to manage an electrical team on site, while simultaneously managing foundation and drywall contractors. The managerial element of the industry is sorely lacking.

How do we fix this? Happily, as opportunities arise, the problem is beginning to sort itself out, but we are still a ways from being healthy. Here are three things that the commercial construction industry needs to do to fix the current construction labor shortage and get back to a balanced market.

  1. Apprenticeships need to increase. According to a recent Crain’s article, this is already happening. It couldn’t come at a better time. The industry needs a new batch of young, skilled commercial construction workers who know their way around a job site. With the proper training in an apprenticeship program, hopefully subcontractors will be able to staff up at a better rate.
  2. Veterans need to come back. The industry lost a lot of talent, especially on the management side, to premature retirement. Commercial construction was in a prolonged slump and many successful professionals thought it would be better to hang it up, rather than wait for the commercial construction industry to come back. With big new retail construction and restaurant construction projects in the pipeline, it would behoove commercial general contractors to approach some of these newly retired individuals and try to lure them back with high-paying opportunities.
  3. Align with education. Commercial general contractors in the Chicago area would be smart to partner with some of the great universities and colleges in the Midwest to offer internships to construction management students. Last year alone, Englewood had four interns—two in estimating, one in operations and one in accounting—from major Midwestern colleges. We feel it’s great to help mentor these young students, but also it gives us a chance to possibly help mold and shape future talent for our team. In baseball terms, we use it as our farm system.

Whether it is at the apprenticeship, management or internship level, mentoring is really the key to bolstering the commercial construction workforce. Learning is a process that should never stop and all commercial construction professionals should stay up-to-date with trends and code changes.

I remember back to my days as a young laborer and one of my mentors, Leopold Hanke. He came up through the ranks and went from apprentice to journeyman to foreman to superintendent. In his time, he had built nearly everything imaginable. I asked him once how he accumulated so much knowledge of the commercial construction industry and he said “Kid, I wake up every day with the goal of learning something new.”

I took that to heart and I approach my job the same way. If I’m lucky enough to pass that along to several young commercial construction workers in our industry, I’ll have done my part.

Chuck Taylor
Director of Operations
Tel: 847-233-9200 x712

Questions? Comments?
You can reach me at chuck.taylor@englewoodconstruction.com
www.EnglewoodConstruction.com

Looking Back at Commercial Construction 2014 – The Year that Was

Commercial Construction 2014

With new hotel construction on the rise, Englewood is reconnecting with clients such as Value Place for projects in 2015.

When I look back on 2014, I’m kind of sad to see it go. While it was a good year for commercial general construction, it was by no means a record setting year. What does set 2014 apart is the excitement it generated for the commercial construction industry, the optimism it set for the near future, and, perhaps mostly for sentimental reasons, the opportunity it provided to rekindle professional relationships.

These are the three most important commercial construction trends I will take from the commercial construction industry in 2014.

  1. Retailer reinvention is good for commercial general contractors. Consumers came back to the market in 2014 and retailers and restaurateurs felt the benefits. This meant a new wave of restaurant construction and a nice uptick in retail construction, especially with international retailers as they continue to take large foot prints at street level locations and in major shopping malls. However, this came with a caveat. Retailers were not content to simply put up new locations with old blueprints and designs. With competition heating up, owners are trying to reinvent the physical location and create an experience for the shopper. This is happening with everything from your corner Red Lobster all the way up to a 1 million-square-foot shopping mall renovation project. This is the effect Apple’s successful retail construction model has had on the industry. Apple stores are always packed and other retailers are looking to capture the same buzz. The good news is commercial general contractors are finding themselves on the ground floor of this process, working with retailers and restaurateurs to revitalize the brick and mortar location. As a result, it is a very exciting time in commercial construction.
  2. Rekindling relationships. It’s no secret that new construction was on hiatus for a few years, but now that consumers are back, retailers and hotel owners are venturing out to begin new retail construction and new hotel construction projects. This has allowed us to work with real estate directors we have not seen for some time. Interestingly enough, many old contacts have shifted to new brands and have brought us new retail construction opportunities. It’s actually been a lot of fun getting to know new professionals and brands as well as reacquainting ourselves with old friends. We are optimistic this will all lead to many new retail construction opportunities in 2015.
  3. Self-reinvention. As the times change in the commercial general construction industry, so too should the commercial construction contractor. At Englewood, we definitely try to keep up with the times and differentiate ourselves from the competition where we can. It’s why we started this informative, award-winning blog a few years ago. As retailers and restaurateurs set to reinvent themselves, so do we. In 2014 we began a rebranding and redesign of our web site, and all of our on-line marketing efforts. Expect to see more changes from our website in 2015 to give Englewood a fresh look. We are also excited to announce that we are expanding our services and have begun work in the multifamily construction and healthcare construction sectors. It’s an exciting new era at Englewood Construction.

