ISSUE 3 2020
MICHIGAN
A PUBLICATION OF ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN
Remembering EDWARD W.
TA N Z I N I
Founder of Tancor Corporation and ABC Champion
Interior Finish and E.I.F.S. Contractor 5965 Clay Avenue SW Wyoming, MI 49548
(616) 531-2330
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ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN
FEATURE 10
Edward W. Tanzini
GOVERNMENT AFFAIRS 6
CONTENTS ISSUE 3 2020
Meet the Leadership of Michigan’s 101st House of Representatives
ECONOMIC UPDATE 18
2021 Construction Economic Forcast
CHAPTER NEWS 26
CLAYS-FOR-KIDS Foundation
30
ABC Southeast Michigan Chapter Recognizes Chairman’s Contribution
DEPARTMENTS 5
Executive Perspective By Jimmy E. Greene
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Advertiser Index MICHIGAN MERIT • ISSUE 3 2020
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ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN
Office: (248) 356-8600 • Cell: (248) 207-6365 rdefrank@levasseurlaw.com www.levasseurlaw.com
EXECUTIVE PERSPECTIVE
I
t’s 2021, and while I most certainly anticipate a great year, unfortunately, the new year brings with it some old problems that require new solutions.
Opioid use, and deaths from over¬doses, has jumped across North America during the Covid-19 pandemic. In December, the Centers for Disease Control and Prevention said the U.S. will record 81,230 drug deaths in the 12 months through May, a record up from 68,829 during the same period ending in May 2019. In Canada, opioid overdose deaths hit 1,628 in the second quarter, from 1,029 in the first, as the pandemic took hold.
JIMMY E. GREENE President ABC of Michigan 2021 BOARD of DIRECTORS Robert Clancy, Chairman Robert Clancy Contracting, Inc. Southeastern Michigan Chapter Ken Misiewicz, Secretary/Treasurer Pleune Service Company Greater Michigan Chapter Chris Beckering Pioneer Construction Western Michigan Chapter Joel Freeman Rockford Construction Western Michigan Chapter Arlen-Dean Gaddy Erhardt Construction Western Michigan Chapter Jeff Kipfmiller Answer Heating & Cooling Greater Michigan Chapter Mike Houseman, Wolverine Building Group Western Michigan Chapter Perry Merlo Perry Merlo Contracting, LLC Southeastern Michigan Chapter Cort Niemi Lake Agency, Inc. Southeastern Michigan Chapter Brian Stadler Wolgast Corporation Greater Michigan Chapter Tom Vitale Smith Haughey Rice & Roegge Western Michigan Chapter
The construction industry, already facing a shortage of manual labor, has been hit particularly hard. Bricklayers, carpenters, and laborers carry heavy loads and perform the same tasks day in and day out, leading to injuries like carpal tunnel syndrome, strained shoulders, and bad backs. Seeking relief, workers can get hooked on strong prescription drugs such as fentanyl, oxycodone, morphine, and street drugs like heroin. There are higher levels of pain in construction than in other industries. Opioid use in the U.S. has made workers in the industry less productive and has increased costs. While the precise number of over¬dose deaths in the North American construction industry is hard to determine, the workers are roughly six times more likely than workers in other manufacturing, industrial, and service industries to become addicted to opioids. What this means is we at ABC of Michigan have a job to do. We collaborate with elected officials, policy shapers, governmental agencies, and private companies to advocate for and protect the merit shop. Still, to make the most significant impact here, it starts first with the front line workers that make possible our successes. The elections are over, and it’s time to get to work on workforce and workplace policies that keep our employees safe and productive. To do that, we’re going to have to meet them at the front lines. Over the past few months, we have worked tirelessly to forge partnerships that will advance the mission by providing tools and resources that support it. That’s why we’re proud to announce a partnership with Forensic Fluids Laboratories. Built on a solid foundation of scientific expertise, state-of-the-art technology, and years of experience, they are committed to a process that gives ABC Members a head start on providing assistance. The oral fluid testing process they encourage you to use comes with a customer service department that is there when you face questions of application or need. As your needs evolve, so does their ability to recognize new drugs with a high standard of accuracy. They educate, test, report, and stand behind the results. They can test for Nicotine, Lead, and Covid-19 antibodies, to name a few. You will hear a lot from this partnership. To learn more about this partnership please reach out to ABC of Michigan. I am also pleased to announce that I have been appointed to a council that will be providing resources and assistance for another problem in our industry; suicide. We can no longer ignore this issue, and many experts attribute this to the above contributing factors dealing with drug abuse coupled with depression. It’s not bad news; it’s not reactive news; it’s tackling these issues with policy-driven advocacy and solutions to combat these issues. There’s a new administration coming in with a new Labor Secretary, and instead of being told what we’re doing wrong and following suit, our objective is to demonstrate what we’re doing right and let everyone else follow us.
Jimmy E. Greene MICHIGAN MERIT • ISSUE 3 2020
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GOVERNMENT AFFAIRS
Meet the LEADERSHIP MICHIGAN’S 101st HOUSE OF REPRESENTATIVES
of
T
he House Republican Caucus voted in November to choose the leadership team for the 20212022 term. ABC of Michigan is proud that all members of the leadership team have been endorsed by the ABC of Michigan PAC over their years of service. We are certain this team will fight for the principles of free enterprise and continue to be friends of the merit shop.
