PUBLICATION OF ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN FALL 2011
Promoting construction companies for growth Also: Program aims to ease capital crunch ABC confident anti-PLA law will withstand challenge
Distributors of siDing: CertainTeed, Wolverine, Napco, Foundry, Nailite roofing:
Atlas, CertainTeed - ROOFTOP DELIVERY
winDows: Ply Gem, Vinylmax, Silverline, Weather Shield (7 DAY CUSTOM ORDERS)
gutters: Custom Lengths While U Wait, Over 20 Colors, 5" & 6" vinyl Decks: Vinyl & Composite CertainTeed & Fiberon Michigan contractor sales Manager jr@sidingworld.com (313) 350-4691 installers available
15
wa in Mrehouse to s ichiga s erve n you !
siDingworlD.com
Inside
4 Executive Perspective Public relations, marketing and advertising can pay big dividends.
5 Feature Article
Promoting Construction
Companies for Growth Finding, attracting and obtaining new clients may be one of the biggest challenges for construction contractors, especially in a struggling economy. There are ways, however, for companies to control their marketing costs and reach higher sales.
10 Easing the Capital Crunch The Michigan Economic Development Corp. has unveiled the Capital Access Program (CAP), a new initiative that assists businesses with capital needs.
15 Economic Outlook Michigan’s economy is on a recovery path, as tracked by ABC’s Michigan Business Barometer.
19 Advertisers Index VOLUME V, ISSUE. 3 Game-changing law for Merit Shop contractors takes effect.
Legislative Update 12 l
www.abcmi.com
ABC is confident that a new law that bans project labor agreements on state-funded construction projects will withstand a legal challenge by organized labor. Fall 2011 3
ASSOCIATED BUILDERS and CONTRACTORS of MICHIGAN 2011 BOARD of DIRECTORS Jim Cripps – Chairman Cripps Fontaine Excavating – Western MI Chapter David Mollitor Jr. – Vice Chairman Consolidated Electrical – Central MI Chapter Rod Kloha – Past Chairman Circle “K” Service, Inc. – Saginaw Valley Chapter
Public relations, marketing and advertising can pay big dividends.
Dave Sheffield – Secretary/Treasurer Onslow-Sheffield, Inc. – Southeastern MI Chapter Chris Beckering Pioneer Construction – Western MI Chapter Bill Buyak Capital Steel – Central MI Chapter Scott Gillespie The Gillespie Co. – Central MI Chapter Rick Jackson Jackson Associates – Southeastern MI Chapter Mike Kelly Wolverine Building Group – Western Michigan Chapter Bill Molnar Wm. Molnar Roofing Co. – Southeastern MI Chapter Brian Stadler Wolgast Corp., Saginaw Valley Chapter Dan Murphy MAG Insulation – Saginaw Valley Chapter Jack VandeGuchte Sobie Company, Inc. – Western MI Chapter Daniel Welch Welch Tile & Marble – Western MI Chapter Michigan Merit Contributors Publisher: Christopher Fisher Managing Editor: Mary Boardway, CAE Communications Coordinator: Kelly Dancsok ABCMI Economist: Don Wilson Publication management: Lezotte Miller Public Relations, Inc. Advertising: Arion Media Printing: Bradford Printing Michigan Merit (ISSN# 1938-9051) is the official publication of Associated Builders and Contractors Inc. of Michigan (ABC of Michigan) and is published quarterly at 230 N. Washington Sq., Suite 202, Lansing, MI 48933, (517) 853-2545. Please direct all inquiries to the previous address. Articles written by outside authors do not necessarily reflect the views of Associated Builders and Contractors Inc. of Michigan. ABC of Michigan reserves the right to reject or edit all material submitted for publication. The appearance of an advertisement in Michigan Merit does not constitute endorsement of the advertiser, its products or services, nor do Michigan Merit or Associated Builders and Contractors Inc. of Michigan guarantee or warrant any claims or offers made by the advertisers. Permission to reprint in whole or in part is hereby granted, provided the following credit line is used: “Reprinted by permission from Michigan Merit, a publication of Associated Builders and Contractors Inc. of Michigan.”
4 Fall 2011
It’s no secret that public relations, marketing and advertising offer unique benefits when employed correctly. When working together, these three practices can build awareness, boost brand value and drive business for your company. This issue of Michigan Merit explores strategies for increasing ABC companies’ visibility and how gaining more exposure can help lure clients and obtain greater market share.
Marketing your company effectively can sometimes be the final piece of a business plan puzzle that takes it to the next level.
There’s no doubt that positive exposure can be of tremendous benefit to any organization, even in the public policy advocacy arena. In 2011, for example, we executed a multi-faceted government relations effort to finally end government-mandated union project labor agreements in Michigan. Public relations was a key component to the effort, and proved to be integral to the campaign’s success. In fact, last month our campaign earned the prestigious Michigan Society of Association Executives Diamond Award in the public relations campaign category. We took the top award in the state for our efforts to end project labor agreements. Marketing your company effectively can sometimes be the final piece of a business plan puzzle that takes it to the next level. Many different approaches are available, as the examples in this issue illustrate. Marketing should never be a one-size-fits-all endeavor, but one that uses the strategies most applicable and effective for your particular business and market. Yours for the Merit Shop,
Chris Fisher
Michigan Merit
Serving as an expert source for media outlets is one way to get your company’s name before the public.
