Mike Luke
First, thanks so much for the team at The Enterprise. Besides keeping us well-informed year-round, they help us appear more professional to those studying or considering Utah. At last June’s Mountainlands Area Plan Room Mid-Year Review, we presented Enterprise chief David Gregerson with an achievement award to that effect. Quality reporting, timely articles and these Focus issues all contribute.
This is not intended to “predict” but rather “remind” construction and other industry professionals. We warned the industry starting in 2006 and 2007 right up to the crash in 2008, that nothing is more unsustainable than a record year. That is true again now.
That usually means that several years in row may even exceed that or new records. So cautious activity should be high priority to prepare for slower times. The conditions that caused 2008 to be so damaging are different than what may see coming now but the warning should be heeded just the same. I feel both are and were politically created.
That said, Utah, Idaho, Colorado, Arizona and Nevada should fare well in what I believe will be a coming recession nationwide. This western microclimate has unique factors to help keep growth strong, regardless of national policies that helped to create this condition — especially for Utah and Idaho contractors.
At the Plan Room we see many “brands” continuing to expand. Some local owners, too, are plowing ahead with developments in multiple states and growing. Owner’s confidence is key. Restaurants and hotels are strong and that makes sense as it parallels the U.S. consumer right now. Hundreds of thousands of rooms are in the works nationwide.
Regardless of how busy Utah seems to be, so many local contractors appear to be satisfied and underpaid (thanks to underbidding). I have seen them miss four or five booms over my career. Even the LDS Church seems to know that identical projects cost more every couple of hundred miles away from the state.
Labor shortages are key and competition from every industry pool require industry-wide commitment to solutions. Our associations are valuable and should be joined to help participate. Loners stay that way and seldom keep themselves educated to the degree that real industry professionals prosper from.
There are three major solutions available to help the industrial labor shortage and construction has some unique characteristics that allow these. Some construction trades have starting salaries in the $60,000 to $80,000 range. Labor in the food and lodging industry, for example, cannot say that.
In many of our lifetimes, we can recall when construction was high if not No. 1 as a post-high school career option. Now it is not on the charts at all. Perhaps the industry can create and advertise a mutual solution to attract more high school graduates. The local Associated General Contractors has built a great solution for a trades training arena that many could emulate.
Women in construction is another solution. Minds greater than mine should collaborate on how to involve more of these talented and motivated participants. Industry trade associations, high school leaders and government officials should help make this a priority. Perhaps monetary incentives and training relief for employers are some solutions.
Migrants are both a fact of life and have always been a factor to some degree in many industries. Rather than creating a welfare community, let’s find ways to endear them into construction. Again, due to the nature of the conditions that brought them here, we may need to rely on state and federal participation to aid in this development.
Basic networking for contractors with peers helps get better knowledge of current pricing. Yesterday’s old news and traditions don’t help these low bidders when projects and pricing have to be dealt with months down the road. Isolation is the enemy of growth and education.
We were always surprised when we had our physical location in St. George (just an example, we’re not picking on Washington County contractors) that when work ended there or was in short supply, they held no other licenses to expand their access to projects.
We reminded them while standing in front of me that this office is at Exit 6. That is 6 miles from another market zone. So, the leaders of these firms should consider gaining the knowledge and expertise to qualify for additional bidding and work opportunities.
Even when Utah is super-busy, some contractors find other markets much more profitable. That goes for some of our local owners, too. So being prepared and qualified to travel with them just makes sense.
And remember, repeat and negotiated work is much more valuable than being the low bidder on some public works or even private projects.
Start looking into other states’ registration. Stay prepared and cautious. Subscribe to and read The Enterprise, Utah’s Business Journal.
Mike Luke is the owner of Mountainlands Area Plan Room, a plan-posting service of project bids for owners, design teams and general contractors in Salt Lake City.