Subs Vie For Skilled Labor

Largest Contractors
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Sub Standards
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Although the number of skilled laborers in Arkansas is increasing, the statewide contribution to education programs that supply certified skilled workers has been decreasing.

Arkansas went from $156,000 in state contributions in 1991 to $918,543 in 1999, when there were a combined 2,809 electrical/ plumber apprentices. But average spending per apprentice went from $326 in 1999 to $205 in the 2003-04 school year. That’s because the state’s contribution is capped at $974,741, according to the Arkansas Construction Education Foundation.

“A program that helped quadruple the number of apprentices and is currently providing a 350 percent return to the state is now being hampered by lack of funding,” said Steve Schaeffer, executive director of the ACEF. “What other state program provides this kind of return?”

Schaeffer estimates that for every $205 the state contributes per apprentice education, it gets an average of $700 back.

There were about 4,475 apprentices registered for the 2003-04 school year that generated an estimated $3.38 million in state taxes through their wages.

“This is money we would not normally be getting because they would be unemployed or working in a minimum-wage job where the state wouldn’t be getting those kinds of taxes,” Schaeffer said.

Apprentices are required to complete a four-year program, or eight semesters, to be certified by the state.

Today, there are 887 registered plumbing apprentices, up 70 percent from 517 in 1991. There are 2,155 electrical apprentices, a staggering 378 percent increase over 450 in 1991.

The Bureau of Labor Statistics estimates that between 2002 and 2012, there will be about 1 million new jobs created in skilled trades nationally.

U.S. Labor Secretary Elaine Chao announced the “Skills to Build America’s Future” initiative in April. Chao said in the announcement that skilled trades play a key role in “building America’s future” and as baby boomers leave the work force, jobs will open up. Partners in the initiative include the Construction Industry Round Table, the National Heavy and Highway Alliance and its affiliated international unions, and the National Association of Home Builders.

The initiative is an “outreach and education effort designed to attract young people and transitioning workers into careers in the skilled trades and to address the growing need for workers in America’s construction industry.”

A Web site sponsored by the U.S. Department of Labor and the Department of Education, www.careervoyages.gov, touts a “brighter future, better pay and good jobs.” It encourages young adults to consider their options out of high school with various levels of education in varied industries such as health care, construction, manufacturing and more, and calculates demand for a particular position as well as salary.

Depending on how the new initiative is set up, the state could receive more federal money to promote skilled trades, Schaeffer said. However, subcontractors in Northwest Arkansas need help now.

Recruiting

Ask the average high school student to rate their career choice and chances are, construction will not make the Top 10, said Stan Johnson, president of Johnson Mechanical Contractors Inc. JMC is a 60-year-old Fayetteville family business that had $6 million in revenue last year.

“It’s hard to recruit people because no one wants to get their hands dirty,” Johnson said.

“You can ask any guidance counselor in a high school here and the construction trade never makes the top 10.”

Subcontractors are offering fringe benefits that 10 years ago didn’t exist.

Paid holidays, paid vacation, 401(k) Retirement plans, medical and dental coverage are just a few benefits, in addition to some of the top skilled laborers making $20 an hour or more in supervisory positions.

Gary Harvey, president of Mountain Mechanical Contractors Inc. in Fayetteville, said he shops his health insurance every year. He estimates his firm, which had revenues of $8.6 million last year and has about 60 employees now, has increased its spending in the wages and benefits package combined by 25 percent over the last three years to stay competitive.

“You’ve got to stay in touch with the market,” Harvey said. “It just increases your labor costs. Those are costs you’ve got to recognize and get into the bid process. If you don’t, you are kidding yourself and you are on a slow boat to starvation.”

Harvey spends about $300 per month per employee for health insurance, which is about 98 percent of the employee premium. In addition, the firm furnishes them with uniforms, sick days, vacation days and a 401(k) plan.

Mountain Mechanical, Johnson Mechanical and Multi-Craft Contractors Inc. all have different compensation programs in place for their respective apprentice plumbers and electricians as they go through the four-year state certification program.

“There is always a challenge to get high schoolers to look at vocational schools rather than four-year institutions,” said Hex Bisbee, CFO of Multi-Craft.

“One of the things we can show high school students, if they go through the vocational school, they can certainly earn a comfortable living.”

Multi-Craft specializes in industrial and commercial HVAC, plumbing, electrical and mechanical work.

Bisbee said Multi-Craft’s tuition compensation program helps instill some loyalty to the company. He agreed with Harvey’s estimate of a 25 percent increase in spending.

“All of the insurance premiums are going up, and of course there are things you can try to do to stabilize that,” Bisbee said.

Multi-Craft has a staff person dedicated to the task of running its safety program to help keep insurance costs down, Bisbee said.

“The savings are large enough to justify the expense,” he said.

Bisbee said in five years his firm has probably added about 100 employees, but revenue has grown with that.

All the subcontractors the Northwest Arkansas Business Journal (see list, p. 40) spoke to said they’ve had employees lured away by a subcontractor wanting the same kind of work, but offering higher wages. All of them declined to be specific, but agreed on one thing: Many of those same workers returned to them again to be rehired after the higher-paying job ended.

Rehiring

Judy Williams, office manager for Mountain Mechanical, said about 50 percent of the employees who quit return to the company.

“Some of our youngsters are leaving to do jobs with bonus programs,” Williams said. “They work themselves to death for no benefits and then they come back.”

Williams, who came to Mountain Mechanical six years ago after a career in banking, said it took awhile to get used to the turnover nature of the business.

“I’ve just been amazed, we have people we hire three or four times,” Williams said.

She has placed advertisements in newspaper classified sections as far south as Fort Smith, as far west as Oklahoma and as far north as Missouri. She said several of her firm’s employees now drive up from Fort Smith.

Johnson said he frequently recruits on a referral basis.

“We offer a bonus to employees to recruit people,” Johnson said. “Newspapers, radio — the best method is referrals.”

Johnson also spends $120 per new hire to perform a full background check and drug testing. He uses Summit Security Investigations Inc. in Fayetteville.

Steve Mankin — who owns Summit along with Jimmy Gibbs, Frankie Hart and Wendell Reed — bought the business from Dick O’Connell in July 2003. Mankin said he’s seen a 35 percent increase in the last six months in demand for “discovery” type cases, such as the ones he performs for Johnson. The firm met its volume goal for the entire fiscal year in seven months.

“Even if you are going to pay up front, you don’t want to pay down the road,” Mankin said.

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