SPEAKER OF THE HOUSE REP. JASON WENTWORTH (R-CLARE) St a t e R e p . Ja s o n Wentworth was first elected in November 2016 to the Michigan House to represent the residents of Clare, Gladwin, Arenac and part of Osceola County including Evart city and the townships of Evart, Hersey, Highland, Marion, Middle Branch, Orient, Osceola, Sherman and Sylvan. Wentworth is chair of the Select Committee on Reducing Car Insurance Rates. He also serves on the Legislative Council Committee. Wentworth joined the United States Army after graduating high school in 2001. He spent five years as a military police officer and completed a tour in South Korea. After his military service, Wentworth worked in law enforcement in both the private and public sector. Prior to being elected, he was the East Central Michigan Regional Coordinator for the Michigan Veterans Affairs Agency. 6
MAJORITY FLOOR LEADER REP. BEN FREDERICK (R-OWOSSO) St a t e R e p . B e n Fre d e r i c k w a s fi rs t elected to the Michigan House of Representatives in November 2016. He represents the 85th District, which includes Shiawassee County and the Southwestern portion of Saginaw County. Rep. Frederick serves as vice chair of the Health Policy Committee and as a member of the Energy, Insurance, and Regulatory Reform committees. He was also appointed to the Select Committee on Reducing Car Insurance Rates. Prior to his election to the Legislature in 2016, Rep. Frederick served as a legislative staff member for 14 years in both the Michigan House and Senate. Locally, Ben served on the Owosso City Council for nine years and was city’s youngest mayor, holding that office for three terms.
ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN
SPEAKER PRO TEMPORE REP. PAMELA HORNBERGER (R-CHESTERFIELD TOWNSHIP) State Rep. Pamela Hornberger was elected to the Michigan House of Representatives in November 2016. She represents the 32nd District, which includes portions of Macomb and St. Clair counties, including the City of New Baltimore and portions of the cities of Memphis and Richmond, as well as the townships of Chesterfield, Casco, Columbus, Ira, Kenockee, Kimball, Riley and Wales. Rep. Hornberger is the chairwoman of the House Education Committee, and is a member of the Elections and Ethics, and Health Policy committees. She also serves as vice chair of the Appropriations subcommittee on School Aid and Department of Education. For the past 23 years Rep. Hornberger taught Art in the East China School District in St. Clair County. Prior to receiving her bachelor’s degree from Michigan State University, Rep. Hornberger worked at Metrics Unlimited, her family’s industrial tool supply. ASSOCIATE SPEAKERS PRO-TEMPORE REP. SARAH LIGHTNER (RSPRINGPORT) State Rep. Sarah Lightner was first elected to serve the 65th District in the Michigan House of Representatives in November 2018. The 65th District includes Springport, Tompkins, Rives, Blackman, Henrietta, Leoni, Waterloo, Grass Lake, Norvell, Columbia and Liberty townships in Jackson County. The district also includes Cambridge Township in Lenawee County and the City of Eaton Rapids along with Hamlin, Eaton and Brookfield townships in Eaton County. Rep. Lighter serves as a member on the House Appropriations Committee. She is vice-chair of the House Appropriations subcommittees on General Government and Judiciary and a member of the
Corrections and Department of Licensing & Regulatory Affairs & Department of Insurance & Financial Services subcommittees. Sarah has made her career as a paralegal specializing in criminal defense and family law. She and her husband also operate a small crop farm, custom hay baling and wrapping operation, as well as a deer processing business in the fall. REP. BRAD PAQUETTE (R-NILES) State Rep. Brad Paquette was first elected to serve the 78th District in the Michigan House of Representatives in November 2018. The 78th District encompasses portions of Berrien and Cass Counties, including the cities of Buchanan, New Buffalo and Niles and the townships of Baroda, Berrien, Bertrand, Buchanan, Chikaming, Galien, Howard, Milton, Niles, Ontwa, Oronoko, Pipestone, Silver Creek, Sodus, Three Oaks, and Weesaw. Rep. Paquette serves as vice chair of the House Education Committee. He is also a member of the Elections & Ethics Committee, Insurance Committee, and Local Government & Municipal Finance Committee. Brad worked as an educator, teaching at Niles New Tech Entrepreneurial Academy where he has led in Project-Based Learning for the New Tech Network. He served on the Planning Commission for the city of Niles. ASSISTANT MAJORITY FLOOR LEADERS RE. ANN BOLLIN (R-BRIGHTON) St a t e Re p. A n n Bollin was first elected in November 2018 and represents the 42nd District in southeast Livingston County. It includes Brighton, Genoa, Green Oak, Hamburg and Putnam Townships, the City of Brighton and the Village of Pinckney. MICHIGAN MERIT • ISSUE 3 2020
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Rep. Bollin serves on the Appropriations Committee, is Vice-chair of Agricultural & Rural Development and Higher Education and Community Colleges, and is a member of General Government, Health and Human Services, Joint Capital Outlay, and Transportation.
MAJORITY WHIP REP. ANDREA SCHROEDER (R-INDEPENDENCE TOWNSHIP)
Prior to her election to the House, Ann was the Brighton Township Clerk from 2003-2018 and was the longest serving clerk. Known for being a strong community leader, she also served on the Greater Brighton Area Chamber of Commerce Board of Directors, Michigan Townships Association Board of Directors (District 25 Director), Michigan Association of Municipal Clerks Legislative Committee and Council of Election Officials (Township Alternate), Livingston County Municipal Clerks Association as Treasurer and the Livingston Community Water Authority.
