WINTER 2014
PUbLicaTioN oF aSSociaTED bUiLDERS aND coNTRacToRS oF micHiGaN
FINDING
WORKERS REFILLING THE PEOPLE PIPELINE
Also: Economic Outlook Forecasts Growth for Construction Industry Growing by Association: The Benefits of Membership www. a b c m i . com
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inside 4
Executive Perspective by Chris Fisher ABC is using several avenues to build interest among youth for careers in construction.
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Refilling the People Pipeline by Carla Kalogeridis The Michigan construction industry is facing a severe shortage in qualified workers, a situation not likely to improve for years to come. Here’s what ABC of Michigan is doing about it.
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Economic Outlook by Don Wilson A look at what’s occurring in eight major markets helps forecast the next year’s demand for construction services.
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Growing by Association by Mary Boardway, MBA, CAE Employing the benefits of your association membership is a cost effective path to implementing your growth strategy.
VoLUmE Viii, iSSUE 1 The Michigan construction industry is facing a severe shortage in qualified workers, a situation ABC of Michigan is working to improve.
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Government Affairs Prevailing Wage Denies Taxpayers 315 Schools US Court of Appeals Again Upholds Michigan’s Fair and Open Competition Act
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ASSOCIATED BUILDERS and CONTRACTORS of MICHIGAN 2014 BOARD of DIRECTORS Brian Stadler, Chairman Wolgast Corporation Greater Michigan Chapter Dan Murphy, Vice-Chairman MAG Insulation Greater Michigan Chapter Dave Sheffield, Secretary-Treasurer Onslow-Sheffield, Inc. Southeastern Michigan Chapter Chris Beckering, Immediate Past Chair Pioneer Construction Western Michigan Chapter Jim Cripps Cripps Fontaine Excavating, Inc. Western Michigan Chapter Mike Houseman Wolverine Building Group Western Michigan Chapter Rick Jackson Jackson Associates, Inc. Southeastern Michigan Chapter Michael Marks The Mackenzie Companies Greater Michigan Chapter Dave Mollitor Consolidated Electrical Contractors Greater Michigan Chapter Bill Molnar Wm. Molnar Roofing Co., Inc. Southeastern Michigan Chapter Jack VandeGuchte Western Michigan Chapter Daniel Welch Welch Tile & Marble Company Western Michigan Chapter MIChIGAN MERIT CONTRIBuTORS Publisher: Christopher Fisher Managing Editor: Mary Boardway, CAE Communications Coordinator: Elise Layton ABCMI Economist: Don Wilson Design and Printing: Keystone Millbrook Advertising: Strategic Value Media 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.
One issue that has been at the forefront for most industries—and especially the construction industry—is dealing with the need to find and hire good people. Ask anyone in construction and we know that a construction career is well paid, highly rewarding, and full of opportunities. Unfortunately, that message doesn’t always get heard. Add to the equation that the average construction worker is in their 40s or 50s (depending on their trade), along with the number of craft professionals who left the industry during the Great Recession, and you have a “Perfect Storm” that leaves many construction companies scrambling to find qualified workers. Over the next decade alone, the demand for Over the construction workers next decade in Michigan is projected to increase by 20 percent. Across alone, the the United States, two million construction jobs will need to be filled by the year 2020. demand for Given the data facing our industry, as well as the realconstruction world experiences many contractors are already coming workers in to terms with, we wanted to spend some time focusing Michigan is on what others are doing to align talent within the construction industry. In this edition of Michigan Merit, projected to we look at some best practices, spend time with human increase by resource professionals, and examine some of the efforts 20 percent. underway in Michigan schools to spark an interest in construction careers. We’re also excited to announce the launch of MichiganConstructionJobsCenter.com. The website is an online job search engine designed to be a one-stop tool for Michigan construction firms looking for skilled craft professionals and for workers looking for the perfect job. We hope you’ll spend some time on the site and take advantage of this latest ABC of Michigan member benefit. Yours for the Merit Shop,
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.”
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Refilling the
People
By Carla Kalogeridis
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The michigan construction industry is facing a severe shortage of qualified workers, a situation not likely to improve for years to come. Here’s what abc of michigan is doing about it.
BRADY
COOPER
FISHER
GREENE
MOLLITOR
SAWYER
STELLINI
The recent economic downturn and an aging workforce are two main ingredients in the perfect storm that has led to the Michigan construction industry’s qualified worker shortage. Full disclosure, it isn’t a storm that came out of nowhere. “We’ve known since 2001 that a skilled labor shortage was coming,” says Mark Sawyer, executive director of ABC’s Southeastern Michigan Chapter. “We knew it was going to happen in construction and in other industries.” In fact, based on workforce demographics, he says, the construction industry was predicting the shortage to begin in 2011, but it got pushed back and intensified by the Great Recession. Sawyer says that Michigan had 82,000 fewer construction workers in 2012 than it did a decade earlier—partly because of the aging of the industry’s most skilled construction craft professionals and partly because of the perception that construction is a low-paying, backbreaking way to make a living. These challenges, followed by a massive recession that dried up the amount of work in the state, prompted employees planning to retire to hold on to their jobs instead and forced construction team members to leave Michigan (and even the industry) just to earn a living.
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But that’s the old story. The new story is an entirely different picture, although unfortunately, not without its own set of challenges. “We’ve got a perception problem,” says Chris Fisher, president of ABC of Michigan, “and we have a huge problem with finding skilled craft professionals—and it’s only going to get worse.” “A great deal of our workforce has left the state, and I do not think they are looking to come back,” says Dave Mollitor, CEO of Consolidated Electrical Contractors. “This has created a shortage of skilled labor across our industry, in both boots on the ground as well as supervision and executive managers.”
