Years ago, I decided to give surfing a try. Without any lessons or formal instruction, I grabbed a board and braved the cold Oregon surf to see if I could catch a wave. While I had fun, the waves were choppy and I just didn’t have much luck standing up let alone really riding waves.

I didn’t know how to position myself. I didn’t know the right time to stand up. And I was pretty darn cold. I am willing to bet that many of you have felt the same way in recent years.

The construction economy nationally, as well as here in the Pacific Northwest, continued to show signs of recovery in 2012. While there clearly is not a huge wave that the industry will be able to ride to prosperity in the coming year, we are seeing small swells that should help make 2013 far better than what most businesses (at least those who didn’t wipe out) have seen in four or five years.

According to the U.S. Census Bureau, nonresidential construction spending rose 0.3 percent in December, and private nonresidential construction rose 1.8 percent and was 7.6 percent higher than a year previous. And while construction unemployment rose to 16.1 percent, the industry added 28,000 jobs in January.

So what does all of this have to do with surfing? Well, I think contractors can learn from what I didn’t do before my little venture out into the ocean.

First, get properly positioned.

The incremental steps toward stability in the construction industry mean it is important that business owners and professionals look ahead and position themselves for success. While these economic indicators make clear that there won’t be a huge wave to surf, ensure that existing assets are being leveraged. Are contacts being used to the maximum extent possible? Are the right networking opportunities being sought? Are lists of capabilities and success stories updated?

Second, know the right time to stand up and ride.

Knowing the right time to make a calculated decision to take a chance and stand up is tough. But knowing when to invest in a workforce by hiring new workers, sponsoring new apprentices and getting skilled training can also provide a lot of stability. It may cost a few bucks initially, but it is also an investment that will pay off via more jobs. The investment will help the growing business complete jobs on time without costly mistakes that often come with an undertrained staff.

Finally, protect against cold water.

Actually, maybe I should say protect against hot water. How? Read contracts. In good times and in bad, contractors find themselves signing contracts because they had the low bid. But often those contracts are full of issues that are going to cost more than planned or are one-sided with all of the liability placed on the contractor. Seek the warmth and security of professional advice. Have contracts reviewed by an attorney so that the company knows what it’s getting into.

Contracting can be a lot like surfing. Sometimes you wipe out. Sometimes you ride a huge wave. But no matter how choppy or cold the water is, it can be a lot of fun. Try to have some fun out there.

John Killin is president of the Associated Builders and Contractors’ Pacific Northwest chapter and executive director of the Independent Electrical Contractors of Oregon.

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Negotiations between President Obama and Congress regarding the fiscal cliff have us all holding our breath over what the economy will do in the coming year. Will protracted posturing and negotiations via the media lead to a solution? And at what point does a solution (or lack thereof) help or hurt the economy?

These are thoughts and questions I hear from people each day. Everyone’s hope is that a solution – whatever it may be – puts our economy on stable ground and a continued path toward long-term recovery.

For a long time, many people in the construction industry have hoped that economic recovery is just around the corner. And after four years of looking around many corners, many of us have wondered if we’re just doing laps around the same square building over and over again.

With that said, I see new signs of optimism within the construction industry increase week by week. This optimism comes through quantifiable and anecdotal data. It suggests that the industry really is on the cusp of turning that elusive corner that we’ve been searching for.

For quantifiable, last month’s Construction Backlog Indicator, a monthly report produced by Associated Builders and Contractors’ chief economist, Anirban Basu, shows a continued rise in backlog for contractors across the country. Backlog is typically seen as a key indicator of economic health within the construction industry.

“While the nation’s nonresidential construction activity is likely to remain subdued as we approach the final months of 2012, the CBI is signaling that nonresidential construction spending will accelerate by mid-2013,” Basu noted. “However, this presumes the nation does not tumble over the fiscal cliff – a series of spending cuts and tax increases that kick in at the end of the year.”

The CBI in the third quarter expanded for the second consecutive quarter, to eight months – a 3.5 percent increase from the previous quarter. It’s measured in months and reflects the amount of construction work under contract, but not yet completed.

Construction spending also continues to increase. According to a Dec. 3 report by the U.S. Census Bureau, total nonresidential construction spending – including both private and public projects – is up 5.1 percent from one year ago.

