Message from Doug

Fire Fighting and the Red Hot Housing Market

Owners and employees of small businesses are often fighting fires – those issues within the company that need your immediate attention.  These fires can be as small as delivering forgotten supplies to a jobsite, or as large as line of credit restructuring with your banker.  As your company grows and you get better at delegating, you handle less of the supply delivery-type fires, but there are plenty of large fires to put out.

Most of the fires we’ve been fighting here at Herbert Construction Co. lately are caused by the recent explosive growth in the Atlanta housing market. 

The low housing inventory has driven prices up, allowing home builders to begin building new homes.

All of this new activity has us fighting fires in the following areas:
1. The rapid increase in new home construction has placed foundation contractors in high demand.  I’ve been contacted by builders that were desperate for a concrete contractor.
2. As foundation contractors get busy, their schedules fill up and builders have to wait longer, causing their construction schedules to get extended.
3. This limited supply and higher demand for foundation contractors has naturally led to price increases.
4. There is a shortage of laborers to perform all of the work.  The once plentiful Hispanic labor force is non-existent due to GA lawmaker policies.  See page 2 for more on this.
5. The price increase for redi-mix concrete has now taken effect (along with lumber, steel, and almost everything else).

While these may be problems to work through, they are good problems to have.  We are very thankful for this increase in building activity.
According to the Atlanta Business Chronicle:
Metro Atlanta’s home values jumped 13.4 percent year-over-year and increased 1 percent from Dec. ’12 to Jan. ’13 (the biggest gain since summer of 2006).
Residential contracts for future construction rose 48 percent to $307.5 in the month of February alone.
In February, there was a 1.8 month supply of bank-owned housing inventory and 3.2 months supply of non-bank owned inventory. 

We’ve benefited from this increased activity in more ways than one.  One of those ways is our ability to construct multiple foundations at one time.  Most small foundation contractors are limited by their equipment and can only construct one basement foundation at a time.  This was good enough for most home builders throughout the slow housing market over the last 6 years.  They were able to get by using a small foundation contractor. 

With new home construction kicking into high gear, many small foundation contractors are unable to keep up with demand.  Home builders are waiting 2-4 weeks for their basements to be constructed. 

This is where our large size comes in handy.  With 11 sets of wall forms, we are able to construct multiple basements at one time.  This is a huge benefit for our clients that have surges in their sales.  And, we’ve recently added new clients because of this. 

Of course, when one fire is put out, another flares up.  Our larger company size has us facing the 50 employee threshold of the forthcoming Obamacare plan.  Oh well, it’s just another issue to manage.  We’ll figure it out.

To your success,

Recent Referrals



Spring has officially arrived!  It’s time for planting the garden, mowing the lawn, and enjoying some of the most beautiful weather of the year.  As we move along, we want to stop for a moment to thank those who have recently referred our company. Thanks so much!

Kyle Henry, Kyle V. Henry, Inc.   Builder  kvhbuild@comcast.net

Matt Clark, Landmark Builders Group – Builder  mattc@landmarkbuildersgroup.com

Jeff O’Connell, Cobalt Contracting – Builder  jeff@cobaltcontracting.com

The Looming Labor Shortage

By Barry Herbert
How many of you are currently experiencing a difficult time hiring quality help?  The unemployment rate is still historically high, but if you run a construction contracting firm, you’d never know it.  Many of the trade contractors I’ve spoken with can’t hire people who want to work.  There are plenty of people who apply for the jobs available, but when they are hired, few will actually give you a good day’s work. 

In the foundation business, which is very hard, dirty work, two out of three new hires may not show up for work the next day.  The one that does may quit before the week ends.  If he does make it a week, there is a very good chance you’ll be forced to let him go, because he really doesn’t want to work and does as little as possible.

Several things have caused this shortage.  We’ve all experienced the recent 5-7 year housing recession; the longest and most severe in any of our lifetimes. During that period of time workers were forced out of the construction industry in huge numbers.  There simply were no jobs to be had in many areas. 

A typical recession lasts one or two years, and people leave their respective industries to seek other employment.  When the work in their field returns, most will return to a job similar to the one they were forced to leave.  But when your profession evaporates for five plus years, large majorities of the people affected are forced to find permanent employment elsewhere.

Construction jobs are not considered good career choices.  Forty years ago there was an abundance of young people eager to learn a construction trade or just start out as a general laborer.  At that time, construction jobs were sought after, and considered by most people to be good, stable career choices. Construction workers in general and skilled tradesmen in particular, were highly paid compared to most of the population; including factory workers, teachers, office workers, etc. 