Promoting construction companies for growth Finding, attracting and obtaining new clients may be one of the biggest challenges for construction contractors, and more so in such a struggling economy as Michigan’s over the past few years. Small to midsize construction companies may not have huge marketing budgets, so they need to be focused when deciding how to increase visibility and attract new customers. Mass advertising is www.abcmi.com
alluring, but the high cost should cause companies to think carefully about whether such wide visibility will actually reach their specific potential clients. Is the potential market large enough to warrant the higher costs of reaching such a broad population? Does the return on investment justify the cost? Companies that can accurately identify their target clientele are better able to control their marketing
costs and reach higher sales. Whether large or small, companies achieve greater success using lowercost but well-targeted approaches to reach new business prospects. By profiling the potential market, the company can develop insight into the media to which its potential clients pay attention and can then spend marketing dollars more wisely. For example, determine which trade publications desired clients read and Fall 2011 5
Market to referral sources
Many local service clubs want to hear presentations from local business people.
identify community organizations they support. Identify to which business groups they belong. Armed with such knowledge, firms can focus their marketing budgets more precisely and take advantage of visibility opportunities that bring new customers. Three specific communication strategies offer opportunities for contractors to build their client base -- media relations (sometimes called “earned media”), direct marketing communication and community relations can each help companies create visibility and stay in front of the competition.
Be a media resource 1. Use your company’s special knowledge or expertise to help reporters and editors inform their readers or viewers. Many media outlets appreciate having access to an industry expert who can add insight to a business story and serve as a resource on particular topics. Follow the articles of business writers who cover construction in your business markets. Contact them by phone or email to comment positively on stories they’ve done. Offer suggestions for other topics they might consider, taking care not to suggest any that might be selfserving or obviously promotional. Provide helpful industry background that the reporter might not otherwise 6 Fall 2011
be able to access. Over time, build a relationship so that the reporter knows he or she can rely on you for accurate information and a quick response to help meet a deadline. Being quoted as an expert on a particular construction-related issue brings tremendous credibility and as much or more value as that which might come from purchased ad space. For example, Robert Hedlund of Hedlund Plumbing in Lansing, an ABC Central Michigan Chapter member, appeared on the syndicated “Michigan Morning Show” radio broadcast this summer to discuss copper theft. 2. Send out regular news releases to local media and trade publications about trends in your industry or business forecasts. Develop a short release and send it to the business editor of your local newspaper or TV news department, then follow up to discuss the possible news angle. Announce your staff’s accomplishments and company achievements. Publicize corporate anniversaries and staff promotions.
1. Publish (either in print, electronically or both) a marketing newsletter designed to inform clients about issues that affect them or that help them be more effective in their businesses. Sharing your knowledge or expertise helps position your company as the expert with whom people want to do business. Such marketing publications need not be expensive or lengthy -- and can be done electronically for even less cost -- but should contain information your clients find useful. Building your company’s name recognition is the goal. 2. Offer a company spokesperson to speak to local service clubs and business groups about the construction industry. Construction trends and forecasts are of interest to many other business segments. Determine what you can share that relates to the general economy, health care, the environment, social services, for example. Pat Gillespie of the Gillespie Group, Lansing and the Central Michigan Chapter of ABC, has been a speaker at local business meetings, such as the Lansing Rotary Club, to shed light on new and planned developments in the area.
Real estate & Development • Design/BuilD ConstRuCtion management • BuilD to suit/leaseBaCk lease spaCe • CommeRCial pRopeRties • geneRal ContRaCting
An Upper Peninsula Contractor Serving Michigan
LOCATE • DESIGN • BUILD 906-482-3000 • www.moyleusa.com
Michigan Merit
3. Identify prospects and communicate your unique market niche directly through email, social media and traditional mail. An upto-date mailing list is still one of the strongest marketing tools. Clients may not need your service now, but when they do, your company’s name should be the first to come to mind. Maintain an accurate email database of customers and potential customers. Connect your company through LinkedIn, Twitter and other social media options and use those tools to inform those in your database about company news, awards, etc. Many ABC members are becoming increasingly sophisticated about their use of social media, particularly Facebook. “I consider it an essential component of our overall marketing and branding strategy,” says Chris Beckering, director of business development at Grand Rapids-based Pioneer Construction, a member of ABC’s Western Michigan Chapter that has actively maintained a Facebook page for about 18 months. Outside of face-to-face interaction, it’s a way to engage with potential customers that other media, such as newspaper advertising, can’t provide, he says. A Facebook page isn’t a place
Pioneer Construction considers Facebook an essential marketing tool.
to make a hard advertising sell, Beckering warns. Rather, it serves more as an extension of the company’s corporate culture and as a forum to interact with existing and potential customers, employees and the community at large. “We are experiencing a benefit from it,” Beckering says. “We find that people with whom we work know a lot more about us. The more people know about us, the stronger their relationship is with us.” Pioneer’s Facebook page’s content primarily consists of news articles
or items about clients, projects and employees, as well as information about the construction industry in general. Pioneer’s social media strategy revolves around Facebook, rather than other options such as Twitter and LinkedIn, because of the graphics available on the medium, Beckering says. Answer Heating & Cooling of Freeland, a member of ABC’s Saginaw Valley Chapter, similarly avoids hard selling on its Facebook page. It offers tips and suggestions
Putting our clients out front Since 1995
Public relations counsel and communication consulting for corporations, associations, government agencies, non-profits
C & R ELECTRIC, L.L.C. Tim Sponseller, Owner 6960 E. Blanchard Rd. • Shepherd, MI 48883 (989) 828-4020 • (989) 828-4089
www.abcmi.com
Issue Management Crisis Communication l Strategic Planning and Research l Media Relations l Internal/External Communication l
Commercial, Industrial, Residential, and Agricultural
l
2175 Commons Parkway Okemos, MI 48864 517-381-1900 www.lezottemiller.com
Fall 2011 7
on reducing heating costs and properly maintaining heating and cooling units. 4. Make the most of signage opportunities. Name recognition is half the battle in attracting new clients or customers. Invest in a strong logo and give it presence wherever possible. Take advantage of your building location, especially if it’s in a high-traffic area. Determine where signage will be most easily seen and use it as a branding opportunity. Use your corporate vehicles similarly, as a chance to build your company’s name recognition. Done tastefully and professionally, such easy visibility opportunities build awareness within the community, and high visibility over time helps generate new contacts, referrals and community partnership opportunities.
