Congratulations to Paul Johnson Drywall customers D.R. Horton, Pulte Homes and Standard Pacific / CalAtlantic Group for making the Top 5 on Builder Magazine’s List of The Top 100 Home Builders in 2016!!
I am frequently asked, why, given that single-family home permits and starts are still lagging the current recovery, are we facing such a significant labor shortage?
What’s happened in residential construction, as the economic recovery has been underway, has been a shift from single-family home construction to multi-family construction. While there is a direct correlation between starts and permits in single-family delivery, because there are numerous units within one multi-family building and work within each apartment is typically more than what is required in a home, labor requirements are exponentially higher in multi-family construction.
Understanding this, all you have to do is look to the Construction Pipeline for Phoenix and Tucson reported by ABI Multifamily. Within these reports, simply compare the 2015 units delivered with the 2016 estimated unit delivery to understand the significant demands on our labor pool in Arizona. According to the report, Phoenix alone is showing an anticipated 11,000 units will be delivered in 2016 vs. 4,661 in 2015, an increase that more than doubles the demand on labor. Likewise, in Tucson the anticipated number of units delivered in 2016 is 1,000, which also is more than double the 445 units that were delivered in 2015.
The staggering growth in multi-family alone has placed higher than usual demands on the local labor pool. In addition, because of the growth, multi-family has attracted general contractors and subcontractors who have not been focused in the market previously. This broadening of firms into new markets is pulling labor from other areas and causing stress in commercial construction as well.
We’re not the only ones to recognize that the growth is significant. In the March 25, 2016 issue of the Phoenix Business Journal, bankers spoke of their transition away from financing multi-family projects. In the article, “Banks see Some Tarnish in Multi-Family’s Shimmer,” Ed Zito, president of Alliance Bank of Arizona, said his institution has moved past multifamily and said “multifamily is too competitive.” Also, David Ralston, chairman and CEO of Bank of Arizona said, “We’ve avoided lending on multi-family projects.”
As usual, the market is going to correct itself. However, due to substantial demands by the multi-family sector, the construction industry will continue to face significant labor challenges through 2016.
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1720 W. Parkside Lane
Phoenix, AZ 85027
1620 Willow Creek Road
Prescott, AZ 86301
Las Vegas Office
5957 McLeod Drive
Las Vegas, NV 89120
Firm recruits 112 and re-hires nearly 100 skilled-workers since January 1, 2016
Since January 1st Paul Johnson Drywall has been highly-focused on ensuring that our best customers can count on us to deliver on our deadlines. We began implementing major initiatives that have already allowed us to successfully recruit 112 new workers and approximately 100 workers were re-hired as permanent full-time crew members. Our growing crews are serving clients in Arizona and Nevada where some market segments are returning to pre-recession activity levels.
You may be wondering how we are doing this in such a tight labor market. Well, it’s pretty basic; we are offering every employee excellent wages and benefits, including paying the highest wages in its markets and providing all full-time employees with paid vacation, healthcare for them and their families, and bonuses for performance at the end-of-the-year. The firm’s new and returning employees include primarily experienced craftsmen who will serve as crew leaders and members. Adding the new employees has increased the firm’s permanent full time-crews in Phoenix by more than 20 percent.
“As you know, we continue to face significant labor shortages nationally and more specifically across the southwest, particularly in recent months as construction activity has been increasing. As a result, Paul Johnson Drywall is aggressively recruiting crews by offering the highest wages in the market and providing benefits that were previously unknown to crews in the drywall industry,” said Cole Johnson, President of Paul Johnson Drywall.
While these initial results are positive for our firm and ultimately provides our best customers with the confidence in knowing their deadlines will be met, the worker shortage will continue to impact the construction industry. That is why Paul Johnson Drywall is elevating its appeal to the current market workforce and working to attract brand new workers to a career in construction. In addition to these pay increases and new benefits Paul Johnson Drywall is engaged in apprentice training programs and is taking action to further build upon our seasonal worker program.
“Our crews told us what they want, and we are delivering it. We are taking actions that will help us recruit and retain employees while also expanding our labor pool to ensure we increase capacity and are able to respond to the needs of our best customers,” said Johnson.
We are focused on this, and we are willing to do what it takes to do right by our customers and our employees.
With the holidays upon us and December drawing to a close, it’s common to reflect on the past year and plan for the year ahead. During 2015, many of us were blessed to enjoy our market’s recovery, and for this we are thankful! As the recovery continues into 2016, we can anticipate the new, healthy challenges that labor shortages and material cost increases will pose to the construction and drywall industry.
At Paul Johnson Drywall (PJD), we’re proactively taking steps to foster an environment where our workforce is well-cared for and productive, which is also attracting more workers. In fact, this topic was the theme of the Department of Labor’s (DOL) Future of Work Symposium, which I was invited to participate in earlier this month, in Washington, D.C. The symposium brought together the public and private sectors to discuss the evolving workplace and share best practices.
PJD constantly strives to be a better employer, an effort which we feel ultimately makes us a better drywall contractor. During my time in Washington, I was asked to share what PJD has been doing to advance our labor standards and how those actions have affected the company, and I want to share it with you as well.
The primary actions taken include PJD shifting to a W-2, or a direct employment, model. Because of this shift, PJD is paying industry-best wages to our crews and has allowed us to also provide health care to each of our employees and their families. As a result, PJD now has nearly 1,000 employees who are loyal to our firm, and committed to delivering for our customers.
While we remain aware of the growing labor shortage, I am proud to say that PJD is able to meet our customer’s needs as a result of our industry-best employment practices. Our loyal crews position us very well for the year to come, and we are proud to be able to produce for our customers, irrespective of industry shortages.
As I prepare to celebrate the holidays with my family, I would like to thank Paul Johnson Drywall’s loyal employees and customers for all of their support during the past year. I look forward to prospering through 2016, together.
R. Cole Johnson
President, Paul Johnson Drywall
This year, we have much to be thankful for at Paul Johnson Drywall.
Thank you to our customers, business partners and crews for making 2015 another successful year.
We appreciate the confidence our customers showed us again this year, calling upon PJD to complete more homes and multi-family projects than we’ve had the opportunity to finish in recent years. We are also grateful to our business partners, who make it possible for us to meet these demands.
And, to our crews and office staff who worked hard all year to make deadlines, THANK YOU! I want to recognize you in particular, for again going above and beyond these past few weeks to make our year-end commitments. Without you, we could not have completed the 85+ additional homes needed by our customers for their year-end sales.
Wrapping up these most challenging weeks of the year, please accept my deep appreciation and best wishes to each of you and your families for a happy, safe and healthy Thanksgiving.
Enjoy the holiday all, Happy Thanksgiving!
R. Cole Johnson
President, Paul Johnson Drywall