Additionally, as reported by the 91��Ƶ recently, Robert Denk, the assistant vice president for forecasting and analysis for the National Association of Home Builders, had positive news.

“Expect to see the homebuilding industry hold steady at 41 percent of its pre-recession levels through the rest of 2012 and early 2013, Denk said. “It should be up to 55 percent by the end of 2013 and into the 70s by the end of 2014.”

This is up from the 27 percent level the industry was at for much of the downturn.

And the anecdotal data also shows optimism within the local construction market as contractors begin to hire more workers and call for new apprentices.

Business owners and managers are more upbeat. They talk optimistically about the future and are beginning to re-engage in civic activities that they had to take a break from while they tried to keep things stabilized at the office.

These developments – the quantifiable and the anecdotal – suggest reason to believe we might soon look around the corner and spot what we have been seeking for a very long time.

But our nation’s leaders have business to take care of before that is going to happen. We need them to seize the opportunity to amicably address the impending fiscal cliff in a way that adds stability to our economy.

As Basu concluded in his November CBI report, “the recovery in construction backlog, and in overall construction spending, would likely be more rapid today if not for the elevated level of uncertainty facing economic decision-makers.”

John Killin is president of the Associated Builders and Contractors’ Pacific Northwest chapter and executive director of the Independent Electrical Contractors of Oregon.

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It’s been said that “elections have consequences,” and that saying is very true. The reason it’s true is that the decisions made by the people we elect have consequences.

Last week’s elections were hard fought. From the top of the ticket to the very bottom, people with opposing views made their case to voters. Now, a new chapter begins. People elected or re-elected to office must begin to develop their ideas from the campaign trail into viable public policy.

Those public policy decisions will impact all of us. These elections will impact decision making, profitability and what employers can provide in terms of salaries and employee benefits. And as always, those public policies will too often pre-determine winners and losers in many sectors.

Some of the ideas that come our way will be things you like. Others will be things you hate.

As I talk to business owners, they always have a lot to say about politics. Unfortunately, too many choose to tell everyone other than their elected leaders what they think and what new laws and regulations mean to their business. That passive-aggressive style doesn’t serve anyone.

So, as the next sessions of Congress and the state Legislature near, it will be important for business owners to talk about the consequences of legislation. That does not mean they should call their legislator and launch into an expletive-laced tirade.

Create a thoughtful dialogue with concise points and practical examples.

I’ve always found that legislators are careful to listen to what constituents have to say. They might not always do exactly what you wish, but they recognize that it is important to listen and be accessible to people in their district.

While there is a paid lobbyist out there for just about every sector one can imagine, relying on lobbyists will get people only so far. Every association and trade group around will admit as much.

Our elected officials need to hear from the people they represent. They need to understand that people in their state, district or ward can offer valuable perspective that they might not otherwise have considered.

At the same time, pay attention to what your chosen organizations have to say. Get the best points available to deliver your message – and then go talk to the people who matter. Reach out to your local elected leaders. Tell your story. Make sure they know the impact their decisions can have on you and your employees.

Now is not the time to wipe your brow and thank goodness the elections are over. It is time to roll up your sleeves and get to work. Your legislators are called “representatives” for a reason and your task is to make sure your representative is representing you.

John Killin is president of the Associated Builders and Contractors’ Pacific Northwest chapter and executive director of the Independent Electrical Contractors of Oregon.

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Remember when success was a good thing? And what it was like before successes and business owners were demonized by political leaders? Remember when people could talk about their successes and ambitions openly?

My favorite opening line when I visit with contractors has always been, “How’s business?” But for the last few years it was delivered with a much more sympathetic tone because it was met time and again by the lowering and shaking of a head.

No one, it seemed, wanted to talk about business. If business was bad, it made them too sad and/or angry to discuss. If business was good, it seemed to make them feel guilty to the point that they could only speak of it in hushed tones and private conversations.

There are still a few folks who answer, “Get me more work.” But most contractors now reveal conservative optimism.

When I ask the question now it is like ambition and success are, at very least, on the positive side of the emotion-meter. I get a lot of “pretty goods” and a fair number of “we have backlog.” I am even hearing people talking about “finally retiring” and not in the “I guess I will shutter the place” kind of way.

Businesses have enough equity that buyers are interested and able to let those owners really consider cashing out. In fact, I think there will be several surprise retirements come the first of the year.

