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.
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.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.
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,
