This article originally appeared on BUILDER’s sister site, Remodeling.
By all indications it’s going to be a banner year for replacement contractors who are enjoying sustained growth in the midst of the ongoing recovery. But that growth could be much higher if not for one persistent problem: the labor shortage.
“Definitely, growth would be stronger and our projected growth would be stronger if not for the labor shortage,” confirmed Paul Emrath, NAHB economist.
In fact, more than 51% of remodelers are turning down some projects due to the labor shortage and 35% are losing or canceling sales altogether, according to NAHB surveys.
The organization’s Remodeling Market Index shows 91% of remodelers reporting labor shortages for finished or rough carpentry with more than 40% of those shortages seen as “serious.”
“The bottom line is that for every one of the 12 trades covered by NAHB’s RMI survey in both 2016 and 2017, the share of remodelers reporting a shortage jumped by more than 10%,” Emrath wrote in his Eye on Housing blog. “The common effects of the shortages have been causing remodelers to pay higher wages, forcing them to raise prices to customers and making it difficult to complete projects on time.”
Another recent report from the HomeAdvisor Farnsworth Index tells a similar tale. “Companies continue to view the shortage of labor as one of the most important factors that could impede growth in the home improvement industry,” said Brad Hunter, chief economist for HomeAdvisor. “The most common expectation among companies who are experiencing hiring difficulties is that they would be able to grow their company by an additional 11 to 20 percent if not for the labor shortage.”
Anecdotal reports from specialty remodelers back up that contention.
“One of the biggest challenges is that the business is wanting to continue to grow and we have to make a concerted effort to keep that from happening,” said Bill McConnell president of Dunright Building Services Inc. McConnell, a replacement window installer, said he raised prices from $179 in 2011 to $419 to try to slow down business, but it continues to grow.
It’s a similar story for New View Windows & Doors. “The labor shortage is absolutely hindering growth,” said Tim Maloney, managing member. “We have excessive amounts of windows in our warehouse that are waiting to be installed and I don’t have enough guys to install them. My current and sales reps are booked 2 weeks in advance. We could do more advertising but I’m like, ‘Why would I?’ because we’re just going to lose some of these leads.”
At DreamMaker Bath & Kitchen of SE Florida a lack of qualified help is forcing the company to put jobs farther out — risking its customer relations and referral network. “We’re kind of at that point where we’re like, ‘What are we going to do?’” asked Sarah Parmental, the firm’s office manager. Parmental added that if the company could find enough labor, it could grow revenue 50 percent.
Emrath said part of the problem is the Trump’s administration’s immigration policy, but even a dramatic change on that front isn’t the long-term solution. And he warned that as the recovery continues, the problem will only worsen.
“In the long run, we’re concerned about attracting more workers to the industry,” he said. “I don’t see this issue going away anytime soon, because we’re still in the recovery phase of getting back from the downturn.”