Are we all where we want to be? No.

We are single-digit percentage points off the floor of the worst economic downturn in our regional industry’s history. But instead of dreadful layoffs, employers are struggling to find the quality and qualified employees they need without over investing.

“But John, the national numbers are still bad, unemployment is still high and we are hearing talk of more recession…”

To which I say, Oregon was hit harder and earlier than our share of the economy suggests we should have been. This has led to slow growth – but in a way that is leading the nation and not trailing it. In fact, many of the national concerns about low-level performance mirror what we saw here in 2011 and not today.

Is it still the construction comeback that Intel built? Yes, but who cares how it arrived? It’s here!

So many of the more conservative folks in the crowd will now say, “John, you aren’t supposed to talk about ambition and success.  How can we beat Obama if you make it sound like things are going well?”

To which I say, it ain’t that good yet.

So many of the more liberal folks in the crowd will now say, “John, you aren’t supposed to talk about ambition and success. How dare you imply that business owners should make more money?”

To which I say again, it ain’t that good yet.

This fall’s elections will be spirited and interesting. Vote with your conscience, but keep in mind that the administration is much more than one person. It is agency heads appointed to do what they think is right. That includes a National Labor Relations Board that is not exactly business-friendly and environmental agencies that all too often aren’t interested in finding balance between jobs and environmental protection.

And it is cities that choose winners and losers instead of letting competition and innovation bring the best product forward. It is also legislators who aren’t exactly prioritizing private-sector job growth.

My call to action this month is to be ambitious. Vote for business. Vote for jobs. Vote for success.

John Killin is president of the Associated Builders and Contractors’ Pacific Northwest chapter and executive director of the Independent Electrical Contractors of Oregon.

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Labor Day is often recognized as the symbolic end of summer. It’s a national holiday dedicated to honoring working men and women. One U.S. industry that represents the expertise and diligence of the American worker is construction.

What many people often don’t realize is that the vast majority of construction workers have made the decision to use their professional skills in a merit-shop work environment. It’s one where they communicate directly with their employer, are free of union dues and assessments, and control their own destiny in the workplace. More than 85 percent of America’s construction workers have elected not to join a union.

However, the livelihood of the merit-shop construction worker is being threatened by supporters of government-mandated project labor agreements, or PLAs.

As unions have lost workers, they have turned to politicians as a means of securing work they may not otherwise. The city of Portland recently adopted such a proposal – requiring almost every worker on two upcoming construction projects to join a union in order to walk on the job.

The pro-union language was sandwiched between efforts to increase the representation of women and minorities in construction. Improving diversity in the industry is important and something that contractors should support.

But government-mandated PLAs blatantly discriminate against the merit-shop construction workforce. When a construction project has a project labor agreement, merit-shop workers are excluded from participating because they are not members of the union, even if their tax dollars are being used to pay for the project.

For the merit-shop construction worker, success is based on safety, skill, knowledge, ability and determination. Merit-shop construction professionals are masters of their own destiny and thrive in a free-market environment. They are competitive and multi-skilled, with no limit to their opportunity to advance as far as their dreams allow. What merit-shop construction workers need most is the opportunity to participate in construction projects, regardless of their labor affiliation.

Keep in mind that Oregon’s prevailing wage law sets specific wage rates and fringe benefit requirements for workers. Government-mandated PLAs are not about wages; they are about picking unions over the rest of the marketplace.

Building America is too important to allow costly and discriminatory union-only project labor agreements. It is time to say “no” to government-mandated project labor agreements, and to say “yes” to the concept of open competition in the construction industry.

This is the highest honor on Labor Day that we can pay all the men and women in the construction workforce.

John Killin is president of the Associated Builders and Contractors’ Pacific Northwest chapter and executive director of the Independent Electrical Contractors of Oregon.

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Almost a year ago, I wrote a column to draw attention to the skilled worker challenges that contractors are likely to face in the near future.

To many, the concept seemed crazy. How could I possibly talk about a skilled workforce shortage with Oregon’s unemployment at 9.5 percent? After all, the local construction industry had shed tens of thousands of workers as residential and commercial projects ground to a near halt.