“The truth is that the construction industry pays more than most other industries in michigan,” says chris Fisher, “and these are jobs that can’t be outsourced. Kids who go through abc’s construction academies, for example, graduate with no debt and very often make more per hour than a recent college graduate who is saddled with thousands of dollars in loans.” “We’re entering into an even greater workforce shortage between now and the end of the decade,” Fisher concurs. “The average Michigan construction worker is in his 40s or 50s depending on their trade. On top of that, construction job openings are projected to increase by 20 percent in Michigan between now and 2020, and that translates to 2-million construction job openings across the U.S.” Fisher and Sawyer agree that part of the problem lies with the Michigan high school curriculum that can often steer kids away from skilled trades careers. “High school counselors and even parents can have little understanding of all the positives that the construction industry has to offer,” says Sawyer. “Therefore, they don’t encourage students to investigate it as a viable career choice.” 8
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The implementation of the Michigan Merit curriculum in 2006 put a much greater emphasis on college prep, and diverted funds and focus from equally as rigorous and relevant technical and vocational development. “The Michigan Merit Curriculum is fine for kids on a college pathway, but it provides very little for the future of students who may be interested in a different pathway to success,” says Sawyer. Jimmy E. Greene, CEO and president of ABC’s Greater Michigan Chapter, points to ABC’s Jumpstart program as an example of how the association is working to change the perception of the skilled trades among students 15-18 years old. “We’ve found that if we can get them introduced and involved in the skilled trades earlier, then their interest level is much higher,” he says. Through the Jumpstart program, Greene’s ABC chapter invites students to come in one evening a week and experience skilled trades like carpentry and electrical firsthand. “We’re able to assess their natural skills and interest level and often transition them right into our apprentice academy,” Greene says. “We’ve also been focusing on market areas for minorities and helping funnel them into the skilled trades. Without our help, these students would likely never be introduced to the fulfilling, high-paying opportunities in the construction industry.” Fisher says the perception problem is with both parents and the schools. “The truth is that the construction industry pays more than most other industries in Michigan,” he says, “and these are jobs that can’t be outsourced. Kids who go through ABC’s construction academies, for example, graduate with no debt and very often make more per hour than a recent college graduate who is saddled with thousands of dollars in loans.” Furthermore, he says, many of the young people who enter the construction industry find great careers and upward mobility that lead them to becoming successful business owners or enjoying high-paying jobs in management or leadership of a large industrial construction firm. “Construction is an opportunity industry.” “Our industry is definitely suffering from an image problem,” agrees Norm Brady, president & CEO of ABC’s Western Michigan Chapter. “The significant downturn from 2008 through 2012 gives current job candidates a reason to pause before pursuing a career in construction. They wonder if another downturn is around the corner, and if construction can be a career or if it is just a job. Plus, manufacturing and other industries are chasing the same people we are. We need to do a better job of letting folks know that they can make a very good living in the trades.” To combat the image problem, ABC participates in job fairs and college nights at various high schools to let students know that they have alternatives. ABC is also working hard to connect with counselors and vocational teachers to inform them that mi cHiGaN mERiT
WHEN YOu REaLLY NEED QuaLIFIED WORKERs, WHaT WORKs? the construction industry is ripe with jobs and careers. “ABC is reaching into high schools to show them the way,” says Sawyer. “We offer our facilities for skilled-trade classes, and we are telling them about ABC’s respected apprenticeship program.” Greene believes a key strategy in changing the industry’s perception is to do more to communicate how much money can be earned in skilled trades as well as telling the success stories of its workforce. “We need to put more faces on these skilled craft professionals,” he says. “The public knows what they look like from 8 to 5, but they need to know what they look like at 5:01. They are fathers, mothers, consumers, and valuable members of their communities. To attract more people to the profession, we need to show these skilled craft professionals with their helmets off. The public needs to understand that competent and intelligent people work in this field.” Most important, Sawyer says, is making sure that the adults who are guiding high school students in their choices are aware of the great opportunities in construction. “We anticipate a skilled labor shortage for the next several years,” says Sawyer. “We will see some serious shortfalls in electricians, mechanics, and carpenters. For every three people we lose, only one is coming in. The result of that is a greater competition for employees, which means higher wages and benefits.” For example, Sawyer says for the last 14 years that he has worked with ABC, the association has always kept a list of students who are currently unemployed and seeking work. “Now, the list is comprised of employers looking for potential employees,” he says. “Currently, all of our apprentices are employed in the fields for which they’ve been trained.” “The highest qualified employees are both working and afraid to move from one employer to another,” notes Mollitor. Nancy Stellini, human resources manager for Triangle Construction, agrees with Mollitor’s assessment. “Currently, the pool of qualified, skilled candidates is small,” she says. “Hiring is more aggressive now, and HR managers need to act quickly when they find qualified candidates.” Stellini says it is typical for a qualified candidate to receive generous offers within a couple of days of marketing themselves. The List Goes Digital About six months ago, ABC of Michigan realized that the time was right for its jobs list to go online. “There has been an outpouring of calls from members and non-members alike, asking us to help the industry with its staffing challenges,” says Fisher. “It was time for us to take our employer list to the next level.” To that end, ABC of Michigan worked diligently on an exciting new online construction jobs center at www. michiganconstructionjobcenter.com, which will debut in January www. a b c m i . com
consolidated Electrical contractors’ Dave mollitor has tried just about everything when he’s short on skilled labor. “we have used staffing services and hiring subcontractors to help us through shortfalls, but when we are looking for direct hires or permanent employees, we usually go to website advertising services, temp-to-hire services, as well as the michigan Talent bank and michigan works.” what works best, he says, is putting it out through word of mouth. “The most creative way to add employees is reaching into our existing staff for friends, family members, and past coworkers for referrals,” mollitor says. “most employers are still very reliant on the ‘friends and family’ method,” agrees abc’s Norm brady. “Existing employees are the best source for new employees. without the influence of the friend or family member, new folks coming into our industry might have overlooked us.” brady says some employers are recognizing the value of forming relationships with technical training centers, iSDs, michigan works, and high school counselors. “it used to be that employers could let their employees know that they were hiring, and they would receive enough referrals to take care of their hiring needs. Employers have to work much harder today, and making friends in the right places can help,” he says. Triangle construction’s Nancy Stellini uses online sources like monster.com and social media sites like Linkedin. “i have begun seeking out qualified candidates as opposed to the traditional methods of hiring through advertising,” she says. “i reach out to my contacts on Linkedin and Facebook and make it public that i am hiring a particular skill set. i ask people that i know if they know of individuals looking to make a career change and often make great connections by doing this.” Lisa m. cooper, director of human resources and recruiting services for beene Garter, also uses online sources for hiring. “many inexpensive applicant tracking systems provide a jobs web page where employers can post vacant positions directly on their website. many aTSs will also provide a direct feed of each position posted to a job board aggregator like indeed.com or SimplyHired.com included with the monthly subscription fee.” These sites, she explains, pull many employer and job board postings into a central aggregate board, making them very attractive to applicants who prefer a one-stop-job-shop versus having to visit many different websites for their next employment opportunity. Employers report the ability to reach more candidates because a wider net has been cast. Like Stellini, cooper has seen Linkedin pick up more momentum within the construction industry, even beyond the traditional white-collar-only member use. “Subscribing to Linkedin groups is an excellent way to not only keep current and connected with others in your trade, but it also provides a great vehicle for expanding your talent network,” she says. “Employers can enter search criteria for education, experience, industry, technical skills, geographic area, and get a long list of potentially viable candidates.” in a recent informal survey of abc of michigan members, some companies said they have also had success with “borrowing” employees for short-term projects—provided there’s a gentleman’s agreement in place that neither will try to permanently hire the other’s employees. MM WI N TER 2014
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ExPLORING THE sTaFFING aGENCY sOLuTION when struggling to fill out their teams, some abc members have found that nothing beats the efficiency and quality of a good staffing agency. “contractors are running leaner than before the recession and still being careful not to overhire full-time people,” says Ed Rojeck, director of marketing of Tradesmen international. “also, many of the skilled workers they had have moved on to other jobs, which makes finding craft professionals with the right skills harder than ever.” “The work load is increasing in the market, but it is still not sustainable enough to commit to employees full time, as the contractors have work today but still are not sure about next month,” adds Ladd Schuiling, service representative for the staffing agency Skilled Trades. “Using an agency helps manage day-to-day cost with scheduling and helps keep unemployment down for the contractors because they are our employees.” a construction staffing firm can save contractors money while increasing their ability to perform work on schedule, says Patrick beal, vice president of staffing agency meritHall, inc. “by creating a shared pool of labor, a staffing firm can provide contractors with skilled and licensed workers with a dramatically shorter lead time than would be required to hire for themselves,” beal says. “by eliminating the repeated candidate search, screening, and interviewing process, a staffing firm is able to provide this worker with significantly less overhead.” Keith m. Tyrell, president of bay Technical Staffing agrees that finding dynamic team members is costly for companies, and the importance of getting the right person in place, in a timely manner, is more crucial than ever. “with project timelines and staffing needs changing constantly, staffing agencies are able to fill those needs and provide flexibility to their workforce,” he says. agencies also provide specific training to candidates, Tyrell says, which can help reduce overtime and allow construction companies to try before they buy. “There’s a real advantage in being able to try the employee out before you add them to your payroll,” he says. “it helps you determine a worker’s dependability and skill sets before adding them to your team.” “it all comes down to productivity and profit margin,” says Rojeck. “working with an agency can allow a contractor to find the exact skills they need when they need them, without having to hire a full10