State Rep. Andrea Schroeder was first elected to serve the 43rd District in the Michigan House of Representatives in November 2018. The 43rd District encompasses part of Oakland County including part of Waterford Township, the city of Lake Angelus, the village of Clarkston and Independence Township.
REP. JULIE CALLEY (R-PORTLAND) State Rep. Julie Calley was first elected to the Michigan House in November 2016 and represents the residents of Barry County and part of Ionia County including the townships of Boston, Campbell, Danby, Keene, Lyons, North Plains, Odessa, Orange, Portland, Ronald, Sebewa, most of Berlin Township, and the City of Portland. Calley serves as chair of the Elections & Ethics Committee, and as a member of the Health Policy, Local Government and Municipal Finance, and Natural Resources and Outdoor Recreation committees. Calley spent ten years in real estate management.
Rep. Schroeder serves as vice-chair of the House Financial Services Committee, and as a member of the Commerce & Tourism, Oversight, Energy Policy and Tax Policy committees. Andrea is a former teacher and senior sales executive and currently operates a successful consulting business. DEPUTY WHIP REP. JACK O’MALLEY (R-LAKE ANN) State Rep. Jack O’Malley was first elected to the Michigan House of Representatives in No v e m b e r 2 0 1 8 . He represents the Fighting101st District, which includes Leelanau, Benzie, Manistee and Mason counties.
Labor & Employment / Management Relations Keith Eastland eastlandk@millerjohnson.com
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ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN
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Rep. O’Malley serves as chair of the Michigan House Transportation Committee for the 2019-20 legislative session. He also serves as a member of the Tax Policy Committee, Education Committee, and Energy Committee.
CAUCUS VICE CHAIR REP-ELECT ANDREW BEELER (R-FORT GRATIOT)
With almost 40 years in Broadcasting both radio and TV, Jack found his home hosting the morning show on WTCM FM in 1984. With his long tenure there, he holds the unofficial record for the longest-running morning show at one station in Michigan history, at 34 years.
State Rep-elect Andrew Beeler was born in Port Huron and returned to his hometown to serve the citizens of the 83rd House District. He represents the people of Sanilac County and Burtchville Township, Fort Gratiot Township, and the city of Port Huron in St. Clair County.
CAUCUS CHAIR REP. MATT HALL (R-EMMETT TOWNSHIP) Matt Hall was first elected to serve the 63rd District in the Michigan House of Representatives in November 2018. The 63rd District consists of south and central Calhoun county and eastern Kalamazoo county. Rep. Hall serves as chairman of the House Oversight Committee and is a member on the Tax Policy, Education, and Regulatory Reform committees.
Rep-elect Beeler reported to Annapolis following a nomination to the US Naval Academy in July of 2010. He spent four years in military training and five years as a Surface Warfare Officer before leaving active duty and entering the Naval Reserves. Beeler began pursuing his Masters in Public Policy at the University of Chicago, but when the 83rd District seat opened, Andrew saw a better way to put his leadership and sense of duty to work. He loves his country, feels indebted to his community, and wants to bring his national and international experience to the table to find solutions in Lansing. MM
Rep. Hall is an attorney. He previously served as West Michigan Liaison for the Michigan Attorney General’s office. Rep. Hall also worked in the private sector for a combat propulsion systems manufacturer.
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MICHIGAN MERIT • ISSUE 3 2020
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FEATURE
EDWARD W. TANZINI Founder of Tancor and ABC Champion, passed December 20, 2020. This is a tremendous loss to the ABC family and someone who will never be forgotten.
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ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN
Ed
graduated from Clarkson University with both a Bachelor of Science in Civil Engineering degree and a Bachelor of Science in Industrial Distribution degree in 1970. He completed his post-graduate work in Civil Engineering at Michigan Technological University in 1973.
years as Assistant to the President in a $50+ million per year construction management firm in Johnson City, New York. In 1992, Ed and his wife JoAnn started The Tancor Corporation, a general contracting firm in Midland, Michigan, where he has been employed ever since. Ed holds Register Professional Engineers licenses in Michigan and in Wisconsin.
Ed began his career in construction as teenager, when he started working for his father as a construction laborer. He has been continuously employed in the construction industry since finishing college, working his way up from Field Superintendent to Project Manager, and then to Vice President at a medium-sized general contracting firm in Midland, Michigan over an 17 year period. Ed also spent 2
Since 1973, he has been very involved in the Associated Builders & Contractors, Inc. He has held many offices in the former Saginaw Valley Chapter of ABC including being one of the Founders (now Associated Builders & Contractors, Greater Michigan Chapter) including four terms as Chapter Chairman and over 45 years on the Chapter Board of Directors. At the National level of the ABC, Ed has served as a
MICHIGAN MERIT • ISSUE 3 2020
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Member of the National Board of Directors for over 34 years and as a member and/or chairman of a number of National ABC committees. He is also affiliated with the Michigan Society of Professional Engineers, the American Society of Civil Engineers and other civic and professional organizations. At Ed’s passing his dedication to Associated Builders & Contractors and its merit shop mission was as follows: • Associated Builders & Contractors, Greater Michigan Chapter Board Member • Associated Builders & Contractors, Greater Michigan Chapter Government Affairs committee • Associated Builders & Contractors, Greater Michigan Chapter By laws Chair • ABC Michigan Board of Directors
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ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN
• ABC Michigan Government Affairs Committee • ABC Michigan Workers Compensation Trustee • Treasurer, ABC Michigan Workers Compensation • The Greater Michigan Construction Academy Board of Directors • Associated Builders & Contractors National Board of Directors • Associated Builders & Contractors National By-laws committee Ed made a tremendous impact on people statewide. Below is just a sampling of those memories, reminding us all what a great man he was. ABC of Michigan will be planning a memorial to honor Ed’s life and legacy in the future. Our thoughts and prayers are forever with his family and friends he left behind.