The argument was simple. If you stop training new skilled workers, you won’t have them when you need them. For the construction industry to have a stable, skilled and well-trained workforce, a sufficient number of new workers must be brought in to replace retiring baby boomers as well as people leaving their tool belts and hard hats to pursue front office and administrative positions.

If you stop training new workers – mostly through apprenticeship – for two, three or even four years, the pipeline of new workers will be running dry that many years down the road.

According to statistics from the Bureau of Labor and Industries, the number of new enrollees in apprenticeship programs slipped to 90 per month in 2008. That’s not a lot of new workers to replace the thousands of people who have left the construction industry in the past four years.

But recent reports on worker productivity suggest that America might soon need to go on a hiring binge. Through June, worker productivity increased 0.5 percent. That means employers are getting more productivity out of their present workers. But there comes a point where employers can’t get much more out of their workers and they need to go on a hiring binge.

I am hearing from more contractors that such a day is nearing. Each week I hear a growing chorus of people saying that it is getting more and more difficult to find seasoned workers with the skills and training they need.

And according to a recent article in the (Salem) Statesman Journal newspaper, demand for skilled workers isn’t confined to construction. A state economist noted in a recent report that there are 30,000 job vacancies and 100,000 unemployed people in Oregon.

The good news is that people are beginning to get serious about training again. Statistics from BOLI this year prove it, because the average number of new apprentices has climbed to 170 per month. That’s almost double the rate of four years ago.

It is improvement, but there is still a long way to go.

If we want to address the skilled worker shortages that we know are ahead, our industry is going to need to expand the use of training opportunities. Contractors will need to renew their commitment to apprenticeship. We need to make sure we are creating career opportunities for more people who may not even know of the ones available to them in skilled construction trades.

John Killin is president of the Associated Builders and Contractors’ Pacific Northwest chapter and executive director of the Independent Electrical Contractors of Oregon.

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Until late last month our local weather has not felt much like “summer.” While sunshine peeked through occasionally in May and June, we’ve been left waiting for the onset of the bright sunny skies that all of us native Oregonians spend October through April dreaming about.

As new jobs reports were released on July 2, it hit me: Our local weather reports sure feel a lot like the recent economic reports. We’ve had months (OK, going on three years) of pouring rain and hints of better weather – only to see gloominess in the weather reports once again.

While hiring in the construction industry has picked up and extended what feels like a ray of sunshine upon us, key economic indicators provide reason to believe a big cloud still lingers over our nation’s economic recovery.

The U.S. Commerce Department announced recently that new home sales rose 7.6 percent between April and May – and at their fastest pace since April 2010. But even with these gains, sales are only about half what is considered “normal.”

The Commerce Department’s data also shows that homebuilders pulled permits on more new homes for the third straight month in May, with the most permits being pulled for a month in 3½ years. However, these numbers were still only about half of what we should see in a healthy economy.

The National Association of Realtors announced recently that its index of sales agreements increased from 95.5 in April to 101.1 in May (a reading above 100 is considered healthy). Yet the same data says that while overall sales have risen 9.6 percent from a year ago, they are still well below levels considered to be healthy by economists.

And then the Institute for Supply Management found that the factory activity index fell from 53.5 in May to 49.7 in June. Any reading below 50 shows contracting and a reading of 47 suggests recession.

Associated Builders and Contractors’ quarterly Construction Economic Update shows similar conflicts.

Total construction spending in the nation – which includes both residential and nonresidential construction – increased 0.9 percent from April to May and is 7 percent higher from one year ago, according to the July 2 construction spending report from the U.S. Census Bureau. “However, nonresidential construction was unchanged in May from the previous month, totaling $562.3 billion,” the report noted.

“While private nonresidential construction spending was up for the month, gains were offset by declines in public nonresidential spending,” said Associated Builders and Contractors chief economist Anirban Basu. “Spending on public sector construction fell 0.4 percent to slightly below $270 billion on an annualized basis, decreasing for a fifth consecutive month.

“This pattern of rising private spending and falling public spending is likely to persist, but stakeholders should be concerned that private spending momentum may begin to abate if the broader macroeconomy does not begin to re-accelerate.”

So what does all of this mean?

I think Basu put it best in his report when he noted that, “construction industry stakeholders should be aware that the performance of construction spending today is largely a reflection of decisions made months ago when the economy was on sounder footing and did not have to contend with as much uncertainty stemming from the European debt crisis, America’s fiscal challenges and the global economic slowdown.”