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time person who might not be needed full-time. it also saves the cost of providing benefits, workers’ comp, and unemployment.” He advises finding a staffing firm that offers the optimum flexibility of having skilled labor that moves in and out of your team as the workers are needed. These abc-member staffing executives do have a few pieces of cautionary advice for construction firms looking to try staffing agencies. For example, beal admits that when using an agency, quality is going to be a construction company’s greatest concern. “i would ask for trade-specific references,” he advises. “a staffing company that is not able to provide references from companies similar to yours will not be as capable of helping your business. if you own a carpentry business, i would absolutely look for references from a carpentry company.” Schuiling agrees that a disadvantage in using an agency can be not getting the right employee skill set that you requested. also, sub-employees are new to the site, so it may take some time to orient them and get them up to full speed. “You will have better luck with an agency that is local in the area where you need help as they more than likely have a local pool of manpower,” he says. “also, do your research on the staffing company and on the recruiter finding you the help. This person is contacting, sourcing, and placing the employees on your site. if they are not confident and clear on the scope of work and duties of the job, the likelihood of their employees being qualified greatly diminishes.” Tyrell advises that when working with staffing agencies, construction firms must be specific when spelling out their needs and the duties employees will be performing. “The more information and detail agencies have about the responsibilities that will be performed, the better the staffing solutions they can provide,” he says. when it comes to the future of the skilled trades workforce in michigan, beal believes that some construction companies will invest huge amounts of money to develop and maintain their skilled workforce, while others will partner with construction staffing firms that can use the labor more efficiently by working them with more than one contractor. in addition, he says, upcoming healthcare requirements will only make employing workers in the construction industry more complicated—and for some construction firms, that’s reason enough to consider a staffing agency in 2014 when obamacare kicks in. MM mi cHiGaN mERiT
2014. The site will be a one-stop tool for construction firms looking for skilled employees and for workers looking for the perfect job. “There’s nothing out there like it,” says Fisher. “It’s the most comprehensive website of its kind in the state—the Monster. com of the construction industry.” ABC of Michigan is promoting the site in various industry magazines as well as online through Google ads. “If someone types in ‘construction jobs Michigan,’ our site is going to come up,” he says. There is a fee for employers to post jobs on the site, but ABC members enjoy a discounted rate, and all job-seekers can access the site for free. “This site will be the top spot to connect construction employers with construction employees,” Fisher says, “and the application process will help craft professionals get the word out about their specific skills, so employers can pick the best available people to meet their needs.” Work on the Legislative Front In addition to engaging more with high schools and launching the jobs site, ABC of Michigan continues to invest significant resources to combat the construction industry’s staffing problems through legislative solutions. “ABC of Michigan is helping to bring together key stakeholders to modify the Michigan Merit Curriculum for high school,” says Fisher. “We’ve got to make it easier for students to pursue technical and vocational education. Michigan does a pretty good job making sure kids are ready for college, but we need to make sure that kids can prepare for other career paths as well. There need to be construction classes, for example, to introduce students to our industry. Fisher says ABC of Michigan has been successful in its efforts. This past spring, for example, legislation to modify the Michigan Merit Curriculum so that high school students have the flexibility to explore career and vocational training education options passed the Michigan House with a bi-partisan super-majority. The bill was sponsored by Reps. Ed McBroom and Joel Johnson. “High school students will be more successful in school and in life if they have classes and experiences that interest them,” said McBroom (R-Vulcan) at a news conference with ABC in March. “The effort to improve education in Michigan through a state curriculum that forces all students on the same learning path is a disservice to our children’s future and the diverse needs of society and our workforce.” “Our education system must include a variety of learning opportunities, but it should be parents and the students in cooperation with our local educators who determine which option will meet their aptitudes and aspirations,” said Johnson (R-Clare). “There’s no way the state can be the best judge for individuals, nor should it be trying.” Fisher believes that working with legislators like McBroom, www. a b c m i . com
Legislation that gives students the opportunity to take careertechnical classes and count them toward graduation is crucial for our industry. Johnson, and others, ABC of Michigan can help develop a comprehensive curriculum for students to pursue CTE, vocational, and trade careers. “Legislation that gives students the opportunity to take career-technical classes and count them toward graduation is crucial for our industry and the future of the skilled workforce in Michigan,” he says. Enter 2014 With Open Eyes As someone who faces the reality of staffing shortages in his business, Mollitor believes we are “years away” from seeing significant relief on the jobsite staffing problem. “This shortage will also hurt the growth of individuals moving up in the ranks in the areas of project management and estimating because companies have not had the opportunity to train others for the growth we’ve seen or even time to replace our aging staff.” Mollitor says Michigan has struggled recently in producing reasons for people to come here and work in its skilled-trades markets or even to get into the skilled-trades industry after high school. “The good part is that our state government is starting to put emphasis on this issue, which I strongly believe will help correct the problem,” he says, “but I’m not sure how long it will take. I just hope it happens before business leaders write off Michigan as a great place to bring or keep their companies.” Brady believes the challenges will continue, citing a recent new economic forecast that predicts 3.6 percent growth in 2014. “Historically, construction softens in the late fall and winter, but many ABC members tell me that they remain very busy and would add people today if they were available. I would expect an increase in spring and summer work will result in more overtime hours worked and some pressure to increase wages.” Fisher’s and Sawyer’s advice to ABC of Michigan members is to enter 2014 with their eyes wide open to what the shortage of a skilled construction workforce really means to their businesses. “As the construction industry continues its rebound and more and more of the workforce nears retirement, finding skilled workers is going to continue to be a huge challenge,” says Fisher. “Fixing that deficit is front and center for the industry and that means it’s a top priority for ABC of Michigan as well.” MM Carla Kalogeridis is associate editor of ABC of Michigan’s michigan merit magazine.
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outlook
ECONOMIC
CONSTRuCTION OuTlOOK: Moderate Growth and Stability
a look at what’s occurring in eight major markets helps forecast the next year’s demand for construction services. By Don Wilson Economic recovery in Michigan has traditionally begun with a revival of car and light truck sales as a result of growth in pent-up demand, which accumulates with the decline in household spending and business investment as well as tightening of lending standards accompanying an economic contraction. A subsequent recovery also usually includes a pick-up in construction activity, some of it contributed by a strengthening in the household income and business profits generated by the increase in automotive industry activity and availability of more loanable funds for mortgages. However, the recovery from the Great Recession of 2008-2009 has been
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somewhat atypical. The pick-up in Michigan was again initiated by the start of a year-over-year increase in North American sales of the Detroit automakers’ motor vehicles in the first quarter of 2010, accompanied by a gradual loosening of non-mortgage credit. Construction activity, on the other hand, continued fluctuating. Construction activity of all types in Michigan, as tracked by year-over-year change in the value of contract awards for start of future construction, after increasing in the first three quarters of 2010, declined in the next four quarters, then rose in the next two, fell in the following one, increased in the next two and then fell in all four quarters of 2013. Over the 16 calendar-quarter period since the start of 2010, residential
building contracts expanded in every quarter and infrastructure nonbuilding contracts increased in eight of those quarters. Despite this growth in residential and infrastructure construction awards and the expansion in the state’s private business sector portrayed in Exhibit #1 by the Michigan Business Barometer, private sector employment, and the Commercial Space Lease Index, non-residential construction awards grew year over year in only eight of those 16 quarters. What is occurring in eight of the major markets for demand of the services and resources of non-residential general contractors and sub-contractors is featured in the following paragraphs and accompanying Exhibits 2-9. They portray the trend of measures of the principal organic factors affecting that demand. There are a wide variety of indicators that track activity in these markets other than employment including dollar sales, payroll hours, vehicle production, value of production, student enrollment, passenger and freight traffic, miles of vehicle travel, event attendance, and others. All of this data is converted to barometers with their level of activity in 2007 being assigned a value of 100. The value of construction put in place, designated as an index to differentiate it from a barometer, has its 2007 value also set at 100. A barometer or index reading of 75 for a specific year means the data that barometer or index represents for that year is 25 percent lower than in 2007, while a reading of 110 indicates the data are 10 percent higher than in 2007. mi cHiGaN mERiT
outlook
ECONOMIC
Office Market Construction Remains slow Michigan office market construction remains slow in returning to a growth pattern, rising only slightly to an estimated 58 in 2013 (2017=100) from 56.2 in 2012 after diving 49 percent from a level of 103.1 in 2008 to 52.5 in 2011, as tracked by its Construction Index, a measure of the inflation adjusted value of construction put in place. Work rolls in the industries inhabiting office structures, as measured by change in employment, shrank by 162,000 workers between 2000 and 2009 before turning around and growing again in 2010, as outlined in Exhibit 2. Employment in Exhibit 2 is advanced three years to show the impact that job change has on the lag in construction work, or lack of it, in a market with abnormally high vacancy levels. Occupancy rates remained at a low level of 84 percent in office buildings at mid-year 2013 based on the inventories of space in southeastern Michigan and western Michigan where the highest proportion of all classes of statewide non-residential structures are located. Why? More employees are able to work from home with increased use of technology that facilitates it. Job growth remains slow with the creation of only 31,200 jobs in 2011; 5,700 in 2012; and an estimated 20,000 in 2013 following 24,300 in 2010. Digital storage is being implemented as a substitute for filing cabinets. Employers are downsizing the space assigned to each of their workers. Retail and Wholesale Trade Market Trying to Recover As illustrated in Exhibit 3, construction outlays in the distribution market (retail and wholesale trade) facilities are closely dependent on trends and conditions in spending at retail and the operations of wholesalers (merchant wholesalers who maintain and deliver from inventory, manufacturers’ representatives, and manufacturers’ sales branches) in www. a b c m i . com
MICHIGAN BUSINESS BAROMETER / COMMERCIAL LEASE INDEX / PRIVATE SECTOR EMPLOYMENT !