B&D Electric supports a great local cause and creates visibility within the business community.
Build a strong community relations program When the work of nonprofit organizations is assessed in most communities, a common thread is visible – strong business support that has stepped in to fill the void as public sector support has diminished. Whether the work involves feeding the hungry, sheltering homeless populations or creating educational opportunities for at-risk youth, the local business community is involved to a great degree. Although businesses get involved first and
Access America’s Top Skilled Craftsmen.
Call our office nearest you to access Safe and Productive Craftsmen!
Detroit: 877.511.0006 Grand Rapids: 877.942.8933 Kalamazoo: 877.345.3950 Lansing: 888.694.1511 Midland: 877.866.8761
tradesmeninternational.com
8 Fall 2011
foremost to improve the quality of life in their communities, they should realize the significant community relations potential that may come along with their philanthropy; the higher a company’s visibility, the more likely it will be approached to support nonprofits and the more important it is to be selective. Companies should carefully choose the organizations with which they affiliate, recognizing that their support will be most effective when it is concentrated among a few rather than spread to too many. 1. Do targeted sponsorships with community service organizations. Work with those organizations that have a logical tie-in or similar mission to your company’s. When the nonprofit and the supporter have a commonality in their missions, it benefits both. For example, a company that focuses its work in the education industry will see its reputation grow when it supports education-related nonprofits. With so many nonprofits that need help, it makes sense to choose those that align in some way with your business mission. TV and radio stations and newspapers are often strong supporters of major nonprofit organizations. Your financial or inkind support of the organization’s event or program can generate Michigan Merit
free publicity or inclusion in broadcast or print coverage and advertising. As an event sponsor, you’d likely have the opportunity to include your company’s logo in an ad or publication that reaches your potential customers. Like many ABC members, Rockford Construction of Grand Rapids, an ABC West Michigan Chapter member, is deeply involved in its community. In fact, a large portion of the company’s website is devoted to its community involvement and charitable giving. “We encourage and empower employees to share time, treasure and talent — whether it’s through a Rockford corporate fundraiser or personally volunteering wherever they choose. In that way, the giving
becomes exponential,” its website states.
Make targeted advertising decisions Some companies may find that the only way to reach their particular market is to purchase ad space. Although advertising is usually a more expensive communication strategy than those previously mentioned, opportunities for ad placement are everywhere. In addition to the traditional venues such as newspapers, television, radio and billboards, companies can now consider placing ads on media websites or purchasing Google ads. Ways to advertise are almost limitless. The key, however, is still to be selective when prioritizing
your communication budget. Say no to advertising deals that reach beyond your target audience. Even though the price may be right, if the audience is wrong, you’re wasting precious marketing dollars. Conversely, it may make sense to spend a little more when the ad will reach your most desired clients, such as in an industry trade publication. Rather than cut marketing budgets when the economy is tight and projects aren’t coming down the pipeline, contractors need to be more aggressive and focused in their marketing efforts. Those who stay on a targeted marketing course will stay in front of their competitors in the race for new clients and customers. MM
ONLINE VIDEO/DVD PRINT
SAFETY EXCELLENC E
Contact us today at 800-646-2690 to learn how J.E. Johnson can provide service and add value to your organization.
Certified Honeywell BCS Contractor
Build Safety Excellence at Your Construction Site! Summit Training Source is the Premier Builder in Safety Training Programs
Reduce costly accident and injuries and increase productivity by building your workers’ knowledge on the importance of best safety practices. Summit’s extensive line-up of construction specific training titles teaches workers what they need to know to make a positive impact on the safety culture at your site. Construction titles include: • Aerial Lift Safety • Scaffolding Safety • Construction Safety Orientation • Fall Protection
P.O. Box 1863 | Midland, MI 48641-1863 1550 E. Virginia Dr. | Midland, MI 48642 P: (989) 835-6671 | (800) 646-2690 | F: (989) 835-7147 www.jejohnson.com | Email: designbuild@jejohnson.com
www.abcmi.com
Construct your safety library today with Summit’s over 600 training programs.
• Hand & Power Tools Safety • OSHA 10 & 30 Hour Training • AND MORE!
