Labor Savers: Solutions for speed, efficiency and sales
Even when labor is plentiful, construction teams place a high demand on products and services that speed up the project, cut time out of the cycle or allow one worker to expand his efficiency without the loss of quality. But in a period of tight labor, these qualities take on a holy grail-type allure.
And make no mistake, there’s a labor crunch in the home building and renovation industry. The shortage was a major talking point at the recent International Builders’ Show in Orlando, Fla., and it’s a talking point at just about any other show where LBM pros come together.
Builders are confident about the growth prospects of housing, said NAHB chairman Randy Noel, a custom home builder from LaPlace, La.
“However, they need to manage supply-side construction hurdles, such as shortages of labor and lots and building material price increases,” he said.
It’s not just the unemployment rate holding steady at an ultra low 4.1% for four consecutive months. Dealers and builders bemoan the loss of labor — skilled and otherwise — that left the construction industry during the massive downturn of 2007-2009 and didn’t return. Further tightening the labor supply is the overall age of many in the home building industry and the difficulty in filling the retiring tradesmen with younger recruits.
At Franklin Building Supply, a 14-unit pro dealer based in Boise, Idaho, president Rick Lierz recently told the Idaho Business Review that framers and plumbers and tradesman are in short supply on job sites throughout the valley. Another shortage is seen behind the wheel.
“There aren’t enough truck drivers out there,” Lierz said. “It’s one of the real labor pinch points.”
Lierz, who is also the 2018 chair of the National Lumber and Building Material Dealers Association, is far from alone in voicing concern about job-site labor.
Statistics from SkilledLaborFund.org show that 93% of builders agreed that the availability of trades is a critical issue.
With the unemployment rate hovering just above a historically low 4%, the tight labor market is infiltrating human resources departments around the industry.
A recent HBSDealer poll question finds dramatic solidarity behind the idea that the tight labor market is either directly or indirectly affecting business. HBSDealer specifically asked: “How is your business affected by the tight labor market?” More than 100 respondents generated the following breakdown:
- 61% — Directly. It’s hard to find good employees.
- 9% — Indirectly. A slow construction industry hurts sales.
- 20% — Directly and indirectly
- 11% — What tight labor market?
At Builders FirstSource, one of the nation’s largest pro dealers, the labor shortages are influencing business strategy and product mix. In a recent presentation to analysts, the Dallas-based company said labor shortages and extended building cycle times increase the relative value of the dealer’s services that speak to that shortage. Therefore, the company has seen growth in its “high-margin, value-added products.”
Through its past three quarters, these added value products of manufactured products and windows, doors and millwork have seen growth of 8% overall, and growth of 10% in manufactured products alone.
The industry’s other national publicly traded lumberyard company, BMC Stock Holdings, has regularly made a similar point to investors about the ability to profit by providing services that speak to the labor shortage. In its most recent earnings report, BMC celebrated “significant growth in structural components and Ready-Frame sales.”
In its third quarter — the most recently available at press time — the company described a 17.5% increase in its higher margin structural components product category. The company’s proprietary Ready-Frame system was described as “a cost-effective and timesaving alternative as they face a very tight labor market,” according to former CEO Peter Alexander, who stepped down in January.
At events like the International Builders’ Show, vendors are aggressively promoting their products and services that save time on the job site — or allow one worker to do the job of two. Such efficiencies were a major talking point at the MiTek booth in Orlando during IBS. “Builders, subcontractors and suppliers are all striving to overcome the current skilled labor and cost constraints and bring market leadership in responsive technology and efficiency,” the company said.
In addition to its software solutions, the company pointed to its new Pro Series structural fasteners, which is double epoxy-coated for speed and ease of installation and has a versatile range of uses.
On the following pages, several companies take aim at job-site efficiency and the labor situation. The building products industry can’t solve that problem. But it is trying to help. There’s a clear need. And filling it with efficient solutions and timesaving products is going to separate winners from losers in 2018.
Stay Tuned: HBSDealer will be publishing one Q&A every day next week with someone from each of the following companies regarding its labor-saving product: Hyphen Solutions, White Lightning, Georgia-Pacific, Epicor and E-Z Gutter.
When looking at a total cost of the Job quote, people used to only look at the cost of the products. So cheaper was better and they would slam and cram those low margin "cheaper" items. Now builders are begining to add the product cost and labor cost together and finding that a higher margin product that may cost 10-15% more will actually save them money because they are cutting their labor down by 50% along with smaller size crews as well. They can charge same price lower rates but profit more. Westbury railing comes to mind for a metal railing. They are boxed kits or even preassembled for larger jobs.