So, can we expect clear and sunny skies in the months ahead? Or can we expect the sun to duck behind another rain cloud and prolong our wait for a better season? I wish I had the answer.

What I do know is this: As the weather improves and our election season warms up, I am truly hoping that our political leadership can push out some more clouds so we can finally have some blue skies. To give our representatives a push, I suggest you support the candidates who put jobs and the economy first.

John Killin is president of the Associated Builders and Contractors’ Pacific Northwest chapter and executive director of the Independent Electrical Contractors of Oregon.

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In the coming few months the Supreme Court is likely to rule on the constitutionality of federal health care reform passed in 2010. But regardless of whether insurance purchase mandates or other rules stay or go, for most of us the next several years of health care will actually look a lot like the last several years.

Here are forecasts that I believe will hold true for the next several years:

• Whether purchased traditionally or through the state-run “exchange,” health insurance will continue to grow more expensive.
• The advent of electronic medical records will create great accessibility, but also may lead to excessive data collection.
• Health insurance exchanges will work well for people purchasing individual coverage, but not for businesses that need a higher level of agent and actuarial expertise.
• Employers will remain the majority purchasers of health insurance.
• Guaranteed coverage and mandatory insurance regulations will reveal more problems in our system; more reforms will be necessary to control health care costs.
• There will be a reduction of traditional family physician practices and an increase in easily accessible medical care in nontraditional venues.

The state health exchange

When we talk about an “exchange,” it is best to think of it like a state-sponsored Expedia or Travelocity for health insurance. Much like online shopping, the exchange will work great on occasion. Other times, better fits will be found elsewhere.

Officials have reported in recent months that they won’t be able to simply set prices without considering the actual costs to health providers – shocking, I know. To some extent, they had actually assumed they could just “pick” an affordable price and provide coverage. The fact that this realization is occurring tells me that while the state exchange will provide some people some form of value, it is not the proverbial silver bullet to making insurance coverage affordable.

Coordinated Care Organizations

One state-sponsored change that does hold promise is Coordinated Care Organizations. According to the Oregon Health Policy Board’s website, local CCOs will be fully launched by Aug. 1.

“They will have one budget that grows at a fixed rate for mental, physical and ultimately dental care. CCOs will be accountable for health outcomes of the population they serve. They will be governed by a partnership among health care providers, community members, and stakeholders in the health systems that have financial responsibility and risk.”

Convenience medicine

The number one change people will see in health care in the coming years will be the increase in availability of and accessibility to actual medical care and their medical information. Two trends will meld together to lead to a new era of easy and fast visits.

First, expansion of electronic medical records will let health care providers readily access people’s information wherever they go for treatment. Second, while doctors will continue to conglomerate into larger clinics (for shared liability reasons), physician assistants and nurses will be able to diagnose people inside just about every mall, amenitized apartment complex and grocery store – much like a local bank or pharmacist.

Because it will be a PA or a nurse, people will have to tell their story only once and will likely receive only a cursory exam. Whether people receive a drop-in while on a shopping trip or a virtual exam via a tablet device, as long as more advanced care of an MD isn’t needed, basic care should be obtained quickly and easily.

These changes in regulation and market should have a Jevons Paradox effect that drives higher levels of utilization. In other words, the ease of seeing a medical provider created through these various efficiencies will likely increase early medical treatment. Because early treatment is generally seen as a relief of vastly more expensive hospitalization costs, the plan may work.

Why should contractors care? Because these factors will impact decisions about whether to provide health insurance to employees. And various market niches should be considered as the field of health care grows to cover an aging and growing population’s demand.

John Killin is president of the Associated Builders and Contractors’ Pacific Northwest chapter and executive director of the Independent Electrical Contractors of Oregon.

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Given a choice between keeping loyal, experienced employees or letting them go and training green apprentices, the decision is predictable. Contractors want loyal, hardworking, longtime employees. And so those firms have retained as many established workers as possible during this prolonged recession.

But as the construction sector looks beyond our current economic situation, we need to be thinking about who will be the future of the industry. Who are the future skilled craftsmen? Who are the future foremen, estimators and project managers?

The construction industry lost thousands of people over the past four years. Most of them either retired or left for careers in other industries. By a number of indications, many aren’t likely to ever return.