Business Barometer / Lease Index (2007 = 100)!
120!
Exhibit # 1!
Emploment! (000,000)! 4!
Business Barometer!
3.9!
Commercial Space Lease Index!
115!
Employment!
3.8! 110! 3.7! 105!
3.6!
100!
3.5! 3.4!
95!
3.3! 90! 3.2! 85! Source: Michigan Dep't. Treasury, Public Service Commission, U. S. Bureau of Labor Statistics, Chicago Federal Reserve Bank, Michigan Association of Realtors, and select commercial real estate organizations ! 80!
03!
04!
05!
06!
07!
08!
09!
10!
11!
3.1! ! 12!
MICHIGAN OFFICE MARKET CHANGE IN EMPLOYMENT / CONSTRUCTION ACTIVITY! Construction Index!
3!
13 Est.!
Exhibit # 2!
Employment Change (000)!
(2007 = 100)!
120!
30! Office Construction Index!
Employment Change (000 - Advanced Three Years)! 20!
100! 10!
80!
0!
-10! 60! -20!
40!
-30!
-40! 20! -50! Source: U. S. Bureau of Labor Statistics & FMI Consulting Building Project Surveys ! 0!
03!
04!
05!
06!
07!
Michigan. Construction, as measured by its index of the value of construction put in place, plunged from a level of 100 in 2007 to 41 in 2010 as a consequence of: 1) The 13 percent decline in retail sales between 2004 and 2009 with the weakening in household spending power accompanying the
08!
09!
10!
11!
12!
13 Est.!
-60!
rise in joblessness; 2) The 15 percent fall-off in wholesaling trade from 2007 through 2010, much of it impacted by the cutbacks in manufacturing and construction, two of its other major markets. Construction in this market then WI N TER 2014
13
outlook
ECONOMIC
MICHIGAN DISTRIBUTION MARKET / CONSTRUCTION ACTIVITY !
Retail Sales / Wholesale Activity Barometer ! (2007 = 100)!
110!
Retail Trade Sales! Construction Index!
Exhibit # 3!
Construction Index ! (2007 = 100)! 110!
Wholesale Trade Activity!
100!
105!
90! 100!
80! 70!
95!
60!
90!
50! 85!
40! Source: Michigan Dep't. of Treasury, U. S. Bureau of Labor Statistics & FMI Consulting Building Project Surveys!
80!
03!
04!
05!
06!
07!
08!
09!
10!
11!
12!
13 Est.!
30!
MICHIGAN HEALTHCARE MARKET / CONSTRUCTION ACTIVITY! Exhibit # 4! Construction Index! (2007= 100)!
Healthcare Barometer ! (2007 = 100)!
105!
Healthcare Services Activity!
105!
Construction Index!
100!
100!
95!
95!
90!
90!
85!
85!
80!
80!
75!
75! Source: U. S. Bureau of Labor Statistics & FMI Consulting Building Project Surveys !
70!
03!
04!
05!
06!
07!
began a slight recovery rising to 44.7 in 2011 (2007=100); 47.7 in 2012; and an estimated 48 in 2013 with strengthening in retail sales and wholesaling activities. Construction, however, has been curtailed by the levels of vacancy in retail and warehousing. Only 90 percent of retail properties were occupied at midyear 2013 in southeastern and western 14
W I N T E R 2014
08!
09!
10!
11!
12!
13 Est.!
70!
Michigan; occupancy was 89 percent of warehousing in the state’s southeastern region and 93 percent in western Michigan. service Market activity Grows The service activities delivered in the healthcare market by all types of medical, dental, and social assistance service
providers, as tracked by the Healthcare Services Barometer, is compared with an index of the value of construction put into place in Exhibit 4. Services grew to a level of 92.8 in 2011 (2007=100) from 88.3 in 2010 and then climbed to 96.1 in 2012 and an estimated 100 in 2013 with the growth in employment accompanying recovery from the 2008-09 recession, resumption of employee benefits outlays with call-back of employees and new hires, and the rise in household spending power with the upturn in wage and salary income. Construction activity also inched upward from 80.9 in 2010 (2007=100) to 81.9 in 2011 and rose to 85.2 in 2012 before slipping back to an estimated 84 in 2013. According to a presentation by Jones Lang LaSalle, a commercial real estate advisory and property management firm, at a Design & Construction Forecast Seminar conducted by Engineering Society of Detroit in mid-October 2013, hundreds of millions of dollars of healthcare facilities are in the design and planning stage and the process of construction by many of the state’s healthcare systems. However, those same networks are finding facilities planning and its implementation difficult because of the unknown future effects of the Affordable Care Act. Education Market affected By Lower Enrollment Exhibit 5 summarizing the education market compares the Michigan Student Enrollment Barometer, a measure of K-12, college, university, and graduate school enrollment at Michigan’s educational institutions, with an index of the value of construction put into place in all types of facilities associated with educational service delivery. Overall, student enrollment at all levels has declined year-over-year since 2003, except for a fractional increase in 2008-09 primarily related to return to school of persons losing their jobs mi cHiGaN mERiT
outlook
ECONOMIC
during the recession. Student population enrollment, down 2.9 percent in 2005 to 2009, slowed to an estimated 1.5 percent in 2009 through 2013 with more charter school and college out-of-state and foreign student enrollment. While colleges and universities have seen rising enrollment for 16 out of the last 20 years, some are encountering decrease in enrollment with a decline in high school graduates, depressed household income, lack of job prospects for graduates, and an unwillingness of some families to assume more student debt. Construction activity, after peaking at 103.4 (2007=100) in 2008, has dropped each year declining to 76.8 in 2012 and an estimated 72 in 2013.
MICHIGAN EDUCATION MARKET / CONSTRUCTION ACTIVITY! Enrollment Barometer! (2007 = 100)! 110!
www. a b c m i . com
Construction Index ! (2007 = 100)! 110!
108!
105!
106! 100! 104! 95!
102!
90!
100!
98!
Student Enrollment Barometer !
85!
Construction Index!
96!
80! 94! 75!
92!
90!
Source: U. S. & Michigan Department of Education & FMI Consulting Building Project Surveys ! 03!