Twenty-five to thirty years ago several things started to change:
  • We as a country gradually are no longer an agricultural society.  Years ago, young people that had grown up working on the family farm or on the neighbor’s farm were taught how to work hard at an early age.  Baling hay, for instance, is a physically demanding and dirty job.  Construction work was a natural progression for those who decided to leave farming.  When was the last time you had a farm kid apply for a job?  Most farms now are large corporate endeavors with zero kids working there. 
  • With the advent of cable TV, the internet, and multiple gaming devices there are fewer reasons for kids to go outside and play.  For a few years I lived in a subdivision that, by all appearances, was devoid of children.  Then one day I happen to be going home just as the school bus was dropping off dozens of kids.  They milled around talking to each other for a little while, and then went to their respective homes for the rest of the afternoon.  You would never know children lived there because they sure didn’t play outside.  Let’s face it.  If you’ve grown up on a PlayStation or a Nintendo you probably aren’t going to be the construction worker type.
  • A few short decades ago, a college degree wasn’t considered a requirement to being successful.  Working with your hands wasn’t looked down upon by society.  High school graduates, who in years past would have loved to work on construction, now look down their noses at those same jobs. High School students now believe the only way to be successful is to have a college degree.

Is college a necessity for everyone?  Don’t get me wrong, there is nothing wrong with a college education.  But is it really necessary for everyone to go to college?  Currently 50 percent of college graduates can’t get a job commensurable with their education, and yet most wouldn’t think of taking a construction job.  Young people going to school used to want a summer job.  Not any more.  Wouldn’t an apprenticeship or trade school serve many students better?

The temporary fix.  For at least two decades, the construction industry has been forced to partially make up for this shortage by hiring tens of thousands of illegal immigrants.  Right or wrong, it’s a fact.  Many of those immigrants have either left the country or found other careers.

At the same time, many strict new immigration policies have been instituted, requiring, among other things, that all workers be E-verified through the federal government.  In certain states, illegal immigrants can be arrested when discovered during routine traffic stops.  Some local municipalities have made laws requiring landlords to verify documentation prior to renting to anyone.

Additionally, some of these new laws have had the unintended consequence of chasing away immigrants who have the proper paper work; because the perceived notion—justified or not—is that they will be harassed by law enforcement and possibly end up in a jail cell somewhere.

How do we solve the problem?  It’s not practical to think that we will return to an agricultural society or that our young people will stop playing video games for hours each day.  But we can encourage vocational training in high schools.  Home Building Associations and other construction organizations could actively promote working in the building trades as a viable career.

I’m all for closing the border to stop illegal immigration.  But I’m also for legal immigration and/or guest worker programs. Everyone talks about relaxing immigration standards, but only for highly skilled individuals such as doctors, engineers, etc.   We also need people who are willing to do the jobs most American citizens no longer want to do at almost any wage; like construction, landscaping, washing dishes, and picking crops.  Currently, it’s extremely difficult for non-college educated workers to immigrate to the U.S. legally. And almost impossible to become legal once they have come here illegally.

In light of these changes, our company is making every effort to mechanize everything we can think of.  The more we can do with a machine the less we need to rely on help that we can’t get. But homes still have to be built by people, not machines.

This article was originally published in the January 2013 edition of Concrete Homes +  Low-Rise Construction magazine.  Barry and Doug Herbert are regular contributors to this important trade publication.

Historic Concrete Projects

Ward’s Castle
Although there were exceptions, during the 19th century, concrete was used mainly for industrial buildings. It was considered socially unacceptable as a building material for aesthetic reasons.  The first widespread use of Portland cement in home construction was in England and France between 1850 and 1880 by Frenchman Francois Coignet, who added steel rods to prevent the exterior walls from spreading, and later used them as flexural elements.  The first home built using reinforced concrete was a servant’s cottage constructed in England by William B. Wilkinson in 1854.  In 1875, American mechanical engineer William Ward completed the first reinforced concrete home in the U.S. It still stands in Port Chester, New York. Ward was diligent in maintaining construction records, so a great deal is known about this home. It was built out of concrete because of his wife’s fear of fire, and in order to be more socially acceptable, it was designed to resemble masonry.  This was the start of what is today a $35 billion industry that employs more than 2 million people in the U.S. alone.

The Grand Coulee Dam in Washington, completed in 1942, is the largest concrete structure ever built. It contains 12 million yards of concrete. Excavation required the removal of over 22 million cubic yards of dirt and stone. To reduce the amount of trucking, a conveyor belt 2 miles long was constructed. At foundation locations, grout was pumped into holes drilled 660 to 880 feet deep (in granite) in order to fill any fissures that might weaken the ground beneath the dam. To avoid excavation collapse from the weight of the overburden, 3-inch pipes were inserted into the earth through which chilled liquid from a refrigerating plant was pumped. This froze the earth, stabilizing it enough that construction could continue.

From The History of Concrete - InterNACHI http://www.nachi.org/history-of-concrete.htm

Welcome!

We’d like to take this opportunity to welcome James Armstrong to Herbert Construction Company. 

James has been brought on as our new estimator and will also help manage our bigger projects.

Feel free to contact James with your estimating questions at
770-795-0103.

Congratulations



 In January, we held a drawing for a dozen Titleist Golf Balls.  The winner was Gregg FitzGerald of SR Homes. 

Be on the lookout for more contests and product giveaways in the coming months.  We think our newsletter readers deserve a free gift every now and then, don’t you?