Finding subcontractors difficult as construction picks up

[mark handler]

Finding subcontractors difficult as construction picks up

http://highlandstoday.com/hi/local-news/finding-subcontractors-difficult-as-construction-picks-up-20141114/

By Gary Pinnell

SEBRING — David Spain is building eight new houses at once, but when he was hired to put up a house in Golf Hammock, he brought his own Polk County subcontractors.

“Our building boom is really kicking in,” said Spain, who owns Eagle Building Contractors in Auburndale.

Why not hire local carpet layers, cabinet makers and drywallers?

There aren’t enough, Spain said. “That’s what I’m finding out.”

The Highlands County building boom isn’t on yet, said Mark Gose of M.E. Gose Construction and Upland Homes. “But there is definitely some light at the end of the tunnel. The foreclosures are being bought up, and they’re buying new homes. It’s a slow process, but we’re on the right track.”

The problem, said Building Official S.Y. Moseley, is that during the recession, subcontractors went wherever they could find work: the Las Vegas boom or the Dakota oil fields. Some returned to college and were retrained for new jobs.

But after wandering seven years in the recession desert, the construction industry is picking up again. In the past year, Spain said, banks have offered more construction loans. “And the VA has good financing for first time in a long time.”

Last October, the Highlands County Building Department conducted 481 inspections on building projects, said office manager Helen McKinney. This October, the number is up to 601.

Subcontractors are coming back. Florida added 2,100 construction jobs in September, third behind Nevada and Delaware, according to an Associated General Contractors of America analysis of Labor Department data. That’s up 11 percent from last year

“We have had 16 construction related job orders in our three counties within the last month,” said Alan Grimes, chief operations officer at CareerSource Heartland. “Some of these positions require skills specific to the job, others are seeking helpers or laborers.”

But finding workers is difficult, according to a Sarasota-Herald Tribune story.

Eighty-three percent of firms nationwide that responded to the Associated General Contractors of America survey can’t fill carpenter, equipment operator and laborer positions. Sixty-one percent are having a hard time filling professional positions, including project supervisors, estimators and engineers.

Spain sees the need for brick and block masons. “And a good quality framing crew. There’s some around here, but not that many.”

Truly Burton, executive vice president for the Florida Atlantic Building Association in Hollywood, told the Sun Sentinel that high-rise and multi-family building is booming in South Florida. She said state and local training programs are generating more workers, but that takes time.

In Highlands County, it’s still a business decision, Gose said. Contractors “are hesitant about hiring more help. They don’t know how long it’s going last. How much overhead do we hire without hurting ourselves?”

Gose currently has enough help. “We’ve got what we need. We’re staying with the guys I’ve been with for a long time.”

But it keeps getting busier said Gose, who has partnered with Lowe’s to remodel kitchens and baths. “I’m starting three more houses after this one, and I haven’t had two houses going at one time in six years. I’ve got one spec home and three custom houses,” Some houses are built on the speculation they will be sold later.

gpinnell@highlandstoday.com

863-386-5828

 

[fatboy]

We are finding the same thing here, multiplied..........the oil patch has claimed so many skilled "craftsmen", and nobody is training into these trades, because of the available high paying jobs in the oil patch. If the trades try to come up to oil field pay, the prices of homes will have to reflect it.

 

[Wayne]

Re: Finding subcontractors difficult as construction picks up

We are finding the same thing here, multiplied..........the oil patch has claimed so many skilled "craftsmen", and nobody is training into these trades, because of the available high paying jobs in the oil patch. If the trades try to come up to oil field pay, the prices of homes will have to reflect it.

My niece in North Dakota rents two rooms out in her basement for $2100 a month. It's the going rate for the oil field areas there.

 

[mtlogcabin]

The North Dakota's oil bust may be on its way. I had lunch yesterday with a drill operator and that was part of the conversation that the companies are gearing up to close some of their production wells and have already stopped drilling new wells. He stated the Balklens get about 10 per barrel less than the world market and when the world market hits 70 dollars per barrel then the Balkens will start cutting back.

Read this and then apply the fallout to any industry that has to cut back

http://fee.org/the_freeman/detail/i-pencil/

http://oil-price.net/en/articles/oil-price-fall-threatens-us-oil-production.php

[h=3]New Normal[/h]Saudi Arabia has put its foot down. In the face of triumphalist crowing about energy independence in North America the country has turned to the classic economic model of price being determined by the equilibrium between supply and demand. Not only are they not reducing their prices, they are actually cutting them. They are not lowering production levels, they are increasing them. The Kingdom has large cash reserves and they seem to be prepared to coast on their savings for as long as it takes for their competitors to go out of business. Fracking is vulnerable and will not survive a price dropunless the US oil industry reorganizes.

[h=3]Challenges[/h]Thanks to financing costs, new hydraulic fracturing sites are unlikely to be opened up if oil stays at less than $90 per barrel for any length of time. Each extraction project is different and incurs different plant investment costs, returning different profit margins. The banking industry, however, works on a blanket level of a need for $80 per barrel for a project to turn a profit. The extra $10 is needed to ensure the banks get paid back.

However, some shale oil regions, such as the Eagle Ford Shale and Permian Basin in Texas can still turn a profit selling at $53 per barrel. The problems faced when assessing any new shale oil project include distance to distribution points, local availability of accommodation, the capacity of the transport network and availability and price of expertise and staff. These factors can make crude oil cheaper to deliver from Texas or North Dakota to refineries on the East Coast, or it can make Saudi oil, arriving by tanker, cheaper than domestically produced oil.

[h=3]Solution[/h]Hydraulic fracturing became a viable business in the US because of a rising oil price and also because of falling production costs. Necessity is the mother of invention and it should not be assumed that the industry will not continue to develop cheaper methods and equipment. The shale oil producers have been living high on the hog with a gold rush mentality, spraying cash in all the communities into which they move. Therefore, there is a lot of fat to trim to bring inception and operation costs down. High payments to property owners for drilling access are probably soon to be dramatically reduced, building schools and community facilities are expensive public relations exercise that may not happen again.

Supported by technology and aggressive cost cutting, the US shale extraction oil producers can continue to expand their share of the market. Pipeline projects to distribute domestic oil to US refineries would lower delivery costs and further reduce the price disadvantages of shale oil. US producers need to be smart and act quickly, however, the Saudi Arabia Oil Policies and Strategic Expectations Center recently revealed that the Kingdom is prepared to go as low as $50 per barrel, which would be a tough price to match.