Manufacturing Market on Growth Track Manufacturing market activity in Michigan, as portrayed in Exhibit 6, is on a three-year growth track because of easing automotive credit. U. S. car and light truck sales totaled about 15.6 million units in 2013, the highest volume since 2007, when sales were stimulated by many buyers with lessthan-desirable credit ratings. According to Experian Automotive, the typical credit score for new cars was 753 in 2013’s third quarter, 22 points lower than in the corresponding periods of 2008-12 years and only 4 points higher than same the period for 2007, a year when U. S. sales totaled 16.6 million units. As a result, the Detroit Automakers Production Barometer increased for the fourth consecutive year, expanding to an estimated level of 85 in 2013 (2007=100) from 43.8 in 2009. Michigan’s other important manufacturing sector, business and institutional furniture, continues to slowly recover according to its trade association. The value of production of all industry products, as measured by the Business & Institutional Furniture
Exhibit # 5!
04!
05!
06!
07!
08!
09!
10!
11!
12!
MICHIGAN MANUFACTURING MARKET / CONSTRUCTION ACTIVITY
13 Est.!
70!
Exhibit # 6
Automo=ve / Furniture Produc=on Barometer (2007 = 100)
Mamifacturing Barometer / Construc=on Index (2007 = 100)
140
140 Manufacturing Barometer Construc=on Index 130
130
Detroit Automakers Produc=on Barometer Business & Ins=tu=onal Furniture Produc=on Barometer
120
120
110
110
100
100
90
90
80
80
70
70
60
60
50
50 Source: U. S. Bureau of Labor Sta=s=cs, Michigan Public Service Commission, Detroit's Automakers Reports & FMI Consul=ng Building Project Surveys
40
40 03
04
05
06
07
Production Barometer, after bottoming out at 64.3 in 2009 (2007=100), rose to level of 74.2 in 2011, declined slightly to 72.1 in 2012, and then rose to an estimated 74 in 2013. A major driver of demand for business furniture, service sector employment is only growing
08
09
10
11
12
13 Est.
moderately. Office vacancy rates are edging downward very slowly as the economy gradually mends. Overall, office building investment and construction across the nation remains sluggish. Construction activity in the manufacturing market, as measured by WI N TER 2014
15
outlook
ECONOMIC
MICHIGAN TRANSPORTATION MARKET / CONSTRUCTION ACTIVITY!
Exhibit #7!
Construction Index ! (2007 = 100)!
Passenger / Freight Barometer (2007 = 100)! 115!
120!
110!
115!
105!
110!
100!
105!
95!
100!
Passenger Traffic Barometer! Freight Traffic Barometer !
90!
95!
Construction Index !
85!
90!
80!
85!
75! 70!
80!
Source: Michigan Dep't. of Transportation, Association of American Railroads, ! U. S. Army Corps of Engineers & FMI Consulting Building Project Surveys ! 03!
04!
05!
06!
07!
08!
09!
10!
11!
12!
13 Est.!
MICHIGAN LODGING MARKET / CONSTRUCTION ACTIVITY!
Mileage & Passenger Barometer (2007 = 100) / Occupancy Rate (%)!
75!
Exhibit # 8!
Construction Index ! (2007 = 100)! 140!
120!
120!
100!
100! 80! 80! 60! 60! Highway Vehicle Travel Mileage Barometer !
40!
Occupancy Rate!
40!
Airline & Railroad Passenger Barometer ! Construction Index !
20!
20! Source: Michigan Dep't. of Transportation, Travel Michigan Program & FMI Consulting Building Project Surveys !
0!
03!
04!
05!
06!
07!
its index of the value of construction put in place, after bottoming out at 80.5 in 2011 (2007=100), rose to 81.9 in 2012 and an estimated 95 in 2013. Transportation Market Continues up Construction activity in the transportation market is compared with 16
W I N T E R 2014
08!
09!
10!
11!
12!
13 Est.!
0!
passenger and freight traffic in Exhibit 7. Passenger traffic (airline and railroad) has been growing every year since the recession ended in 2009, as has freight traffic (railroad, waterborne, and airline) according to their barometers. Passenger traffic returned to a growth track with the lifting of restrictions on travel with the start of a return to profitability in the
automobile industry, its supply chain, and other Michigan business sectors, and the strengthening in household spending with the increase in earnings accompanying the resumption of job growth. Freight traffic (inbound and outbound) began to recover with the upturn in manufacturing displayed in Exhibit 6. Construction put in place, as expressed by its index, after dropping to a level to 100.7 in 2011 (2007=100) increased to 108.6 in 2012 and an estimated 117 in 2013. Lodging Market shows some Occupancy Improvement Exhibit 8 shows the relationship between the statewide rate of hotel and motel room occupancy in Michigan’s lodging market, barometers of highway vehicle travel mileage, airline and railroad passenger traffic, and an index of the value of construction put in place. Construction, after topping out at level of 120.1 in 2008, plummeted to 81.1 in 2009 (2007=100) and then 28.9 in 2011, much of it due to a drying up of financing as well as low occupancy levels. Construction recovered to 34.9 in 2012 and an estimated 38 in 2013 as the result of an improvement in occupancy, growth in passenger traffic, and the start of large-scale hotel renovation expenditures in Detroit. The drop-off in vehicle mileage reflects residents are driving fewer miles due to higher fuel costs, a lesser number of persons commuting to work, and more use of other modes of transportation. The reason construction investment lags change in occupancy is the amount of time typically taken by hotel/motel operators to assess whether business conditions causing the upturn in occupancy have a strong basis, whether present and likely future profits justify a construction investment, locating financing for the investment, and its planning and design, if the investment provides a reasonable payback.
mi cHiGaN mERiT
outlook
ECONOMIC
Recreation and Entertainment Market Begins Recovery Construction in the recreation and entertainment market is contrasted in Exhibit 9 with a measure of the number of attendees at athletic and cultural events presented at several major venues
where those events are traditionally performed. Attendance, as expressed by its barometer, shrank to a level of 92.3 in 2010 (2007=100) from 96.9 in 2009 as a product of the contraction of household spending power and business budgets as result of the recession.
The barometer then expanded to 96.4 in 2011, 100.4 in 2012, and an estimated 100 in 2013 with the strengthening in household income and loosening of budgets accompanying the state’s economic recovery. The value of construction put in place, per its index,
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17
outlook
ECONOMIC
MICHIGAN RECREATION & ENTERTAINMENT MARKET / Exhibit # 9 ! ! CONSTRUCTION ACTIVITY! Construction Index ! Attendance Barometer 120!
(2007 = 100)!
(2007 = 100)!
Attendance Barometer!
120!
Construction Index!
100!
100!
80!
80!
60!
60!
40!
40!
20!
20! Source: Several entertainment venue reports & press releases & FMI Consulting Building Project Surveys! !
0!
03!
04!
05!
06!
07!
08!
09!
10!
11!
12!
MICHIGAN NON-RESIDENTIAL CONSTRUCTION ACTIVITY / NON-FARM EMPLOYMENT CHANGE !!
Construction Index ! (2007 = 100)! 120!
13 Est.!
0!
Exhibit # 10!
Employment Change (000)! 150!
100!
100!
50! 80!
0!
-50!
60!
-100!
40!
All Markets Construction Index!
0!
-150!
Employment Change - (000 Advanced One Year)!
20!
-200!
03!
04!
05!
06!
07!
08!
fell for four consecutive years in 2008 through 2011 before recovering to a level of 71.5 (2001=100) in 2012 and an estimated 75 in 2013. Non-Residential Markets should Rise Exhibit 10 sets forth the outlook across all non-residential markets, as measured by an index of construction 18
W I N T E R 2014
09!
10!
11!
12!
