Workers

CHRISTOPHER WOODARD Staff Reporter The current real estate development boom, unparalleled since the high-flying 1980s, has created a shortage of construction workers, driving up the cost of everything from labor to asphalt to lumber. With more than a dozen large commercial and residential projects currently underway in the greater San Fernando Valley, developers and contractors have had to go begging for workers to meet tight deadlines. “For the first time in my life, I’m physically unable to get people out here and keep them on an extended schedule,” said Rick Caruso, developer of the Commons at Calabasas, a 200,000-square-foot retail center scheduled to open in November. “Everyone’s busy as hell.” The demand for workers has been so great that some union halls stand empty, and union organizers have taken to prowling job sites looking for new members to bolster their ranks. “We’ve got 10 guys in full-time positions out visiting the job sites,” said Floyd Clay, administrative assistant for the Southern California-Nevada Regional Council of Carpenters. “It allows us to go get members back that left during the recession, and it allows us to take some of the top talent away from the non-union sector.” Project managers also report being bombarded with as many as two or three job offers a week, as construction companies take on more and more work. Some companies have had to dole out pay raises to keep their people in place. “We have people who have gone up from say $75,000 to the $90,000 range as project mangers,” said Dan Penn, president and chief executive of Peck/Jones Construction Corp. “But these guys are responsible for tens and sometimes hundreds of millions of dollars.” Industry observers blame the recession, in large part, for creating today’s shortage of employees. “What you had was a very long dry spell in the early ’90s, and lots of people left for places like Las Vegas, Phoenix, Tucson,” said Jack Kyser, chief economist of the Economic Development Corp. of L.A. County. In addition, young people likely shied away from the building trades due to the bleak job outlook, he said. That short supply of labor is especially troublesome considering the wave of development now taking place throughout the greater San Fernando Valley: The Voit Cos. and Selleck Development Group Inc. are developing about 970,000 square feet of retail and industrial space on 68 acres at the former General Motors Corp. plant in Panorama City called “The Plant.” Shapell Industries Inc. is developing a 660,000-square-foot shopping center inside the 1,300-acre Porter Ranch Specific Plan area, featuring a Wal-Mart store, among others. Newhall Land & Farming Co. is undertaking a $100 million expansion of its Valencia Town Center. A new $35 million Hyatt Valencia was recently completed and Princess Cruise Lines is set to move into a new 127,000-square-foot building at the site. Regent Properties is building a 600,000-square-foot, campus-style office park in West Hills at the former Hughes Aircraft facility at Fallbrook Avenue and Roscoe Boulevard. M. David Paul Development LLC is nearing completion of a five-store, 215,000-square-foot office building adjacent to the Burbank Airport, called Media Studios North. Commercial building permit valuations in the San Fernando Valley for the March-August period increased to $226 million this year, up 56 percent from $144 million in the like year-earlier period, according to the Los Angeles Building and Safety Department. Contractors say that rapid pace of development is driving up costs. “Everything has gone up concrete, asphalt, pipe, conduit, the hardware for framing, drywall, landscaping everything,” said Randy Sovereign, a project manager for Valley Commercial Contractors LP, the contractor building most of The Plant. A non-union carpenter who earned $15 an hour a year ago can expect to earn $20 to $25 an hour today. Laborers can demand $15 an hour, when a year ago they would be lucky to earn $8. Even ground-up concrete and asphalt used as a base for parking lots has increased in price, jumping from $6 a ton to $11 a ton in a matter of months, he said. Jack Schwellenbach, president of Warmington Homes California’s north counties division, said residential developers have been feeling the pinch as well. Workers typically are paid more for commercial and industrial jobs than for housing jobs, so the boom in commercial/industrial projects has made it more difficult for housing developers to find enough workers. That situation is leading to construction delays for many homebuilders, he said. “Whatever stage you’re at, there’s a shortage of people,” he said. “If you’re pouring foundations, that’s where you feel it. Framing, that’s where you feel it.” Warmington is developing about 100 homes in the Thousand Oaks area, and one of its projects is facing a delay of up to 30 days because the company is having trouble finding crews to build the model homes. Labor and material costs, meanwhile, have been rising at a clip of 2 percent to 5 percent per phase. “And we’re building smaller phases than we used to, maybe 15 to 20 units per phase,” he said. In Calabasas, Caruso is preparing to go to a two-shift schedule on his retail project in order to meet his deadline for a November opening. Caruso has had to resort to calling in favors from subcontractors he has worked with in the past to get enough workers to complete the project. “We consistently kept people busy during the lean times,” Caruso said. “I’ve been calling the principals and directly reminding them that we were there for them when times were tough.” Caruso’s contractor, Peck/Jones, uses higher-paid unionized workers, but even so, it has been tough finding enough crews, said Peck-Jones President Penn. “The union halls are pretty much empty,” he said. “We’re pretty much getting up toward the limit now.” Leo Valenzuela, secretary treasurer of Laborers’ International Union of North America Local 585, said his Ventura County-based local has more work that it can handle. “This is the best we’ve seen it in many, many years,” he said. “The way the economy has been has just been fabulous.” With several large projects underway in Ventura County, including a new Albertson’s store in Simi Valley, Local 585’s members have been working nights and weekends to keep up. Sergio Rascon, business manager of the Laborers’ International Union Local 330 in Los Angeles, said that local’s members have been busy as well, but not as busy as their counterparts in Ventura, Riverside and Orange counties. Still, the main dispatch hall in downtown Los Angeles had 600 people on its waiting list last year. Now, that number has been cut in half. The Mission Hills office had 300 workers on its waiting list, and now it has about 100, he said. Not all trade unions are doing well, however. “It’s been slow for us. If you’re non-union, there’s plenty of work,” said Marshall Goldblatt, assistant business manager for the International Brotherhood of Electrical Workers, Local 11, which has 800 members on its waiting list. “We’re focusing on organizing and trying to get a Democratic governor,” he said. While the greater San Fernando Valley has enjoyed explosive growth of late, some contractors said they have noticed a slight slowing of activity in the last six or eight weeks due to uncertainty in the marketplace. Still, most contractors interviewed said they remain confident the area will continue to grow. “We took so long to get out of the early-’90s recession. Now there’s quite a bit of momentum to carry over any dips that might happen in the national economy,” said Penn.