800.842.0466 I www.safetyontheweb.com
1030-0067
Design/Build n HVACR Systems n Plumbing Sheet Metal n Process Mechanical Systems Energy Management Systems Maintenance Services
Fall 2011 9
Easing the
Operating any business in Michigan during the past three years has been difficult, but none more so than in the construction industry. In addition to the challenges of finding work during that span, construction companies, more than almost any other, found it nearly impossible to find operating capital. Many large financial institutions simply were not lending in Michigan, while smaller ones were randomly closing lines of credit and calling due notes and other outstanding funds. Business owners who had banked with an institution for many years found themselves no longer able to get a business loan or seasonal line of credit just to maintain their operations. Today, the economy in Michigan is still sluggish, but it is showing faint glimmers of hope. Many industries are beginning to turn around, although commercial and industrial construction is still struggling to get out of the basement. Most encouragingly, the July 19 passage of the Fair and Open Competition in Governmental Construction Act, which bans project labor agreements on state-financed construction projects, gives Michigan contractors more jobs to bid on and the possibility of more work. However, even with the promise of fair and open competition on the horizon, capital financing remains a missing piece in the foundation of rebuilding the commercial and industrial construction industry in our state. The Michigan Economic Development Corp. (MEDC), the state’s lead public agency for business assistance services, working with the Michigan Strategic Fund (MSF), is launching the Capital Access Program (CAP), a new initiative that assists businesses with capital needs. The CAP uses small amounts of public resources to generate private bank financing and provide small Michigan businesses with access to capital that might not otherwise be available. To date, the $24.3 million 10 Fall 2011
in public resources committed to the program has generated approximately $677.7 million in bank lending – a private/public ratio of about 28 to 1. The program can be used to finance most types of businesses, with a few exceptions: the construction or purchase of residential housing; development of a casino, stadium or arena; or the purchase of passive real estate (defined as commercial or investment real estate). The maximum loan amount that may be enrolled in CAP is $5 million. Loans must be for a new extension of credit and may not be used to refinance existing debt, or to finance the nonguaranteed portion of a U.S. Small Business Administrationguaranteed loan. CAP loans are offered directly to companies needing credit enhancement by participating banks throughout Michigan. A listing of approximately 80 participating financial institutions can be found by visiting http://www. michiganadvantage.org/Access-toCapital/ and clicking on the Capital Access Program document file listed on the page, or by calling the MEDC at 517-373-9808 or emailing CAP@ michigan.org. Additional financial institutions are being approved regularly, so checking with the MEDC regarding the approval of a particular bank or credit union is advisable. The program works similarly to a loan loss reserve fund in that the bank, the company and the MEDC pay a small premium into a reserve that makes it possible for the borrower to receive fixed-asset and working-capital financing. Michigan Merit
capital crunch Although the MEDC is administering the program for the MSF, neither organization plays any role in lending decisions or in setting non program-related loan terms and conditions. CAP loans are private transactions between banks and borrowers, and the bank assumes the risk of the loan. CAP loans can be long- or short-term loans or lines of credit, as determined by the individual lender. The bank has the flexibility to recast, extend or refinance the loan to address the needs of the business owner. The loans are available to most
www.abcmi.com
for-profit Michigan businesses with no more than 500 employees and that satisfy the lending institution’s criteria. The funds received from the loans must be used in the state. Loans can be referred to the CAP from either the lending institution or the borrower. Borrowers are required to complete a Borrowers Assurance Form, which asks the borrower to attest to many of the requirements listed above. A copy of the form is available through the ABC of Michigan website (www.abcmi. com) or by requesting it via email at boardway@abcmi.com.
In addition to the CAP program through the MEDC, several public and private nonprofit organizations have grants and loans available for businesses in Michigan, many specific to local or regional areas. Several listings of resources of business loans, seed and venture capital and matching funds programs can be found by visiting http://www. michiganadvantage.org/Access-toCapital/ and clicking the links specific to these services. MM
Fall 2011 11
Unions attempt overturn of new PLA law ABC, Gov. Snyder, Attorney General Schuette defend open competition law Governor Rick Snyder is the named defendant in a suit filed in federal court over the Fair and Open Competition in Governmental Contracting Act which banned the use of certain terms often included in government-mandated project labor agreements (PLAs) for state, local government, public school and university construction projects. The lawsuit was initiated by the Michigan Building and Construction Trades Council and Genesee, Lapeer, Shiawassee Building and Construction Trades Council. The 10-page complaint claims that section 5(a) of the law prohibits Michigan and all state governmental units “from entering into or expending funds under a contract for the construction, repair, remodeling or demolition of a public facility, if the contract or any subcontract under the contract contains a term that requires or encourages bidders, contractors or subcontractors to enter into or adhere to agreements
with a collective bargaining organization relating to the construction project or other related construction projects.” The union complaint alleges: “The prohibition in 2011 P.A. 98 against employees in the construction industry seeking to negotiate and implement project labor agreements and other prehire agreements through their bargaining representatives for use on public works projects in the state of Michigan also constitutes impermissible state interference with the ‘free play of economic forces’ that Congress intended to govern construction industry labor relations.” ABC of Michigan lead the fight for passage of Michigan’s new law which is part of a growing trend against governmentmandated PLAs
that is moving through a number of states. The lawsuit charges that the law violates both the Contract Clause of the U.S. Constitution and the National Labor Relations Act. The suit has been filed in the Federal Court, Eastern District of the State of Michigan. ABC of Michigan and several legal experts are confident that the law will be upheld by the courts. “The legal challenge and assertions by the building trades are a stretch,” says Chris Fisher, president of ABC of Michigan. “The new law establishing governmental neutrality
WE’RE BUILDERS TOO. OF PROFITS.
Fire Protection Systems DESIGN, INSTALL, SERVICE & MAINTAIN
Jackson Associates, Inc. 1111 West Oakley Park Road Walled Lake, MI 48390
248-669-5155
www.jacksonassociatesinc.com
And the tools we use? Tax planning. Audits. Strategic planning. Quality systems analysis. Merger and acquisition. Succession planning. Technology strategies. Tom Doyle 248.223.3402 plantemoran.com
12 Fall 2011 406184_JacksonAssociates.indd 1
Michigan Merit 11/3/08 5:06:07 PM
with regard to labor affiliation is on solid legal footing.” In response to the legal challenge, Attorney General Bill Schuette fired back in defense of the new law filing a motion to dismiss the case on several grounds. In the motion on behalf of Gov. Snyder and the pro-Merit Shop law, the Attorney General’s office offers a sharp rebuke of the Building Trades Council’s legal challenge asserting that [Building Trades] Councils “rely upon speculative and illusory impediments to nonexistent rights and reflect only a dispute of hypothetical or abstract character rather than any definite and concrete controversy.” The motion to dismiss goes on to conclude: “The [Building Trades] Councils have failed to state any claim against the Governor, as the Complaint fails to allege an actual case or controversy. Because they have failed to demonstrate any injury, let alone an imminent one, the Councils have no standing, and this case is not ripe for adjudication. The Councils have not identified any actual rights the NLRA protects and the Public Act impairs. Neither have the Councils established how the Public Act impermissibly impairs existing contractual obligations, because by its own terms, the Public Act does not apply to construction contracts entered into before July 19, 2011. Simply put, there can be no deprivation of a non-existent right. And the Councils may not claim an injury to non-existent rights to meet the constitutional prerequisite of an actual case or controversy.” The case is scheduled for oral arguments in January in Detroit.