13 Est.!
14 Fcst.!
-250!
put in place in all markets compared with change in both private and public sector employment. Overall construction going into place is projected to rise to a level of 71 in 2014 (2007=100) after stabilizing at 67 in 2013 and 67.3 in 2012, up 63.8 in 2011. That compares with a forecast of 65 for 2013 (2007=100) predicted one year ago. Employment change (advanced one year) is estimated to have grown by
70,000 in 2013, up from 34,000 in 2012, but down from 95,000 in 2011. Such change is advanced one year to show the impact that net job creation or loss has on the lag in construction, or lack of it, across all classes of buildings where occupancy growth is slack in contrast to earlier recovery periods. What external factors have been restricting or stimulating non-residential construction in several markets? • First, a substantial inventory of vacant space in classes and sizes of buildings built up with the statewide lay-off, retirement, or relocation of 430,000 employees during Michigan’s one-state recession in 2001 to 2007 and the 424,000 jobs lost in the 2008-09 recession. • Second, demand for nonresidential space has been limited with creation of only 252,000 jobs since 2010. • Third, non-residential real estate investment and commercial mortgage lending in Michigan remains constrained. Besides excessive building vacancy and moderate job creation, lenders are hesitant to finance construction work with weak landlord cash flow due to low rental rates, high building vacancy, and losses absorbed related to commercial mortgage foreclosures during the recession. Many businesses, despite buoyant profits, remain wary of investing due to tax, healthcare, and regulatory policy uncertainty. Government and school budgets are still tight. Construction materials prices and trades wage rates continue to rise. Some of these factors are also limiting the ability of many landlords to refinance their mortgages as they come due. MM Don Wilson is a consulting economist for ABC of Michigan.
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Development
BuSINESS
Growing by Association by Mary Boardway, MBa, CaE One of the most common requests of association members is how their association membership can help to grow their businesses. Business owners know that without growth, their businesses will not be profitable in the future. Growth is the result of investing in your business using one or more strategies. Without growth, profits will decline. Because variable and fixed costs increase over time, sales that remain constant will cause a resulting decrease in profits. Employing the benefits of your association membership is a cost-effective path to implementing your growth strategy. In fact, a direct and indirect raison d’être for any association is to help their members be successful, whether they have business members (trade associations) or personal members (societies).
you sell to. This is by nature the most risky growth strategy. Both the products and market are non-proven entities to your organization, however, with great risk is the opportunity for greater rewards. This is also referred to as innovation. association Member Benefits Trade associations sell memberships by offering members a value proposition that is appealing to their specific segment of the business world, much the same as a sales person offers a product or service to meet the needs (either perceived or real) of their customers. This value proposition meets the members’ needs by offering them a unique set of benefits, both tangible and intangible,
Growth strategies To grow a business, one of four courses of action could be employed, each with different risk factors and financial commitments attached. These are: 1. New market development: offering your current products to new markets. New markets can be a previously untapped segment of your current market or a new market altogether. The market development growth strategy requires some knowledge of your current markets and the ability to find a new market niche that has not yet been tapped by your company. 2. New product development: offering new products to your current markets. As the name suggests, this strategy involves introducing a new product or service to your existing market segment. Obviously, there needs to be knowledge of what products your market needs that it is not being offered (or not offered at a competitive price, etc.). 3. Increasing your market share: selling more of your current products to your current markets. Also referred to as market penetration, this involves selling more of what you are currently selling to the same market to gain a greater market share (or customer base), often through price decreases (sales) or increased marketing activities. 4. Diversification: changing both the products you sell and the market
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Development
BuSINESS
GROWTH STRATEGIES CHART
GROWTH sTRaTEGIEs CHaRT
MARKETS
Lower Risk Higher Risk
CURRENT NEW
PRODUCTS
Higher Risk Lower Risk
CURRENT Increasing Market Share (Market Penetration)
New Product Development
NEW
New Market Development
Diversification (Innovation)
that they either cannot acquire on their own or can acquire at a reduced rate as a result of their association membership. Both the tangible and intangible benefits can create the opportunity for business growth if recognized and used for that purpose. using Your association Membership Using one or more of the aforementioned strategies for business growth is something that most associations can assist you with. By their very nature, membership organizations (associations) facilitate the exchange of ideas and the opportunity for new relationships, which can lead to increased
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business growth. In the business world, networking is valuable; any opportunity to network is an opportunity to market. The trick is to look beyond the face value of the membership benefit to what it can lead to or be used for in a secondary capacity. Here is a look at association benefits that can assist you in your business growth strategy. • New Market Development. If you are looking to develop new markets to pursue business growth, your association offers educational and networking functions that can be a great avenue to finding new markets for your current products. Some of the tangibles you may receive from your membership to help with this strategy include membership directories, buyers guides, or marketplace listings in trade publications, as well as advertising opportunities in association publications and as a sponsor at association events. Directories or marketplace listings, either electronic or in print, can allow you to find the new markets (or customers) you are seeking and can also allow other members to find you as a supplier of a product or service they are seeking. • New Product Development. If this is your chosen growth strategy, you will have already researched the needs in your marketplace and have an idea of the interest in your new product or service. Now you just need to make that new offering known to your market. Since you are already familiar with the market, you will already be aware of the most effective channels for marketing to your customer base. In addition to your regular methods, your association can help expand your marketing tactics. Using the association’s opportunities to advertise and sponsor or exhibit at a trade show, you can trade on your already established name and reputation to get the word out to your market. As a known commodity in the market, you will not have to prove your company’s reputation, which increases the likelihood of a sale. • Increasing Market Share. In addition to the advertising, sponsorship, and exhibitor options already discussed previously,
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Employing the benefits of your association membership is a cost-effective path to implementing your growth strategy. participating in association events can be a very cost effective part of your marketing plan. Your target market already knows your company and your product when you use this growth strategy. This provides a distinct advantage, as you don’t have to sell yourself or your product—just demonstrate how more or diverse uses of it can add greater value for the customer. Playing a round of golf with a current customer or having dinner at a membership meeting allows you to talk one-on-one with that customer and show them how doing more with your company can be a cost savings or increase the return on their investment or how it offers another benefit they are seeking. In addition, you know whom your marketing will reach when you market through your association, so you can target specific offerings to that audience. • Diversification. As the riskiest of strategies, to be successful at growing your business through innovation or diversification it is of primary importance that you join and participate in the association that is at the heart of your intended market. Your opportunities to interact with and learn from those who have already embarked on the road you are looking to tread is invaluable. Since this is a new market and a new product or service for you, it is wise to learn from those who have done it before, or at least those who have served the market you are targeting even if your product is completely new to the market. Participating in every meeting or work group and attending or sponsoring every function possible is crucial if you are employing a diversification strategy for growth.