MICHIGAN MERIT • ISSUE 3 2020
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“Ed was a friend, mentor, and a second father to me. He led by example, with a fierce passion for what he believed in. First and foremost, his family. His love for Joanne, their kids and grandkids was self-evident. His heart was big enough to encompass many though…I had the pleasure of spending a great deal of time with Ed while serving on ABC’s Board. Many car trips to Lansing, plane trips to DC and travels afar. I learned from Ed about the history of ABC, the history of many buildings and even about doorknobs on buildings. More important I learned from Ed how to be a better person.” – RODNEY KLOHA, Circle K Service Corp
“I knew Ed for 15 years. To me he was the Merit Shop personified. We have lost a giant. When I first started with ABC National 15 years ago, Ed was on the short list of people I needed to meet. I’d be lying if I told you I wasn‘t intimidated the first few times we met. Luckily we hit it off and it wasn’t long before he was calling me “Little Red.” Ed was as tough as they get. His loss is even tougher. My prayers go out to his family, most especially to JoAnn.” – CHRIS FISHER, former ABC of Michigan president and
current partner at Midwest Strategy Group.
“Ed worked tirelessly on local, state, and national organizations and committees of the Associated Builders and Contractors (ABC) to organize, coordinate, and train contractors and the skilled trades. As a volunteer at ABC, Ed was a founding member of our local chapter and held 10 different Key positions, (Local, State, and National), starting in the 1970’s and continuing to the present. Ed volunteered for 46 years!! Midland and the Saginaw Valley have been enriched by Ed and his wife JoAnn, with decades of volunteerism from which we all have benefitted. We are blessed they decided to stay here — the Saginaw Valley and Midland have been the beneficiary”
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ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN
“We will miss him dearly.” – JOHN & SANDY BARTOS
“The first time I meet Ed was in the early 70’s on a project at the Gladwin Hospital. Everyone knew when Ed arrived at the job site either by word of mouth from the workers or when he as having a very boisterous conversation with one of his employee’s or a subcontractor working for him. You learned very quickly to do your job correctly, on time or plan on having a listening session with Ed. Over the years there is no end to what I learned from Ed, he was a wealth of knowledge and would pass it along if you were willing to ask and listen. Ed will be missed for all of his knowledge, selfless volunteerism and dedication to helping anyone at any time.” – GARY ELZA, GE Insulation
“I lost my friend, my brother, my ABC Mentor Edward Tanzini to Covid today capping off a miserable year. He was a founder of Associated Builders & Contractors, Greater Michigan Chapter and stayed on the Board of Directors from 1977 right up to today. The Chapter wouldn’t dare invoke term limits because of Ed Tanzini. He was the pulse of the chapter period. You didn’t get into membership without an Ed vote and nothing ever crossed the chapters by-laws or charter without his approval. He was a lion with a teddy bears heart if he loved you and he would tell me that so I never had to assume.” – JIMMY GREENE, former ABC Greater Michigan Chapter President & current ABC of Michigan President MM
MICHIGAN MERIT • ISSUE 3 2020
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MICHIGAN MERIT • ISSUE 3 2020
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ECONOMIC UPDATE
2021 CONSTRUCTION ECONOMIC FORECAST
As Recession Threat Remains, ‘V’-Shaped Recovery Is at Risk of Becoming a ‘W’
D
espite chronic difficulties sustained by contractors and others with securing human capital, in January 2020, the nation added 214,000 net new jobs. It followed that up with an even more blistering 251,000 jobs in February. For 113 consecutive months, the nation had added jobs—an unprecedented winning streak in the nation’s history. Unemployment, which peaked at nearly 10% during the most tumultuous phase of the Great Recession, had neatly drifted to a 50-year low of 3.5% as the pandemic loomed. Wage growth among workers was accelerating, helping to fuel retail sales, home purchases, construction and other aspects of economic life. Meanwhile, the lack of skilled craftspeople typically topped the list of contractor concerns. America was marching forward with an economy that appeared an indefatigable force. Such was 2020’s onset.
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Though unemployment dipped to multi-decade lows and wages ratcheted higher, overall inflation remained benign prior to the onset of the novel coronavirus pandemic. That helped to support lower interest rates, which in turn helped fuel a surge in building permits as the year began, drove financial markets to dizzying heights and created additional wealth for Americans to spend and invest. The United States had gone an entire decade without a recession and, if anything, the current decade appeared even more promising as the dislocations produced by the Great Recession receded ever further into the rearview mirror. With economic progress unchecked, the nation’s share of global output increased from 23% at the start of the decade of the twenty-teens to 25% by the decade’s final year.
ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN
an expanding global economy, willing consumers, aggressive stock repurchases and an active mergers-andacquisitions cycle—had entered the year in record territory. But that was quickly dismantled, with the Dow Jones Industrial Average freefalling from in excess of 29,000 to around 18,000 in mere days.