ABC members appointed to State Electrical Administrative Board Governor Rick Snyder announced the appointments of ABC members Thomas Erdman and Corey Hannahs to the Electrical Administrative Board, which is www.abcmi.com
ABC accepts the 2011 MSAE Diamond Award for PR Campaigns: from left Leah Borst, Lezotte Miller Inc.; Mary Boardway and Chris Fisher, ABC of Michigan; and Barbara Lezotte, Lezotte Miller Inc.
ABC of Michigan wins Diamond Award for PLA Ending Campaign ABC of Michigan’s “Campaign to End Project Labor Agreements (PLAs)” earned the top public relations campaign award at the Michigan Society of Association Executives’ (MSAE) 10th Annual Diamond Awards in September. ABC of Michigan worked with Lezotte Miller Public Relations, Inc. to develop and coordinate the campaign, which was geared to pass legislation banning union-only PLAs on publicly funded construction projects. The MSAE awards program recognizes excellence and innovation in associations. responsible for licensing and certifying qualified applicants and developing rules and regulations necessary for enforcement of the Electric Safety Act. “The appointees bring valuable knowledge and skill to the board as it continues to oversee the regulation of the electrical construction industry in Michigan,” Snyder said. Erdman, of Vassar, is president of Nuechterlein Electric Inc. in Frankenmuth. He is a licensed master electrician with nearly 40 years of professional experience in the electrical industry. Erdman is a member of the Frankenmuth Downtown Development Authority Board of Directors and is a former member of the Michigan State Fire Safety Board. He earned a degree in electrical technology from Michigan State University. Erdman will represent electric parts distributors and replaces Joseph Reyes. Hannahs, a licensed master electrician of Ann Arbor, serves as president and owner of Hannahs Electric Co. in Ann Arbor. He is also an electric apprenticeship instructor
and director of education for the Central Michigan Chapter of the Associated Builders and Contractors of Michigan. He previously served as an electrician apprentice, journeyman and master for Integrity Electric Inc. in Lansing. Hannahs earned an associate’s degree from Lansing Community College. He will represent master electricians serving as a supervisor and replaces Mark Bauer, an IBEW business manager. ABC of Michigan applauded the appointments of Erdman and Hannahs. “These ABC members come from great Merit Shop companies and will do an outstanding job representing the Electrical industry,” says ABC of Michigan President Chris Fisher. “Their knowledge of the industry has long been of value to ABC and it’s terrific to see the state of Michigan now benefiting from their expertise.” Appointees will serve three-year terms expiring Aug. 10, 2014. The appointments are subject to the advice and consent of the Senate. MM
Fall 2011 13
it’s the law!
Any person engaged in a construction activity who is operating a mobile crane must be certified.
Now available from Associated Builders and Contractors oshA required mobile crane operator certification prep ANd/or test Now AvAilABle from the sAgiNAw vAlley ChApter CAll 989-832-8879 for more iNformAtioN Why should I attend?
• OSHA regulations require most crane operators to be certified. • Mobile cranes are the most dangerous and have the highest accident potential of all industrial and construction equipment. • 20% (1 out of 5) of all construction fatalities are crane related. • Some of the largest lawsuits are a result of crane accidents, which are most often the fault of an untrained operator. • More often in crane accident litigation, the employer is found negligent in not determining an operator’s qualifications and providing the necessary training to ensure operator competency as required in Federal, State, and Industry Crane Safety Standards.
What you WIll gaIn:
Program requIrements—Please read:
Crane Operator Certification is based on comprehensive requirements derived from established standards and technical information. The applicant is required to acknowledge a statement verifying that he/she meets or exceeds ASME B30.5 physical requirements and pass both written and practical examinations. Upon satisfactory completion of requirements, each applicant will be issued a Certification from the National Center for Construction Education and Research (NCCER) valid for five years from issue date. All participants will be sent application forms which must be completed, signed, and submitted three weeks prior to class session.
• Crane operator training for written and practical exams. • Crane operator Certification issued by the National Center for Construction Education and Research (NCCER).
Participants must bring their own: hard hats • safety glasses high visibility vest • proper shoes.
CertIfICatIon Can be In:
• Classroom review of the Written Test subject matter • Load chart calculation review • Core Test & Specialty Test (per crane type) • Review of Practical exam course • Preparation for Practical Test • Practice on Practical Test course • Practical Test taken for each crane type chosen
swing Cab/rt hydraulic Cranes These types of mobile hydraulic telescoping cranes are characterized by the operator moving with the boom. fixed Cab/boom trucks A mobile hydraulic telescoping crane usually on a truck bed/boom truck where the operator is at a separate station.
WorkshoP agenda
the oNly NCCer CrANe eNdorsed ACCredited AssessmeNt CeNter iN the stAte of miChigAN!