We look forward to all of the opportunities and projects 2015 will bring the commercial construction industry, and, as we see 2014 go, we appreciate the seeds it sowed for what should a very busy future.

Bill Di Santo
President
Tel: 847-233-9200 x710

Questions? Comments?
You can reach me at bill.disanto@englewoodconstruction.com
www.englewoodconstruction.com

Commercial General Construction 2014 Highs and Lows

As we close out another year, we wanted to take a look back at the commercial construction trends that defined 2014 and highlight some of the highs and lows. Overall, this was a great year for the commercial construction industry as commercial construction activity and revenue were up considerably.

According to a recent article from Crain’s Chicago Business, signed contracts for construction projects in the Chicago area were at $4.3 billion during the first six months of the year, up 16 percent from deals during the same period a year ago.

Stratford Square Mall - Commercial COnstruction

Englewood recently began work on the Stratford Square Mall in Bloomingdale, Ill.
Mall renovation work was a highlight of 2014.

High – Ground-Up Construction Makes a Comeback
Nothing gets a national commercial contractor more excited than moving dirt. The past few years have been dominated by commercial construction renovation work, but this year saw a strong return of ground-up construction. Led by the restaurant sector, new projects broke ground across the country as restaurateurs felt the gains of the improving economy.

One byproduct of this commercial construction trend is it has allowed Englewood to be more selective in our projects. In 2010, commercial construction firms were in survival mode and had to bid on anything available. Now, we can avoid bidding on projects that already have too many bidders, or, are too small for Englewood to be competitive. This has allowed us to concentrate on national corporate programs with firms like Darden and profitable new construction projects with restaurants such as Cooper’s Hawk Winery and the award-winning Harry Caray’s 7th Inning Stretch and Chicago Sports Museum.

Low – Retail takes a step back
While it has been a robust year and revenue is up, the majority of our commercial activity has been in new restaurant construction. Retail construction has taken a step back and worthwhile projects are becoming few and far between. Many national retailers are still expanding, but it is with smaller square-footage concepts, making margins much tighter and bidding much more competitive. National retailers still haven’t fully recovered from the downturn, with expansion velocity at a sluggish pace.

That’s not to say there are no opportunities in new retail construction. Englewood continues to be very active with many national retailers such as American Girl and Destination Maternity brands, but work in the retail construction sector is definitely down for everyone.

High – Shopping Mall Renovation
Yes, you read that correctly—one portion of the retail construction market that is experiencing robust activity is the mall reconstruction sector. While new retailers may not be expanding at a rapid clip, shopping mall owners are taking the opportunity to renovate and reposition traditional malls to entice shoppers back to brick and mortar locations. Englewood has been busy at the Lake Brazos Mall in Jackson, Texas and Stratford Square Mall in Bloomingdale, Ill. We expect this work to continue well into 2015.

Low – Labor Shortage
An unfortunate byproduct of the recent economic downturn and now quick construction rebound is that the industry is facing a major commercial construction labor shortage. Many skilled laborers were forced to leave the industry to find new work, while others left the country entirely to find work in growing overseas markets. Commercial contractors are very concerned about the lack of skilled labor available for new projects. As the commercial construction industry continues to heat up, this should be a commercial construction trend to watch closely as it may put a damper on the amount of new commercial construction the market can handle.

On behalf of everyone at Englewood, I would like to wish all of our readers happy holidays and a safe and healthy New Year. With the way the commercial construction industry is going, we feel 2015 will be a prosperous year indeed.

Check back in with us in January as Englewood CEO Bill Di Santo will take a look back at 2014.

Chuck Taylor
Director of Operations
Tel: 847-233-9200 x712

Questions? Comments?
You can reach me at chuck.taylor@englewoodconstruction.com
www.EnglewoodConstruction.com