As is now well understood, that irresistible force met with an immovable microscopic object known as COVID-19, a virus about 1/10,000th the size of the period that concludes this sentence. All that gathered economic momentum scarcely mattered. The current recession was not caused by a loss of demand (à la 2008-2009), but rather by a massive shock to the economy’s capacity to supply. Social distancing measures shuttered malls, theaters, restaurants, manufacturing plants and other hallmarks of American life. A SECOND QUARTER BLOODBATH Rather than gradually edge into recession as the economy did prior to December 2007 when the previous recession began, the economy hit a brick wall— hard. Though the recession officially began in February as behavior among global producers and consumers began to shift, the worst of it arrived in March and April. Over the course of the prior economic expansion, the nation added 22 million jobs. That was almost exactly how many jobs were lost during those two dreadful months. The official rate of unemployment surged to 14.7% in April, though many economists agree that the actual peak was likely in the range of 20%.
The U.S. Bureau of Economic Analysis estimates that the economy shrank 5% on an annualized basis during the first quarter despite momentum that lingered into February, so horrific were March’s latter three weeks. The economy’s second quarter, however, was a bloodbath worthy of a Quentin Tarantino film. On an annualized basis, the nation’s GDP fell a mind-numbing 31.4% on an annualized basis. To put that into context, the economy shrank 8.4% during 2008’s final quarter, the worst period of the Great Recession. Things were set to worsen as households, companies, and state and local governments’ budgets were battered. At least that’s what many predicted. When April turned to May, it was the downturn that hit the equivalent of a brick wall. What looked to be a long, dark, economic night turned out to be a short, albeit incredibly violent, rainstorm that passed quickly. The Wall Street
The stock market—bolstered by fabulous corporate earnings, a cut to corporate tax rates passed in late 2017,
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Journal surveyed a group of economists who had collectively predicted that the economy would lose another 8 million jobs in May. They couldn’t have been more wrong. Rather than add to the massive job losses from the previous two months, the economy rallied. In May, it added 2.7 million net new jobs, the result of state governors reopening their respective economies and the abating of the supply shock. June produced even better numbers, with job growth equaling 4.8 million that month. Certain economic segments flourished amidst the chaos. This group included the e-commerce giants led by Amazon, which hired tens of thousands of people during the worst of the crisis. The emergence of remote work and shopping also advanced the fortunes of companies such as Zoom, DocuSign and Carvana. As the economy reopened, more traditional establishments began participating in the recovery, including retailers and restaurateurs, which experienced a short surge of pent-up demand, depending on the region and local illness rates. Many economists, some of whom incorrectly believed that economic momentum could keep recession at bay during the public health crisis, then adopted the view that the initial phase of recovery would be soft. Wrong again. The economy’s light had been turned off and then on again (only to be dimmed again in the third quarter). While governors of different states had different re-opening tactics—the governors of Florida, Georgia and Texas, for example, have favored an economic approach, resulting
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in a lower loss of job totals; conversely, the governors of states such as New York, Hawaii, and Massachusetts have favored a public health approach, resulting in less overall cases of illness. Nonetheless, the United States began to recover in May, resulting in job creation and spikes in activity such as home sales, residential building permits and manufacturing. During the early stages of the crisis, there was a great debate in the economics community regarding whether or not the shape of the recovery would be L-shaped, U-shaped, V-shaped, Nike “swoosh,” hockey stick, square foot, checkmark, etc. The vote is in—and the “Vs” have it. But there is much to consider. In March and April, Congress began pouring dollars into the economy, including trillions of dollars to the stock market. On March 27, the federal government passed the CARES Act, a $2.2 trillion stimulus package offering financial support to households and businesses. The CARES Act was actually the third major stimulus passed during the crisis’ early phases, and another jolt of stimulus was passed less than a month later. Some Americans received a $1,200 stimulus check, while those who lost their jobs were often eligible for a federal subsidy ($600/week) on top of their standard state unemployment insurance benefits. The combination of that stimulus and a broadly shuttered economy translated into a surging household savings rate. Before the crisis, the U.S. household savings rate averaged around 7% to 8% (savings
ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN
as a percentage of personal disposable income). By April, America’s savings rate had ballooned to 33%, which served to spring-load consumer spending. As the economy reopened, that accumulated spending power hit the economy like a turbocharger, helping to produce the “V”-shaped trajectory that was apparent through September. Millions of people returning to work helped. By September, about half of the jobs lost in March and April had been recovered. Importantly, the impact on state government budgets was, in certain cases, not as severe as predicted, especially among states that rely heavily upon income taxes. In addition, many higher-wage workers, some of whom were able to work remotely, preserved their employment, paying income taxes in the process. Many states also considered construction to be an essential industry, helping to preserve many jobs in that segment along with significant pre-existing backlog. By June, retail sales were above their pre-recession high. By September, retail sales reached a record monthly high of $493 billion. This was about $110 billion more than registered in April. Unemployment, which had officially peaked at 14.7% in April, had fallen below 8% by September. Among the most buoyant segments at present is owneroccupied housing. With more and more Millennials coming of age coupled with the high rate of people looking to social distance, to take advantage of record low mortgage rates and to acquire enough space for a home office, housing demand has raced even higher during the pandemic. But that surging demand has crashed into a dearth of available, unsold inventory, resulting in rapidly rising home prices and the highest homebuilder confidence on record.