Michigan Economic Indicators
Michigan’s economy on recovery path By Don Wilson, ABC MI Economist
At the opening of 2011, Michigan’s construction industry was comprised of 21,747 companies that have employees. Only six of those companies employed more than 500 people and 19,140 employed fewer than 10. More than 99 percent of construction activity in Michigan is conducted by organizations classified as small businesses, 1,170 of which are nonresidential general contractors and 13,992 are classified as specialty subcontractors, who work on nonresidential as well as residential building. Because of the size and geographic dispersion of the industry, there is limited information on the value of nonresidential building activity in the state. MICHIGAN MERIT in 2010 initiated reporting on the value of nonresidential building contract awards in the service areas of the regional chapters of ABC in Michigan. This year ABC thought it appropriate to further improve MICHIGAN MERIT’s readers’ understanding of the non-residential market by putting together data on measures of the markets for leasable space which are a major driver of demand for the skills and resources of non-residential building general contractors and their sub-contractors. Demand for new floor space available for lease or additions and alterations to existing space are determined by: www.abcmi.com
1) The level of occupancy of The market for the skills and present space; resources of general contractors, 2) Space absorption, which is the their subcontractors and the net change in occupied space from materials they install in nonresidential one time period to another; structures, as measured by the 3) The level of business activity inflation adjusted value of building as employment or other broad contract awards, changed as follows economic measures in the industries in 2011 first two calendar quarters occupying the space; compared to earlier years: 4) The availability of funds to McGraw-Hill tabulations show finance space construction and Change in Value of All Nonresidential occupancy. Building Contract Awards (Annual %) Data on Detroit Lansing Grand Rapids rental rates are Year Q1 Q2 Q1 Q2 Q1 Q2 excluded as such 2006 370.0 26.5 -44.6 -69.4 22.3 40.7 prices vary widely 2007 51.0 17.7 -54.6 -42.8 -30.0 74.7 due to location 2008 -31.0 153.1 89.7 70.2 23.1 -19.2 and supply and 2009 -1.2 -83.2 -77.6 -37.8 -30.3 -76.8 demand factors. 2010 24.3 -23.2 169.2 138.8 -33.9 59.6 Data on lending 2011 22.1 -6.3 -25.3 -14.2 -47.6 -1.9 is also omitted Source: McGraw-Hill as bank mergers and consolidation of reporting have the rate of decline in the value of curtailed much of the data on lending all contract awards, including some to businesses in various areas of the upturns, has been moderating, state. While data on leasable space since 2009. Why? Michigan’s are tabulated for the Detroit, Lansing economy is on a recovery path, as and Grand Rapids areas, information tracked by ABC’s Michigan Business for the Saginaw Valley area is only Barometer, which is a composite Saginaw-Bay-Midland employment. measure of private sector business The market for nonresidential activity in nine sectors covering more building activity is comprised of three than 80 percent of the statewide broad property sectors: commercial, economy. The Barometer’s rate of industrial and institutional. quarterly change and that of its major Commercial is primarily comprised of components are as follows, since the office, retail and hotel/motel markets state’s economy bottomed out in the segments. final three months of 2009: Fall 2011 15
Year 0ver Year Quarterly Change (%) 09 Q4 10 Q1 10 Q2 10 Q3 10 Q4 11 Q1 11 Q2 Barometer -13.5 -10.8 -5.0 1.4 3.9 6.1 3.2 Manufacturing Industries Activity -13.9 -1.5 7.7 1.4 9.2 4.9 0.6 Wholesale Trade Activity -11.1 -6.2 0.2 4.2 4.0 6.3 3.5 Retail Trade Activity -0.8 -0.8 -0.7 5.9 6.8 -3.4 -0.6 Service Industries Activity -8.2 -5.3 -0.7 2.0 4.1 5.4 5.5 Employment -8.7 -6.9 -2.8 -0.2 1.4 1.6 2.7
As shown in the following commercial and industrial market data, building occupancy rates in Detroit, Lansing and Grand Rapids continue to remain below their pre-recession levels, except for industrial facilities in Lansing and the improvements registered in hotel and motel usage. Sufficient information is not available to project when vacancies will recede to prerecession levels. However, data on the level of building occupancy, growth in leased space and employment suggests the process has started in the three metropolitan areas, except Grand Rapids retail.
Office market vacancies increase With decline in the volume of revenues of building tenants as the economy in each metropolitan area weakened in 2006 or 2007 through 2010, some businesses downsized and cut back on leased space, while others vacated space through mergers or shutdowns. As a result, building occupancy levels declined and vacancy increased. The change in occupied space is the net increase or decrease in square footage occurring when space is vacated or added in leases with new tenants or with expansion of existing tenants. The resumption of employment growth in 2010 and 2011 is a sign that businesses are filling more jobs than are being eliminated, which is resulting in increased occupancy 16 Fall 2011
(indicated by 2011 second quarter data). Also, landlords are making concessions to keep existing tenants, but little is known about those arrangements and their impact on maintaining occupancy. Employers, however, remain wary about hiring due to uncertainty caused by lack of loanable funds, which are being soaked up by excessive governmental spending, Occupancy Level (%)
Grand Detroit Lansing Rapids
2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q2
82.4 83.1 82.9 81.8 81.0 80.8
82.2 82.9 82.6 82.3 80.4 81.2
82.4 80.2 79.9 78.4 76.7 78.0
Annual Change in Occupied Space (%) 2006 2007 2008 2009 2010 2011 First Half
-0.6 0.7 1.0 -1.7 0.1 .04
-2.1 2.0 -0- -1.6 -3.2 0.1
-3.3 -1.9 -2.7 -11.3 0.03 2.0
0.8 -1.7 1.3 -7.3 2.8 0.9
Occupancy Level (%)
Grand Detroit Lansing Rapids
2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4
90.0 90.0 90.0 89.0 89.0
83.5 82.5 77.9 81.4 80.3
90.9 88.3 81.0 77.9 78.2
Annual Change in Occupied Space (%) 2006 2007 2008 2009 2010
0.2 1.5 0.7 -0.4 0.7
2.3 -0.9 -5.7 0.8 -0.01
0.5 Est. 0.5 Est. -5.7 -1.2 0.1
Annual Change in Retail Sales (%) Statewide
2.2 0.4 -0.5 1.1 -1.2 0.4
Change In Office Jobs (Year / Year %) 2006 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2
overregulation by some federal agencies and the threat of higher taxes. The shift to growth in employment will gradually create a market for non-residential contractors whose business will likely concentrate on renovation of existing space, until occupancy levels return to 2006 levels or above. The time required for such a change cannot be projected. Change in basic measures of the market for office space is summarized below:
2.4 -1.9 1.7 -7.0 1.8 6.3
Sources: CB Richard Ellis / Martin MARKET VIEW reports for Lansing and Grand Rapids, Colliers International RESEARCH REPORTS for Detroit and U. S. Bureau of Labor Statistics
2006 2007 2008 2009 2010 2011
-2.7 -0.7 -5.0 -3.7 3.1 -1.0
Note: Data on the occupancy levels and change in occupied space excludes regional malls. Sources: CB Richard Ellis / Martin MARKET VIEW reports for Lansing and Grand Rapids, Allen & Associates (Birmingham, Michigan) for Detroit, U. S. Bureau of Labor Statistics and Michigan Department of Treasury
Little growth in retail market leased space expected As retail spending began a moderate decline in 2006 and 2007 and more serious cut backs in 2008 Michigan Merit
through 2010, many small retail establishments closed their doors, some chains closed unprofitable branches and some retailers reduced the amount of individual outlet space leased. As a result, occupied space suffered a 3.2 percentage point loss in Lansing between the fourth quarter of 2006 and 2010 and a 12.7 point loss in Grand Rapids, while the Detroit area posted only one point shrinkage. The upturn in retail activity in 2010 resulted in only fractional improvement in leased space. Leasing data for the first half of 2011 is still being tabulated. Growth in leased space will be slow going forward. Its primary driver, retail sales, is dependent on the household sector, where spending is limited by debt, reduced home equity, lack of earnings growth, rising prices and weak confidence in the future due to the high level of unemployment. As a consequence, retail occupancy levels will also likely recede only gradually to 2006 levels. Non-residential building activity will likely be centered in renovation of existing space. How long it will take for space vacancies to decrease enough to spur growth in retail investment cannot be projected.
Hospitality industry may benefit from lower fuel costs, promotion With the rise in fuel costs on top of the stringent air passenger inspection program implemented after the advent of 9/11, passenger air travel into Detroit, Lansing and Grand Rapids declined in every year from 2006 through 2009. Then the surge in gasoline prices in 2008 caused substantial drops in highway traffic in 2008 and 2009 further slashing occupancy. With moderation of fuel costs in 2010 and implementation of the “Pure Michigan” promotion program, occupancy increased in both 2010 and 2011. www.abcmi.com
At an occupancy rate of around 60 percent, lodging facilities have an opportunity to survive according to industry analysts. As the rate approaches to 70 percent or higher, profitability is ensured. With profits, the industry is more willing to allocate funds to build new or renovate existing space. As in the instance of the office and retail markets, non-residential construction skills and resources is likely to be solicited mainly for lodging renovation projects until occupancy levels show a consistent record of profitability.
Industrial occupancy downsizing continues
Industrial employment is substituted for more comprehensive measures of local manufacturing, wholesale trade, construction and transportation activity. Industrial facility occupancy declined 1.2 percentage points in the Detroit area between the fourth quarter of 2006 and 2010 and 2.4 points in Grand Rapids, while rising by 10.3 points in the Lansing area. Occupancy then increased by 1.5 points in Detroit and 1.1 points in Grand Rapids while declining 2.5 points in Lansing between 2010’s fourth quarter and 2011’s second quarter. Industrial space in the Detroit area contracted mainly as result of downsizing and restructuring of the automotive industry and its supply chain and decline in market share. Space in Grand Rapids contracted with loss of market share by domestic office furniture makers to foreign makers and to a lesser degree by the domestic automakers. Lansing industrial occupancy contracted with downsizing of local automotive activity and then turned around with the gradual ramp up of General Motor’s new assembly operations and its supplier network’s local facilities. With sales recovery of several vehicle models in 2010
and 2011 and a return to profitability, Detroit automakers and suppliers are again in a position to plan and execute capital expenditures across their respective networks. Occupancy levels reflect the rise in spending from the end of 2010 to mid-year 2011 with a 0.9 percent gain in space leased during the first half of the year. In Grand Rapids, according to CB Richard Ellis Martin MARKET VIEW, leasing activity in 2011’s first half is especially encouraging as it came from a wide cross section of organizations from automotive manufacturers new in the local area to expansions of local food processors to transportation service and pallet making companies. The pallet makers are an indicator in and of themselves as they are usually the first in the supply chain to experience growth in orders and a need for additional space. With the completion of Lansing area’s automotive sector restructuring, more tenants are interested in space, ranging from small square footage (5000 to 20000 feet) to larger amounts (100,000 square feet and larger) from automotive manufacturers new to the market to defense related companies and distributors . While important, leased space growth is not consistent, according to first half 2011 data. Leased footage shrank by 0.4 percent in January through July after growing 1 percent during 2010. When the level and type of industrial building vacancy will be low enough to spur construction work other than renovation in existing space cannot be projected.
Public sector market continues decline Institutional building employment (mainly local and state government) has been declining with personnel lay-offs and retirements required by declining budgets due to Fall 2011 17
Occupancy Level (%)
Grand Detroit Lansing Rapids
2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q2
87.3 86.7 87.4 85.7 84.6 86.1
80.3 85.6 82.3 87.7 90.6 88.1
84.9 83.6 82.4 80.7 82.5 83.6
Annual Change in Occupied Space (%) 2006 2007 2008 2009 2010 2011 First Half
-2.4 -1.6 0.3 -1.2 -0.8 0.9
2.9 4.0 -3.3 -2.7 1.0 -0.4
4.3 1.5 1.7 -2.6 -0.5 1.0
Change in Industrial Jobs (Year / Year %)
2006 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2
-1.6 -3.6 -5.1 -13.3 -0.8 3.2
-0.5 -0.3 -5.3 -11.3 4.6 2.9
0.2 -1.7 -2.0 -10.0 -0.3 1.4
Annual Change in Manufacturing Activity (%) Statewide 2006 2007 2008 2009 2010 2011
1.1 -2.5 -6.7 -19.1 4.2 2.7 Est.