nothing will change. It has been said that failure to plan is a plan to fail. However, it is also true that we can plan and plan, but the plan won’t work unless we work the plan. In short, to borrow a slogan from Nike—Just Do It. MM
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Final steps Discussing with your association’s representatives your plans for growth and what benefits membership offers that can be of use to you is an important first step in planning your growth strategy. Investing in an association membership will pay great return on investment for any company looking to grow its business. The final crucial step to make your association membership valuable is to take advantage of what it has to offer. You have to take action. It is similar to being given medicine for an ailment; you can know that it will make you better and even purchase the medicine, but unless you actually take it, it won’t work. If attending a self-improvement seminar, you can buy all the tapes and learn all the lessons, but unless you put them into practice, www. a b c m i . com
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23
PREvAIlING WAGE DENIES TAxPAyERS 315 NEW SChOOlS
A
new study by East Lansing-based Anderson Economic Group found that Michigan’s prevailing wage law is costing taxpayers and draining millions of dollars per year from the state’s public universities, community colleges, and school districts by driving up the costs of construction projects. With no additional taxpayer funding, more than 315 elementary buildings could have been built in the past decade with the money lost to prevailing wage. “Over the past 10 years, Michigan taxpayers spent $224 million per year more on construction projects for K-12, community colleges, and higher education than they would have without the state’s prevailing wage law raising construction labor costs,” says Alex Rosaen, a senior consultant at AEG and one of the study’s authors. “The findings add to the mounting evidence about the wastefulness of prevailing wage and provide further support for repeal of the law,” says Chris Fisher, president of Associated Builders and Contractors of Michigan, which commissioned the impartial study. “Not only is the law costly and outdated, but also it denies local choice to school and university leaders who are entrusted by citizens to wisely manage financial resources,” Fisher explains. “Prevailing wage requires the public to pay artificially high wages on statebacked construction projects, reducing money for other vital needs with no return on investment for such unjustifiable cost overruns.” The study’s release comes as bills that would eliminate Michigan’s prevailing wage law are pending before the state legislature. ABC points to unnecessary wasteful spending in a time of depleted construction budgets as a key 24
W I N T E R 2014
mi cHiGaN mERiT
affairs
GOvERNMENT
reason for its support of the legislation. Michigan’s prevailing wage law, on the books since 1965, requires that workers on construction projects whose financing is backed by the state adhere to the prevailing wage for the area in which the project is located. The law requires all construction firms to pay wages and abide by work rules based on provisions in union agreements, even though unions represent less than 20 percent of the industry’s workforce. The law lacks transparency, as taxpayers, public officials, and educational entities have no say at the bargaining table while the prevailing wage mandates are issued. Only seven states have similar laws applying to the construction industry; the other 43 states either have no such mandate or more fairly and accurately determine wages based on an actual sampling of construction workers. The artificially high wage mandates for publicly funded work are well above the average state construction wage of approximately $47,000. “Construction is already more highly compensated than most other industries in Michigan. The unnecessary overspending
• • • •
• • • •
“Prevailing wage requires the public to pay artificially high wages on state-backed construction projects, reducing money for other vital needs with no return on investment for such unjustifiable cost overruns.” — Chris Fisher is money that could have been invested in necessities such as hiring new teachers, upgrading technology, or building new schools,” Fisher notes. “At a time of depleted education budgets, parents, students, and taxpayers deserve more than being saddled with unfunded mandates such as prevailing wage.” After reviewing the results of the study, the Detroit News
• • •
•
• • • • •
TRUSTED TRAINING Optare Services provides consulting and training for construction professionals. With the recent OSHA law requiring certification for any person engaged in a construction activity who is operating a crane, it is critical that you can trust your trainer. Optare can customize the training and administer testing needed to meet all requirements and certifications in cranes, signal person and rigging. Optare provides the options you need to assure your employees receive the proper and required training.
5037 Baker Rd. • Bridgeport, MI 48722 989-245-3963 optare@charter.net www.optareservices.com
MEMBER
NCCER Testing is available
www. a b c m i . com
Professional, Customized Training in
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agreed. In an editorial November 25, 2013, the newspaper writes that “the prevailing wage law that has existed for too long in Michigan is unfair to taxpayers, builders, and construction workers. It creates high costs for education building projects and works against job creation. Proposed bills in the legislature would repeal prevailing wage, and we think they should pass, in light of a new study highlighting the damage done by the act.” The Detroit News editorial board made the point that Michigan’s leadership has been working hard to make Michigan into a business-friendly environment again, and that prevailing wage is a costly piece of red tape that makes total sense to remove, while saving the state money. “Repeal of the prevailing wage law would enhance measures taken by the state recently, including passage of the right to work, to improve Michigan’s business climate. The package of bills should be passed. There’s no reason to continue the excessive costs when building schools,” the newspaper states.
Legislation has been introduced in both the Michigan House and Senate to repeal the mandate. In the Michigan House, House Bill 4172, sponsored by Rep. Amanda Price (R-Holland), would repeal the law completely, while House Bill 4173 (Rep. Peter MacGregor, R-Rockford) facilitates the repeal. House Bill 4174, sponsored by Rep. Brad Jacobsen (R-Oxford), addresses some issues by exempting schools from the current law. These bills all have eight or more co-sponsors. Sen. Arlan Meekhof (R-West Olive) leads the charge for repeal in the Senate, having introduced Senate Bills 157, 158, and 159 to repeal the law. Fifteen other senators join Sen. Meekhof in co-sponsoring the legislation. The full study on Michigan’s prevailing wage law is available at www. PrevailingWageTruth.com.
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CAPITAL INSURANCE GROUP Over 30 years experience working with construction professionals seeking cost effective coverage, combined with friendly, extraordinary service!
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248/333-2500 • Fax 248/333-2504 1263 West Square Lake Road • Bloomfield Hills, Michigan 48302-0845 www.cap-ins.com
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M I K E W A A L K E S · L I G H T H O U S E G R O U P. N E T 800.344.3531 EXT 7812
Protect Your Worksite with Summit’s Expert EH&S Training Get the job done while saving lives, time, and money with Summit’s safety and compliance construction training program line-up: • • • • • • • • • • • •
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Access America’s Top Skilled Craftsmen. Detroit: 877.511.0006 Grand Rapids:877.942.8933 Kalamazoo: 877.345.3950
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Call our office nearest you to access Safe and Productive Craftsmen!
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5701 Safety Drive, Belmont, MI 49306 • Phone: 800-886-1614 • Fax: 616-784-1140 www. a b c m i . com
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us Court of appeals again upholds Michigan’s Fair and Open Competition act Associated Builders and Contractors of Michigan recently applauded the Sixth Circuit U.S. Court of Appeals for again upholding Michigan’s 2011 law that prohibits governmentmandated project labor agreements on taxpayer-funded construction projects. “Once again, the U.S. Court of Appeals has sided with Michigan taxpayers and denied a frivolous motion that wasted the court’s time by asking them to reconsider their previous decision,” said Chris Fisher, president of ABC of Michigan. “The court’s decision means that Michigan’s commitment to fiscal accountability and non-discrimination was further secured. We’re pleased to see that equal opportunity to compete for business remains the law of the land.” In a decision handed down November 27, 2013, the 6th
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Circuit Court denied a motion filed by the Michigan Building and Construction Trades Council to have a rehearing on a September 6, 2013 decision that upheld the Fair and Open Competition in Governmental Construction Act, as amended in 2012 (Public Act 238). The Court’s Nov. 27 order noted that the “issues raised in the petition [for rehearing] were fully considered upon the original submission and decision of the case.” Numerous studies show PLAs discourage merit shop contractors and workers from competing for public construction contracts, thereby increasing costs to taxpayers and discriminating against the 81.2 percent of Michigan’s construction workforce that does not belong to a labor union. PLAs typically force contractors to hire most or all of their craft employees from union hiring halls, follow inefficient union work rules, hire apprentices exclusively from union apprenticeship programs, and pay into union benefit plans on behalf of employees, even if they have their own qualified benefit programs. MM
Have prevailing wage jobs left you hanging in a tough spot? We can help. With a supplemental unemployment plan from BCT Benefits, you provide a fringe benefit for your employees which pays them when work isn't available.
