MHC President, Guy Martin, took part in Nevada Business Magazine’s Industry Focus / Builders & Developers Roundtable to discuss challenges facing supply chain, workforce, COVID recovery and market uncertainty.
How are Supply Chain Issues and Shortages Constraining this Industry?
We are seeing, what I will call, “fabricated shortages”. We saw it in the late 90s with cement powder. When Cemex, who is arguably the first or second largest producer of cement powder, shut down a kiln and stopped making cement powder they fabricated their shortage. Are there legitimate supply chain issues? Absolutely. But the one thing my clients are having a hard time choking down is, [they] write the PO (purchase order) and get the order placed, but there’s fine print in the PO that says you pay a “produced” price. (This refers to the price at the time a product is produced, rather than a pre-agreed upon price.) So, they get whacked with a half a million dollar up-charge because the price went up 50 percent. Some of these pricing challenges are actually just taking advantage of a market. We’ll work around some of this, but some of it is just gouging. This has gotten to be very complicated waters to navigate.
How is a Changing Workforce Impacting your Business?
Workforce development is a big deal. All the unions have closed their apprenticeship programs because they’re under a DOL (Department of Labor) law federally that says they must have a certain amount of journeyman hours being placed before they can place apprentices. There’s no journeyman work, so they’re not taking [new applicants].
This issue goes back to the dinner table when parents make it okay for children to choose construction as a career. That’s where everything leaves the track. This is a societal issue. It took us 15 years to get where we’re at today to complain about it. It’ll take us 15 years, at least, to fix. It is a bigger discussion. There are a ton, almost immeasurable numbers, of empty apprenticeship seats because people don’t want to go into construction. This is not a programmatic issue. There is money to be made in apprenticeship, that’s guaranteed. There will always be available apprenticeship programs. This is an issue of getting parents to be okay with their kids going into the industry. When tradesmen and women work harder to prevent their children from entering our industry than they do to protect the nobility of the craft, we’re on a downward slope. That’s why our industry ages 17 months every 12 months. Tradesmen and women are not replacing themselves.
How did the Construction Industry Respond to Covid?
Our industry invented the term PPE (personal protective equipment). We understand it. I’m super proud of the industry and the way they stepped up and figured it out. I’ve never seen sneeze guards installed between two tradesmen on a boom lift and we had it at the convention center. I’ve never seen three plaster guys jump out of a truck to go shoot plaster on the outside of a building wearing masks in the truck, and they did it. Our industry responded very well. It also revealed the people that would take advantage of COVID and the trades and call out sick or take PPP (Payroll Protection Program) money. It brought out the worst of our industry, too. But, overall, our industry probably responded and behaved better than others.