CEO Roundtable: Construction woes center on competition, lack of work, labor issues

WINDSOR — Whether it’s fighting off the competition from Denver construction companies seeking work in a landscape of shrinking projects and opportunities or ensuring that employees can afford their own homes and have the training to keep up with a changing world, area construction-industry CEOs have a lot on their minds these days.

While Northern Colorado is considered the fastest growing area in the state, that just means more companies are working their way into the area to get the jobs, which have subsided somewhat because of high interest rates, those leaders said Tuesday morning at BizWest’s CEO Roundtable at the Better Business Bureau of Northern Colorado.

Resoundingly, one of the most pressing concerns all in attendance had is securing jobs. Many said they are sitting on multimillion-dollar projects that were halted mid-build or prior to construction.

“When you’re talking peak construction costs and higher interest rates, everyone is like,

‘We’re just going to wait,’” said Chris Aronson, principal architect of VFLA Architecture & Interiors. “In the last year, we’ve just diversified. We’re relationship based, so we reach out to our network. It’s starting to pick up. I will say that we’re starting to get more confidence, starting to work in the numbers better.”

Wes Masi, vice president of operations for Hall Irwin Corp. in Greeley, said he would have thought land prices would come down in this era of high interest rates.

“Landowners, they’re still thinking they can get top dollar,” Masi said. “Our customer base has really slowed. We have three to four projects that have been on hold for six to eight months now.”

Some have been having to fill their coffers with smaller projects while the big stuff is put on hold.

“We’ve had probably $100 million worth of construction projects go on hold,” said Curtis Koldeway, partner/architect with Hauser Architects PC.  “We started a project a year and a half ago, we get through entitlements, then the interest rates (increase), and financing falls apart, and things get put on hold.

“We have probably $50 million in projects in permit review. We just extend the permits thinking the project is going to start, then a month comes, and it’s another month, all of the sudden you’re six months down the road, and the project is still not under construction.”

For David Kress, principal of RB+B Architects, there is no time to dilly-dally: “with costs rising, we’re trying to keep a handle on what a building will cost by the time you’re done designing.”

Connie Dohn, co-founder and chief financial officer of Dohn Construction, agreed and lamented the amount of competition that Northern Colorado is seeing with Denver and Colorado Springs companies entering the market while projects are being shelved:

“Everybody is squeezing the margins because everybody needs work,” Dohn said. “It’s all competitive, it’s been really challenging in the last year and a half. We had one project that was $68 million in Greeley that’s still on hold. That was all teed up, and we were going to start in a month, and then you have to replace it with little stuff.”

While that challenge may get some relief in the coming year, many still worry about the labor force — from availability to morale to training, let alone being able to afford a home.

Patrick Elder, president and chief financial officer for Elder Construction Inc., said the financial issues have been disruptive on its staff.

“You work these projects for 12-18 months and for them to go away within a month of the start is terribly disruptive,” Elder said.

Michelle McLaughlin, chief visionary officer for MAC Electric & Lighting, said that as the industry changes with greater technology, that means more training for staff, who took their jobs because they like to work with their hands. Sitting at a computer learning is not necessarily a favorite pastime.

For Bill Pigg, president of Neenan Archistruction, the company is dealing with culture change as leadership changes. “When I was young, we’d just go get it done. It’s not the same today. Our focus has been on training and how to build the foundation to allow us to perform, to work together.”

Labor availability continues to plague some of these construction leaders. 

“We’re finding that personnel is a huge challenge now, especially in construction,” said Peter Meyer, vice president for business development for Brinkman Construction. “After this year, if we don’t see things turn around, it will be a huge problem.”

Attracting labor is one thing, but keeping them is something else, especially in an area in which housing prices aren’t cooperating with entry-level buyers’ budgets.

“That starter- or entry-level housing, the first step into the workforce doesn’t pencil for a lot of folks,” said Nick Haws, marketing manager for EPG Group, which just merged with Northern Engineering. “The people in the room pay competitive wages, but for many folks, unless you have a roommate or other financial means, the process of housing in our region doesn’t align with wages,” 

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