Annual Change in Wholesale Trade Activity (%) 2006 2007 2008 2009 2010 2011
5.4 -0.7 -2.3 -12.3 0.4 4.9 Est.
Note: Data on occupancy levels and change in occupied space exclude manufacturers and wholesaler owned properties. Sources: CB Richard Ellis / Martin MARKET VIEW reports for Lansing and Grand Rapids, Colliers International RESEARCH REPORTS for Detroit, U. S. Bureau of Labor Statistics and Michigan Public Service Commission
shrinking property tax and fee revenues. Public K-12 enrollment has been shrinking with lower
18 Fall 2011
birth rates, population emigration, home schooling and the popularity of charter schools and some private schools. Higher education enrollment, on the other hand, has been thriving as job seekers realize the increasing importance of a degree and/or retraining to qualify for new employment. As a result of such contractions, building occupancy has been in decline in public administration Change in Student Enrollment (Year /Year %) Statewide
2005 Q3 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3
Elementary/ Higher Secondary Education
-0.7 -1.3 -1.6 -2.0 -1.3 -2.0
0.9 1.2 1.4 1.5 5.1 3.5
Sources: U. S. Bureau of Labor Statistics and Michigan Department of Education
except where there is a need to replace a building that needs to be mothballed or demolished.
Saginaw Valley area begins recovery Data indicates the Saginaw Valley area is in a period of recovery in its three largest sectors as measured by employment, while the institutional market, primarily comprised of public administration and education functions, remains in decline. As a result, non-residential building contract awards, measured on a year over year basis, have been increasing as part of the upturn. Industrial sector growth in the second quarter was primarily comprised of the activities in manufacturing and construction. Manufacturing is thriving with increased sales and production in the automotive industry and activities in the chemical industry. As no information exists regarding leasable building trends, there is no basis for projecting how nonresidential construction activity can fare in the period ahead, except such activity will be dependent on the direction of employment and needs for renovation. MM
and select school districts, while increasing at the university and college level. However, enrollment in Michigan community colleges declined in 2011 with the drying up of federal worker retraining funds and expansion of healthcare coverage, which enables part-time students to take fewer credit hours and still qualify for the benefit. With tax revenues likely to continue to decline for the next two to three Change in Value of Nonresidential Building Contract Awards (Annual %) more years, 2006 2007 2008 2009 2010 2011 tight budgets Q1 62.6 -32.7 136.1 -49.7 98.5 21.4 will prohibit 164.3 -25.6 42.4 15.7 -70.1 84.2 occupancy levels Q2 from rising due Change in Second Quarter Employment to stable or (Year / year %) receding work 2006 2007 2008 2009 2010 2011 rolls and declining Office 1.3 -2.5 -2.8 -6.7 1.8 Est. 2.9 Est. enrollment. 0.4 -1.0 -3.3 -2.8 1.7 Est. 1.3 Est. Building activity in Retail -2.1 -2.4 -5.7 -11.7 -0.2 Est. 7.0 Est. the period ahead Industrial 0.5 -1.1 -1.0 -0.9 Est. -1.7 Est. will mainly relate Institutional -3.5 Sources: U. S. Bureau of Labor Statistics to renovation,
Michigan Merit
Advertisers Index
Andrews Hooper Pavlik PLC.................................... 19 BCT Benefits........................................................... 11 C&R Electric LLC....................................................... 7 Lezotte Miller Inc....................................................... 7 Jackson Associates Inc............................................ 12 J.E. Johnson.............................................................. 9 Moyle Construction................................................... 6 Pinnacle Insurance Partners.................................... 19 Plante Moran........................................................... 12 Regency Group........................................................ 20 Siding World............................................................... 2 Summit Training Source............................................. 9 Tradesmen International............................................ 8 Valenti Trobec Chandler, Inc..................................... 19 Welch Tile & Marble................................................. 11
Having the appropriate tools for the job
Insurance for the
Construction Industry Valenti Trobec Chandler, Inc.
1175 West Long Lake Road, Suite 200 Troy, MI 48098 (248) 828-3377 www.vtcins.com
Griffin, Smalley & Wilkerson, Inc.
also applies to running your business
37000 Grand River, Suite 150 Farmington Hills, MI 48335 (248) 471-0970 www.gswins.com
Accounting and Audit • Tax • IT Consulting • Succession Planning • Business Valuations • Cost Reduction Programs • Cost Segregation Studies • Retirement Plan Consulting • Fraud Prevention Evaluations • Profit Improvement • Strategic Planning, Development & Evaluation • Bonding/Surety Assistance • Entity Selections
An Independent Agency Representing
www.ahpplc.com Grand Rapids •l Greater Lansing Auburn Hills •l Bay City l• Grand Lansing •l Midland •l Saginaw
www.abcmi.com
Fall 2011 19
PRESORTED STANDARD U.S. POSTAGE PAID LANSING, MI PERMIT NO. 193
Associated Builders & Contractors of Michigan 230 N. Washington Sq. Suite 202 Lansing, Michigan 48933
endorsed by
Are You Getting Money Back From Your Work Comp Plan?
WORKERS’ COMPENSATION INSURANCE With a 35% Average Premium Return! $2.4 MILLION Returned To Members In 2011! Make the best business decision you’ve ever made - Get a Quote Today! administered by
800.686.6640 abcmifund.org