At the same time, apartment rents have been descending rapidly in many of America’s most expensive communities, including Manhattan and San Francisco. The average rent in Manhattan recently dropped below $3,000 for the first time since 2011. According to a report from StreetEasy, a record-high number of rent reductions contributed to Manhattan’s average asking rent declining to $2,990 during 2020’s third quarter. But economics seldom offer plenty without requiring some sacrifice. While homebuilders have been buoyed by a surge in demand for what they produce, they have also experienced a historic increase in the price of softwood lumber as supply chain disruptions and trade wars crash into the next American housing boom. A NEW REALITY SET IN Even as the economy embarked on its sharp partial recovery, the virus’ presence in the lives of everyday Americans ebbed and flowed. This economy’s shutdown helped to flatten the curve into mid-June, but surging case numbers in Florida, Georgia and elsewhere drove infection rates sky high deep into the summer. The curve began to flatten thereafter but, since Labor Day, infection tallies and hospitalizations have been rising parabolically. The sharpness of the initial phase of recovery may have convinced Washington’s policymakers that they could simply wrangle with one another as another presidential election approached. Accordingly, as of this writing, there has been no major stimulus passed in a bit more than six months. The impact of previous stimulus is waning. American Airlines, United Airlines, Disney and others have announced large-scale layoffs.
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Unfortunately, this means that the “V”-shaped recovery could be transitioning into a “W”—another recession may be on the horizon. Critically, one could occur even if a further stimulus is passed. Stimulus supports the demand side of the economy, primarily. Another shutdown would compromise the economy’s ability to produce (supply side), presumably leading to another round of mass layoffs, job loss, crumbling consumer confidence,
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corporate bankruptcies and other negative outcomes. If the first recession is any indication, the next one will be sharp and short. Regardless, that would delay complete recovery, which is the ultimate aspiration. The winter looks bleaker than usual in the light of such considerations.
ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN
NONRESIDENTIAL CONSTRUCTION’S DOWNTURN HAS BEGUN Recession or not, nonresidential construction is the weakest it has been in more than a decade. Commercial real estate has been hit particularly hard, with industry fundamentals in tatters as more companies choose to work remotely, more retailers go bankrupt and hotels remain under-occupied. Two University of Chicago economists recently determined that 37% of jobs can be done entirely from home. But the fact that many people can work from home was well understood prior to the crisis. What is more remarkable are the recent studies indicating that many people are more productive working from home than in the office. In the office, workers are exposed to numerous distractions, such as the urge to chat with coworkers, fill out NCAA brackets and the ubiquitous impromptu staff meeting. While there are plainly distractions back at the homestead (including children, pets, neighbors, Netflix and food deliveries), many workers persevere. What’s more, working from home obviates the need for lengthy, stressful commutes.
This is not particularly good news for office construction. Over the last decade, which was associated with persistent growth and falling unemployment rates, many firms upgraded their office accommodations by moving from Class B to Class A/A+ spaces. This was done for a variety of reasons, including location and prestige, as well as a way to recruit talent and retain skilled workers by supporting them in more appealing environments. But with unemployment elevated and both graduating classes of 2020 and 2021 looking at the worst employment markets since 2008, many firms may eschew so much expensive space for less luxurious space, including the suburbs. By August, the construction-spending-in-the-office category was down nearly 9% on a year-ago basis. Meanwhile, the spending-in-the-lodging segment was down approximately 12%, a reflection of a considerable volume of new hotel rooms colliding with a lack of leisure and business travel. Predictably, the level of design work has tumbled. The Architectural Billings Index, a leading indicator for commercial construction, has been below the threshold reading of 50 since March. Architects have steadily become less
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busy, especially in the Northeast, home to markets that have suffered massive jobs loss in absolute and relative terms, such as Boston and New York. If architects are not busy upstream, contractors are less likely to be busy downstream. Anecdotal evidence suggests that contractors are experiencing fewer bidding opportunities and that when a bid opportunity emerges, competition is fierce. Backlog data has been receding, with some contractors indicating that they will exhaust their current backlog by year’s end. The pandemic has also hurt traditional brick-andmortar stores, many of which were vulnerable prior to the crisis. J.C. Penney, Brooks Brothers, J.Crew, Nieman Marcus and others have already declared bankruptcy. Many others are shuttering stores to preserve liquidity. Roughly a quarter of the nation’s 1,200 malls are at risk of closure within the next few years. Many communities are already forging plans to deal with the existing and prospective overhangs of underutilized retail space. Largely because of the weakness in commercial construction, despite the renaissance of homebuilding activity, the average weekly hours worked by construction workers has declined over the course of the crisis. A winter recession would likely increase limited hours even beyond normal seasonal levels. There’s more. Survey data indicates that lending to commercial real estate ventures has tightened, while state and local government finances have been compromised, especially in states that depend upon substantial tourism activity. This only adds to the simmering uncertainty that lingers, resulting in less risk-taking among developers and others who procure nonresidential construction services. Nonresidential construction employment is down almost 6% on a year-ago basis as winter approaches.