Unlike a cash raise, contribution to the plan are not subject to labor burden, overhead or taxes - so you can bid more competitively and realize additional profits. Accounting and Audit • Tax • IT Consulting • Succession Planning • Business Valuations • Cost Reduction Programs • Cost Segregation Studies • Retirement Plan Development & Evaluation • Bonding/Surety Assistance • Entity Selections
Go ahead, you get the jobs . . . We’ll be your safety-net
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Call 877-924-3228
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Ronald H Chambers
17600 Northland Park Ct. Independent Associate Southfield, Michigan 48075 Vice President of Group Marketing o: 313-215-5304 tf/f: 877-875-8203 r_chambers@legalshield.com www.legalshield.com/HR/Presentation
E L E C T R I C ELECTRICAL CONTRACTOR COMMERCIAL / INDUSTRIAL RESIDENTIAL SERVICE / CONSTRUCTION
32733 Folsom Farmington Hills, MI 48336
248-471-2277 248-471-6550 Fax
www.RCI-Electric.com ww w. a b c m i . c o m
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REAL ESTATE & DEVELOPMENT • DESIGN/BUILD CONSTRUCTION MANAGEMENT • BUILD TO SUIT/LEASEBACK LEASE SPACE • COMMERCIAL PROPERTIES • GENERAL CONTRACTING
LOCATE • DESIGN • BUILD 1284 EAST CHICAGO ROAD, QUINCY, MI 49082 Phone: 517.639.4656 Fax: 517.639.3361 www.parrish-excavating.com An Equal Opportunity Employer
An Upper Peninsula Contractor Serving Michigan
906-482-3000
Accent Window & Door
www.moyleusa.com
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Replacement & Repair New Construction Windows Sash Replacement-Fogged Glass-Broken Seal-Wood RotVinyl & Wood Clad Replacement Windows 13036 23 Mile Road Shelby Twp. MI 48315 586-843-3461 www.Awad23.com accentwindow@hotmail.com
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Great Lakes Industrial Supply 6612 N. Telegraph Rd. Dearborn Heights, MI 48127
Shafer Redi Mix Inc. - Shafer Bros., Inc
Phone: (313) 274-9800 Fax: (313) 274-7849
Portable Onsite Concrete Plants Available Nation Wide
517-629-4800
www.shaferredimix.com • www.shaferbros.com
Locations in Michigan & Ohio
Jackson, MI • Mason, MI • Albion, MI • Battle Creek, MI • Montpelier, OH
3115 Dixie SW Grandville, MI 49418
www.ExcelElectricInc.com Toll Free: (877) 283-3450 Phone: (616) 532-9575 Fax: (616) 532-3632 Contracting – Service – Design – Electrical Excellence – Since 1983
Your Total Security & Integration Solutions Provider
Ronald O. Colvin 575 E. Isabella Road Midland, MI 48640 ronc@securecominc.com www.securecominc.com
ID
ICHIGAN ATERIALS, INC.
Owner O: (989) 837-4005 C: (989) 615-3384 F: (989) 837-3289
Concrete & Asphalt Aggregates • Sand & Gravel 6966 Fisher Rd. • Jeddo, MI 48032
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1627 West Lafayette, Detroit, MI 48216 (313) 964-2763 Fax: (313) 964-2324
Licensed and Insured Affiliated with Young Detroit Builders HUD Section 3 Qualified
Office: 231-726-4046 Fax: 231-726-4294 Cell: 231-578-4457 565 B W. Western Avenue P.O. Box 975 • Muskegon Michigan 49443-0975 nwj@waterstoneinsurance.com www.waterstoneinsurance.com
Bob Koster Jr.
MidMichMat.com
O: (810) 327-6251 F: (810) 327-6037 general@MidMichMat.com
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YDB Contracting
Putting Detroiters to Work!
Plumbing Co., Inc. COMMERCIAL - RESIDENTIAL Email: rkoster@ksplumbing.com
mi cHiGaN mERiT
index
ADvERTISER
ABC Self Insured Workers Compensation Fund ...................... 32 Accent Window & Door .......................................................... 30 AIS Equipment ........................................................................ 29 Alma Painting Incorporated....................................................... 5 Andrews Hooper Pavlik, PLC .................................................. 28 Answer Heating & Cooling, Inc............................................... 19 ASHA Safety ............................................................................ 23 Attitude & Experience, Inc. ..................................................... 19 Barrett Paving Materials, Inc. ................................................... 21 BCT Benefits Plan .................................................................... 28 Blue Star Inc. ............................................................................. 5 Brad Lubahn Landscaping & Tree Moving Company ................. 5 Brigade Fire Protection ............................................................ 27 C&R Electric, LLC..................................................................... 5 Capital Insurance Group ......................................................... 26 Capital Steel & Builders Supply................................................. 5 Century A & E .......................................................................... 5 Chuck’s Electrical Services, Inc. ............................................... 30 Commonwealth Associates, Inc. .............................................. 30 Consolidated Electrical Contractors ......................................... 17 Cornish, Zack, Hill & Associates, Inc., WBE, DBE .................. 19 Crowe Horwath LLP ................................................................ 23 Curtis Glass Company ............................................................. 19 Davenport Brothers Construction Incorporated ....................... 23 DJ Maltese Construction LLC .................................................... 5 DJ McQuestion & Sons, Inc. ..................................................... 5 EGI Solutions .......................................................................... 19 Enterprise Fleet ......................................................................... 5 Excel Electric, Inc. ................................................................... 30 Fisher Companies.................................................................... 26 Garber Chevrolet ..................................................................... 17 Grand Equipment Company ................................................... 19 Great Lakes Industrial Supply Co., Inc. ................................... 30 Great Lakes Roofing & Insulation Systems, Inc. ........................ 5 HD Supply Waterworks........................................................... 19 HNI Risk Services of Michigan .......................................... 21, 29 Independence Commercial Construction, Inc.......................... 29
Jackson Associates, Inc. ........................................................... 22 JBS Contracting, Inc. ............................................................... 31 JE Johnson Incorporated ......................................................... 29 JGM Machinery Movers & Erectors, Inc. ................................. 21 K & S Plumbing Co., Inc. ........................................................ 30 KMR Construction Services ....................................................... 5 Lakewood Construction .......................................................... 30 Legal Shield ............................................................................. 29 Lighthouse Insurance Group ................................................... 27 Liquid Calcium Chloride Sales .................................................. 5 Loomis, Ewert, Parsley, Davis, Gotting, PC .............................. 19 Merlo Construction Co., Inc. ..................................................... 5 Metrocom Technologies ........................................................... 26 Mid Michigan Materials, Inc. ................................................... 30 Moyle Construction ................................................................. 30 Optare Services LLC ................................................................ 25 Parrish Excavating, Inc. ........................................................... 30 Pinnacle Insurance .................................................................. 26 Plante Moran ........................................................................... 19 Power Door Systems, Dvn. Nabco Entrances, Inc. ................... 22 RCI Electric ............................................................................. 29 Robinson Electrical & Mechanical, Inc. ................................... 31 Ronald B. Rich & Associates .................................................... 21 SecureCom, Inc. ...................................................................... 30 Shafer Redi-Mix, Inc. ............................................................... 30 Siding World ............................................................................. 2 Summit Training...................................................................... 27 Thermico, Inc. ......................................................................... 25 Timpson Transport, Inc. ............................................................ 5 Titan Interiors LLC .................................................................. 19 Tradesmen International .......................................................... 27 US Trackworks LLC................................................................. 19 Waterstone Insurance Agency, Inc. .......................................... 30 Welch Tile & Marble Company ............................................... 21 Wm. Molnar Roofing, Inc. ....................................................... 19 Young Detroit Builders/Youth Build Detroit ............................. 30
Licensed, Insured and Bonded
Robinson Electrical & Mechanical Inc. Electrical • Installation Fresh Water Control Installation Wastewater Pumps & Controls 11475 W. Lincoln Rd. PO Box 69 Riverdale, MI. 48877
Phone: 989-833-7440 Fax: 989-833-7870
In Business For Over 30 Years
www. a b c m i . com
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PRESoRTED STaNDaRD U.S. PoSTaGE PaID LaNSiNG, mi PERmiT No. 75
Associated Builders & Contractors of Michigan 230 N. washington Sq. Suite 202 Lansing, michigan 48933
Your Self-Insured Workers’ Compensation Fund Returning Millions Back to members since 1995
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• Workers’ Compensation Insurance with a 36% Average Premium Return • Safety & Loss Prevention Services • Competitive Up-Front Pricing
abcmifund.org | administered by Regency Group | 800.686.6640 32
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