So where does that leave the industry? How will we meet the demand for skilled workers and future leaders. In most trades, the answer will be apprenticeship and advanced skills training so that journey-level workers will be empowered to move up the career ladder.

With indicators suggesting modest improvement and possible growth in the construction industry, it’s time to start taking the issue of training seriously again. It’s time for contractors to put five-year plans in place to preserve the health and stability of their workforce. This can be done by:

• Studying the past and determining traditional turnover of a field workforce during good times.
• Determining how many new workers will be needed to address this turnover and setting up training to bring people through apprenticeships and skills development programs.
• Looking closely at the demographics of existing management teams, foremen, estimators and project managers, and identifying how many are likely to retire or leave the industry soon.
• Identifying existing team members who can step up and replace departing leaders.
• Pushing the next generation to hone management skills through training efforts that will position them and their companies for future success.

The stability of businesses and our industry is dependent on people taking our future workforce issues seriously.

Years are required to prepare people for the leadership roles they will fill in the future. In licensed trades, years are needed to simply move someone from entry level to license-in-hand, full journey-level status.

Contractors that are beginning to add workers should be sure apprenticeship is at the top of their hiring priorities. Don’t miss the need to grow our industry’s workforce again and prepare for an inevitable shortage of skilled workers in the very near future.

And look closely at our workforce for ways to train future leaders. The Northwest College of Construction has a great portfolio of courses to accomplish this. Visit www.nwcoc.com for a full list of opportunities to consider.

Future access to a skilled and trained workforce depends on proactive action today.

John Killin is president of the Associated Builders and Contractors’ Pacific Northwest chapter and executive director of the Independent Electrical Contractors of Oregon.

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A couple of years ago I wrote about concerns for building and planning departments throughout the region.

As large-scale construction projects disappeared from the bidding market, so too did permit revenue for local governments to pay for field inspections and plan review. Then staffing levels dropped – as they should when the demand for services drops. The downturn’s impact was being realized and also was beginning to lead to extensive layoffs and delays in inspections.

For instance, the city of Portland in 2010 had an insufficient number of field inspectors (who also serve Multnomah County through an inter-governmental agreement).

The city’s Bureau of Development Services was so decimated by layoffs that the industry and our customers could not rely on formerly timely inspection schedules. With fewer large projects, inspectors were jumping all over the city conducting inspections on small projects that further stretched the department’s resources. Calls for inspection began to take days – becoming a serious customer service issue for remodelers as well as commercial and residential service contractors.

This led to a number of frantic contractors already frustrated by the market to feel caught in a crisis.

For an industry that relies on timely responses to keep construction schedules on track and maintain good relationships with customers, this was unsatisfactory.

So the industry sat down with city officials. They listened and they responded. They were frank about their financial situation but they also worked to make life easier on the industry by streamlining some processes and concentrating on meeting inspection expectations.

Today, more than 90 percent of the city’s residential inspections and 96 percent of its commercial inspections are turned around within 24 hours after request. Both are huge improvements and deserve recognition.

As the industry begins to come back, the city of Portland and other planning departments are going to continue to be stretched. Funded almost entirely out of fees paid by our industry, the Bureau of Development Services has to operate much like a business. As the economy begins to improve and the need for additional staffers to cover plan review and inspections increases, BDS officials must make sure they are prepared to address service demands.

Two weeks ago I met with city staffers to discuss their budget for the 2012-13 fiscal year, expected service levels and permit fees. Their proposal to City Council calls for 5 percent increases in most fees associated with construction permits.

No one wants to see costs rise, but the 5 percent increase is not a surprise.

We also discussed the industry’s economic forecasts and how we hoped the industry would become more predictable in the coming year, agreeing that construction would be up a “few percent” over last year.

The Bureau of Development Services will put its permit rate proposal before the Portland City Council on May 23. It projects that adoption of the new fees will increase 24-hour turnaround of inspections to 98 percent on all projects. Likewise, commercial plan review turnaround will improve from an average of 24 days to 15 days.

In this day and age when speed is of the essence, these commitments are likely worth the 5 percent permit fee increase to you and your business.

John Killin is president of the Associated Builders and Contractors’ Pacific Northwest chapter and executive director of the Independent Electrical Contractors of Oregon.

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