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Even with all these negative signs in the construction market, there are some bright spots. One segment that has benefited from the shutdowns and social distancing measures is e-commerce. The backbone of these online retailers are fulfillment and data centers as well as trucking. E-commerce will be a source of significant construction starts for years to come. Additionally, as many businesses look to cut costs, there may be an increase in demand for Class B office space, incentivizing property managers to update and renovate those facilities. HVAC contractors are especially well positioned as building owners look to upgrade air handling systems to limit viral spread. Other likely improvements will focus on shared spaces such as elevators, restrooms and lobbies. MM
Written by Anirban Basu - Chairman and CEO, Sage Policy Group Anirban Basu is chief economist of Associated Builders and Contractors. For more information, visit www.abc.org/economics. Reprinted from Construction Executive, December 9, 2020, a publication of Associated Builders and Contractors. December 2020. All rights reserved.
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CHAPTER NEWS
CLAYS-FOR-KIDS FOUNDATION Hosts Annual Event
Supporting Ronald McDonald House of Western Michigan
From left to right, John DeBlaay (Dan Vos Construction), Jen Schottke (ABC/WMC), Mallory Brouwer (RMHWM), Norm Brady (ABC/WMC), Monica Kioshi (ABC/WMC), Ellen Carpenter (RMHWM), Tony Roussey (EV Construction).
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ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN
GRAND RAPIDS, MI (November 9, 2020) – The Claysfor-Kids Foundation celebrated its 22nd annual Clays-forKids Charity Clay Shoot on September 23 & 24th at Kent County Conservation League, 8461 Conservation St. NE in Ada. For the seventh year in a row, Associated Builders and Contractors of Western Michigan (ABC/WMC) partnered with the Clays-for-Kids Foundation to raise money for a local children’s charity. Proceeds from this year’s event were donated to Ronald McDonald House of Western Michigan (RMHWM). Due to COVID-19, and Kent County Conservation League protocol, this event was held as a two-day event to accommodate all participants. Over the course of those two days, $26,000 was raised to be gifted to the Ronald McDonald House of Western Michigan. The ABC/WMC Clays for Kids Committee presented the check to the organization on October 27th, 2020. “I am continually impressed with the outpour of generosity from our construction family,” said Norm Brady, president and CEO of ABC/WMC. “When our members participate in Clays-for-Kids Clay Shoot event, they know they are making a positive impact on children here in West Michigan. As an association, I’m grateful to provide this experience to our members and to continue to give back to the communities we serve.” This year’s chosen charity, Ronald McDonald House of Western Michigan (RMHWM), has a mission to provide a home away from home for families traveling to Grand Rapids for critical medical and mental health treatment for their children and youth. Since its establishment in 1990, the RMHWM has provided quality living accommodations and support services - at no cost - to over 14,000 families while their child (newborn to 18 years of age) is receiving the treatment they need in the Grand Rapids area. The 19,000 square foot farmhouse located at 1323 Cedar St NE, Grand Rapids, has 17 bedrooms with private bathrooms and pro-
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vides guest families with meals, transportation, laundry and support services all at no cost, so families can focus solely on the care of their children. In recent years, ABC WMC and Clays-for-Kids Foundation have raised thousands of dollars for organizations such as the Down Syndrome Association of West Michigan, the Baxter Community Center, and The Autism Support of West Shore, and School Supply Santa. For media requests, contact Monica Kioshi at mkioshi@ abcwmc.org. Learn more about ABC/WMC at www.abcwmc.org. About ABC Western Michigan: ABC Western Michigan (www.abcwmc.org) is a non-profit construction trade association that fosters the principles of freedom of choice through the merit construction philosophy. ABC members build commercial buildings, industrial plants, municipal and public works projects, roads and highways, homes, and provide a wide array of construction services. The organization strengthens the construction industry by advocating on behalf of its members, offering educational and training opportunities, and providing cost-saving strategies in order to support and defend the merit shop philosophy and open shop contractors. The West Michigan Chapter has over 400 members and includes all of the Western Lower Peninsula and Upper Peninsula of Michigan. Follow us on Facebook or Twitter @ABCWMC. About Clays-for-Kids: Clays-for-Kids Foundation is a non-profit created by a group of construction executives who enjoyed shooting sports together. In 1998, the group decided to have the event begin fundraising to support local organizations directly helping children. Since its inception, the Foundation has donated more than $375,000 to support children around the state of Michigan. CFK has no paid staff, consultants or overhead to the foundation, all work is done strictly by volunteers with 100% of funds raised going to the chosen children’s organization. MM
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MICHIGAN MERIT • ISSUE 3 2020
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CHAPTER NEWS
ABC SOUTHEAST MICHIGAN CHAPTER
Recognizes Chairman’s CONTRIBUTION
A the great outdoors.
ssociated Builders & Contractors (ABC) of Southeastern Michigan (ABC SEMI) honored past chapter Chairman, Robert Clancy owner of Robert Clancy Contracting with a patriotic flag gun cabinet. It was a gift that combines his steadfast love of country and
“Robert continues to set the bar as a defender of ABCs merit shop philosophy,” said current ABC SEMI Chairman Andrew Maltese of DJ Maltese Construction Corporation. “For the past four years, his finely-honed business instincts have left an indelible mark on our chapter and the construction industry, while leading Robert Clancy Contracting as a strong competitor. His dedication to our cause will serve our state well in his new position as State Chairman.”
