Shortage of contractors, inflation could delay Gaylord reconstruction for years
Gaylord Mayor Todd Sharrard took the stage during a tornado relief concert on a sunny June 14 afternoon in downtown Gaylord.
He addressed a group of a few dozen residents and thanked local first responders, volunteers and donors.
“The resilience of this community and the surrounding areas immediately began to pick up the pieces,” he said.
However, looking ahead, Sharrard said Gaylord will face economic issues beyond his control as he continues to recover from the devastating disaster. May 20 tornado.
“We’ve seen the impact of what mother nature can do,” Sharrard said.
As demand grows for the skilled workers needed for reconstruction projects of all sizes, the industry will struggle to keep up due to an already shrinking workforce.
Nationally, the construction industry will need to attract nearly 650,000 additional workers on top of the normal rate of hiring in 2022 to meet labor demand, according to a model developed by Associate builders and contractors.
Michigan ABC Chairman and CEO Jimmy Greene said that means longer waiting lists almost everywhere, but especially in high-demand areas like Gaylord.
“(It could take) 18 months,” Greene said. “Homebuilders are just as constrained in terms of labor and availability as commercial types. It’s not just a business issue. It’s a problem with our industry – period.
Entrepreneur shortages are not new. Many trace it back to the 2008 recession when thousands of retail workers left Michigan or changed careers.
Dan Goodchild is the Acting Director of Technical Academic Area at Northwestern Michigan College. He said many of the job pipelines that once supplied workers to the industry are gone.
Educators like him are trying to change the discourse on commerce labor for young people.
“You don’t have to go to a four-year school to have a rewarding and successful career,” Goodchild said. “Construction pays well. It is hard work, but very rewarding.
Greene said it worked. Last month, Governor Gretchen Whitmer and the Michigan Department of Labor and Economic Opportunity received an $8 million grant at the Michigan State AFL-CIO Workforce Development Institute to support pre-apprenticeship programs.
However, Greene said most new commercial workers are far from owning and operating their own business.
And in Gaylord, it’s not just the lack of contractors that’s causing delays. Rising prices for building materials and equipment are causing more concern.
According to the last Producer Price Index Report released by the Bureau of Labor Statistics, prices for goods used in residential construction rose about 8%. These goods include lumber, materials used to make drywall, plaster and ceiling tile.
The price of building materials has risen 20.4% year-on-year and 33% since the start of the pandemic, according to the National Association of Home Builders.
Homebuilders Association of Michigan executive director Bob Filka said expensive materials can be a good thing, in some ways.
The high-end market demand for luxury homes and large-scale projects will decline, leaving contractors the opportunity to undertake projects in low-income areas.
“(Contractors) who might otherwise be working on six-figure or million-dollar homes…may have the opportunity to hopefully rebuild Gaylord,” Filka said.
But in the meantime, high prices continue to put pressure on the residents of Gaylord.
The Gaylord Habitat for Humanity ReStore provided residents with low-cost solutions to replace furniture and appliances. It also helps them by connecting them with local contractors for repairs.
Director Aini Abukar said most materials have to be specially ordered as they fly off retail shelves. She said it took two weeks to help a customer find a replacement door. The cost of even the smallest projects is a concern.
“Something like a roof job that would have cost $8,000 just a year ago would cost $15,000 to $16,000 now,” Abukar said.
Shortages of contractors coupled with high local prices have opened up opportunities for companies from outside Gaylord to offer their services.
This is common in areas that have recently experienced natural disasters. However, hiring a contractor you don’t know comes with its own set of risks.
These are contractor companies that flood an area after a natural disaster and may not be licensed or charge unfair rates.
“Some (companies outside of Gaylord) are there to help,” Deflorio said. “And some of them don’t always have the best intentions.”
Deflorio said he recommends having basic information before hiring a contractor. To ensure they are licensed, customers should request the contractor’s license number and verify it on Michigan Department of Licensing and Regulatory Affairs‘ before accepting any offer.
The state of the construction industry matters, especially in an area like Gaylord. As entrepreneurs grapple with the backlog of projects ahead of them, Mayor Todd Sharrard said local nonprofits are there to help.
The United Way of Otsego County led efforts to mobilize volunteers and set up emergency accommodation at local hotels. Director Erin Mann said moving the tornado will add to the already considerable housing crisis in northern Michigan.
“I moved to Otsego County seven years ago. It was a challenge then, and I think it’s still consistent,” Mann said. “The tornado really brought the problem to light.”
Governor Gretchen Whitmer – along with US Representative Jack Bergman (MI-01), US Senator Gary Peters (MI) and US Senator Debbie Stabenow (MI) – asked President Joe Biden on June 8 to declare a major disaster in Otsego County. This would make funding available through the Federal Emergency Management Agency (FEMA).
This assistance includes individual assistance for individuals and families, and the Risk Mitigation Grant Program to prevent harm that may occur in the future, according to the lawmakers’ letter.
Bergman’s office has been contacted for an update on FEMA assistance and has yet to respond.