February 9, 2015

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Article

Building, Construction, and Design Roundtable

February 9, 2015


Utah’s construction industry has finally recovered from the Great Recession, with nearly every sector seeing growth opportunities. While industry leaders predict this steady comeback will continue in 2015, they still have some concerns. Challenges like finding enough skilled workers and negotiating contracts that make all parties happy will be at the forefront of these leaders’ minds in coming months.

Participants:

  • Rich Thorn, Associated General Contractors of Utah
  • Jeff Clyde, W.W. Clyde & Co.
  • Mike Alter, Kilgore Companies
  • Rob Moore, Big-D Construction
  • Scott Parson, Staker Parson Companies
  • John Fortuna, Jacobsen Construction
  • Alan Rindlisbacher, Layton Construction
  • Jim Slade, Komatsu Equipment
  • Steve Ogden, Nielson Construction
  • Troy Thompson, Okland Construction
  • Chris Knoles, Zwick Construction
  • John Hadfield, Hadco Construction
  • David Kolesky, Honnen Equipment
  • Bernell Kerkman, Jones Excavating
  • Richard Hunt, Hunt Electric, Inc.
  • Brad Sweet, Granite Construction Company
  • Sam Clark, Dale Barton Agency
  • Chris Nielson, Evergreene Construction
  • Sean Davis, Brahma Group, Inc.
  • Davis Mullholand, CCI Mechanical, Inc.
  • Scott DeGraffenried, Holland & Hart
  • Melissa Beutler, Holland & Hart

We’d like to give a special thanks to Rich Thorn, CEO of the Associated General Contractors of Utah, for moderating the discussion.

Let’s start with the annual state-of-the-state question. What are we seeing?

MOORE: In the past we were really focusing on government projects, both federal and state. A shift is happening pretty quickly and is moving more toward private projects. It’s interesting to see the market shift and see where the market is going. 

When it comes to labor, there were 100,000 folks in the construction industry and we went down to about 60,000 and now we’re back up to about 80,000 in our marketplace. With unemployment at 5.6 percent nationwide, that starts playing on your mind as you start picking up new projects and getting ready for the future.

FORTUNA: In the commercial building sector we are seeing growing opportunities. We are seeing a lot more work to pursue out there than what we had in the past. We have seen a rise of 6 to 8 percent over the last year in terms of construction costs. I’m optimistic that fees are rising as well as those costs.

RINDLISBACHER: A year ago we were all still in that cautiously optimistic mode. Right now we are all enthusiastically optimistic about the future and the growth and the opportunities that present themselves. The challenges we face are employee related. Where are we going to find those workers? Now is the time to look at the resources available, the manpower, the costs that will be rising, and be very cautious about the future and where we are going.

THOMPSON: Two or three years ago we had subcontractors calling nonstop wanting to know what we had to bid and what they could participate in, to the point where we were getting nine, 10, 11, 12 deep on subs, which is uncomfortable for subcontractors. We want to participate when the bidding process or the margins are a little bit narrower. In 2014, we had many jobs where there wasn’t great participation—instead of getting those eight or nine companies bidding, there were more like three or four. 

My guess is that skilled workers took other jobs during the recession and haven’t come back into the market. A lot of those subcontractors are finding it hard, now that the workload is going up, getting those folks back. All of us are feeling that it’s difficult to find key people. As we are growing and we are needing to hire project managers, superintendents, estimators—those guys are pretty hard to come by.

Resources are tightening up. We hear that subcontractors or material suppliers have either gone out of business or have closed that are producing materials like drywall and glass. Those lead times are substantially longer.

NIELSON: I’d just encourage everybody here to hope the fees come. Let’s quit being our own worst enemies and beating each other into the ground. I jumped out of the big market. It’s just not worth it.

A lot of it is relationship based. We would all rather have that ability to work with good owners we trust and good subcontractors we trust, and quit taking all this risk. It’s kind of ridiculous, when we look at the risk that we take on as companies and individuals, for the return we have. You hit a certain point where we have to be smarter as an industry.

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