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Clancy was elected 2019 chairman of the board for ABC of Michigan, our state chapter. He is excited to continue the fight and make sure that merit shop contractors continue to have a level playing field to compete on here in Michigan. He feels that there has been so much accomplished but so much more yet to do. “I’m honored to continue the great work that is happening in Michigan for ABC,” Clancy said. “I’m passionate about working with my fellow board members and ABC members to produce solutions for the workforce development issues our industry is facing. We have made tremendous strides in ensuring our merit shop contractors can compete in Michigan, but what is gained can be lost and that won’t happen on my watch.” Clancy challenged the board and general membership to get actively involved to continue ABC SEMI’s success that has established this chapter as the leading commercial and industrial construction organization in southeast Michigan. MM
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ISSUE 3 2020
MICHIGAN
ADVERTISER INDEX
A PUBLICATION OF ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN
CONTRIBUTORS PUBLISHER Jimmy E. Greene jgreene@abcmi.com MANAGING EDITOR Breanna George bgeorge@abcmi.com
Advanced Architectural Sheet Metal & Supply..................................................31 AIS Equipment.........................................2 Allied Insurance Managers Inc..................4
FCC Construction Inc............................32 FCCI Insurance Group ..........................28 Fire Pros, Inc...........................................35 Fisher Companies...................................17
GRAPHIC DESIGN Sally Bancroft Bancroft Graphics www.bancroftgraphics.com
Amerisure Companies...............................9
PRINTING Bradford Printing www.bradfordprinting.net
Attitude & Experience, Inc.......................2 Blasius Inc................................................4
Great Lakes Industrial Supply Co., Inc................................................17
ADVERTISING Strategic Value Media www.svmmedia.com
Brigade Fire Protection...........................25
Guy Hurley, LLC....................................32
Bruton Electric.......................................35
Hanba & Lazar Law................................29
Burgess Concrete Construction Inc.........16
Hartford & Ratliff Inc............................17
Capital Steel & Builders Supply..............16
Heyboer & Bolt Inc..................................2
Cloverleaf Electric, LLC..........................16
Hickey Electric, Inc..................................2
Colville Electric Co Llc.............................4
Independence Commercial Construction, Inc.......................................................17
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 118 W. Ottawa Street 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.”
Andrews Hooper Pavlik, PLC.................28 Arrow Concrete Cutting...........................2
Constructive Sheet Metal, Inc.................16 Core & Main..........................................27 CSM Mechanical, LLC...........................21 D C Byers Co.........................................16 Desai/Nasr Consulting Engineers, Inc.......9 Detroit Diamond Drilling......................24 Douglas Electric......................................28 Eikenhout...............................................33 EMGS Michigan....................................24 Enterprise Fleet.......................................27 Expert Heating & Cooling, Inc.................2 Fair and Square Construction, Inc..........27 Fairway Engineering LLC.........................9
G & G Electric.......................................28 GBM Recycled Concrete, LLC...............28 Garber Chevrolet....................................28
J & B Electric Inc.....................................2 Jackson Associates, Inc............................33 Jackson Industrial Construction..............33 JBS Contracting, Inc...............................29 Jimco Fire Protection, Inc.........................2 K & H Concrete Cutting, Inc...................4 K-Value Insulation..................................33 Kyle Barnhart Trucking, LLC..................32 Laux Construction..................................35 Levasseur & Defrank PC..........................4 Liquid Calcium Chloride Sales.................4 Loomis, Ewert, Parsley, Davis, Gotting, PC.........................................33
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Scientific Brake & Equipment................29
Maltese Construction LLC.....................17
Slipstream Inc.........................................29
Mechanical Heat & Frost Insulation LLC.....................................17
Standard Electric Co...............................29
Mid-American Group.............................29 Midland Tool & Supply Co., Inc............32 Miller Johnson Attorneys..........................8 Modern Concrete...................................33 Modern Roofing Inc...............................29 Nugent Builders Inc................................33 Pamar Enterprises.....................................8 Performance Line Tool Center................33 Propane Services LLC.............................17 Rapid Fire Protection Inc........................17 RCI Electric............................................29 Robert Clancy Contracting, Inc..............29
Summit Electric Inc..................................4 Superior Asphalt.....................................29 The Campbell Group..............................32 Tradesmen International.........................17 TRP Crushed Aggregate.........................33 Universal Roofing.....................................4 Universal Spiral Air.................................32 Valenti Trobec Chandler.........................31 Valley Electrical Contractors...................29 Van Dyken Mechanical Inc.......................2 Van Laan Concrete Construction............33 Wm. Molnar Roofing, Inc.........................8
616.453.4800
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248.397.6550
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FireSystemsOfMichigan.com Serving Michigan for over 30 years!
MICHIGAN MERIT • ISSUE 3 2020
35
PRESORTED STANDARD U.S. POSTAGE PAID LANSING, MI PERMIT NO. 193
ASSOCIATED BUILDERS & CONTRACTORS OF MICHIGAN 118 W. Ottawa Street Lansing, MI 48933 www.abcmi.com
SAFETY. OWNERSHIP. VALUE. “It’s reassuring to know my workers’ compensation insurance is with a program that looks out for my company’s safety and insurance costs. Owned by ABC contractors, the Fund is very knowledgeable and has dedicated resources specific to our industry. As far as I’m concerned, every eligible ABC contractor should belong to this Fund. I’m 100% satisfied with the expertise and value the ABC Fund brings.” Steve Russell, President A/C Electric Lansing, MI
Benefits to Fund Members • $12,688,358 Distributed to particpants in 2020 • Over $74.7 Million Returned Since 1995 • Members Average a 45% Return of Premium • ABC Membership Required • Industry-specific Loss Control & Safety Services
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abcmifund.org | administered by RPS Regency | 800.686.6640
