We are all tired of hearing about how bad the economy is. It seems that every article we have seen over the past five or six years has included some theme about the down economy and how it impacts our various industries. Some have proven to us that times are tough (as if we didn’t know that), some have told us how to survive, and some have told us how to use it to our advantage. Well as a sign of a new era, West Michigan is entering a time with a new problem.
Somewhere in the neighborhood of 2 million construction jobs were lost when the recession hit. West Michigan was not immune to this and the result was a lot of small construction firms and subcontractors were hit hard and many companies went under or had to cut crews to match the amount of work they had. With other industries like health care, education and multifamily markets coming back, this has trickled down to an uptick in the construction industry in West Michigan. So much so that those small construction firms and subcontractors are being stretched thin because there is so much demand.
Basically in short, because the subcontractors had to constrict to match the demand for their services, now that the economy is rebounding and the demand is starting to increase, there are not enough subcontractors to go around.
With the West Michigan construction season getting geared up, especially for the schools that have a short period of time to get projects done while students are gone for the summer, contractors are noticing that subcontractors are not as easy to find as they used to be. While most contractors don’t believe this to be a huge issue at this point, they acknowledge that Grand Rapids subcontractors are quickly approaching capacity.
This issue impacts both contractors and subcontractors. Contractors have to be careful when hiring subcontractors. Subcontractors want to take on as much work as possible, contractors could easily find themselves with a subcontractor that has stretched itself too thin causing delays and poor workmanship.
On the flipside of that coin, subcontractors have to make sure to not over extend themselves or attempt to grow faster than they can handle. Knowing what your capacity of projects is and having the wherewithal to say that you can’t handle more than that (despite the desire to strike while the iron is hot) is important. On top of that, it could be easy to see the demand and hire new employees but this could lead to potentially hiring too many employees that you are not familiar with and not meet the quality of work you are known for. Also, if the next season is not as demanding as this year, you might find the same issues you had a few years ago.
Avoiding potential disputes over quality of work or meeting deadlines is so very important for both contractors and subcontractors. The construction industry is fraught with potential litigation issues. Adding the potential of overworked subcontractors, the potential cost of settling disputes can grow exponentially. Having a Grand Rapids small business attorney that can assist you in analyzing your risk potential and help you avoid those costs will actually make you money.
Source: “Contractors keep tabs on shorthanded subs” by Elijah Brumback of MiBiz