2017 Book of Giants: Workforce crisis turns contractors into manufacturers

Opportunities for new work are abundant across the country and most contractors’ backlogs are growing, says Tim Moormeier, president of U.S. Engineering in Kansas City, Missouri.

“The flip side of that is that we have a limited labor force and our work tends to be seasonal because of the nature of HVAC work,” Moormeier says. “There’s a lot of work and not enough field labor to execute it. It’s a perfect storm of great work opportunities and not enough qualified field leaders and field plumbers, pipefitters and sheet metal workers to complete the work on time and with the kind of productivity that you want. We experienced it directly during the last two summers and we worry about this summer. Our big solution is to manufacture more of our work to the point that we manufacture the vast majority of it.”

If you’re still performing work like you did 10 years ago, there’s no way you can get it done today.

— Denny Terrell, Ivey Mechanical

Denny Terrell, president of Ivey Mechanical Co., Kosciusko, Mississippi, says Ivey has invested more than a half million dollars over the past two to three years in four fabrication shops.

“If you’re still performing work like you did 10 years ago, there’s no way you can get it done today,” Terrell says.

Ivey set up shops in four buildings on the same property, a plumbing shop, a pipe shop, a heavy metal shop and sheet metal shop. “Heavy metal” fabricates pieces such as hoods, trench drains and hangers. Ivey will ship assemblies all over the Southeast, but for larger projects it may also lease space somewhere close to the jobsite for prefabrication of smaller repetitive items such as VAV hookups.

Manufacturing investment

Terrell estimates that what in the past would have been 50 percent of the field man-hours on a project are now redirected to their shops. For example, if Ivey is building a chiller plant, 95 percent of it is constructed in the shop, he says. They “leave out a piece or two” for the final connection in the field and, while it’s not 100 percent accurate, Ivey’s crews can get it to work.

U.S. Engineering has gone all-in. “We have in excess of 250,000-sq.ft. of manufacturing at this point,” Moormeier says, “and the largest capital investment the company has made in its history is our new manufacturing facility in our Denver market that came online last fall. It is extremely busy and is at the core of our strategy. Four years ago we bought a manufacturing facility in the Kansas City market and it’s already outpacing its ability. We’re continuing to evaluate where we make those investments. It requires advanced machinery that’s very expensive and the technology to feed that operation.”

The manufacturing model breaks down silos in the design, planning and fabrication process, he explains. Departments and functions can’t be segregated.

manufacturing facility do must now be comingled into one process. The flow starts with a virtual model. In order to have confidence in the virtual model, designers have to get down to a fine level of detail for each manufacturer that’s being used in the assembly. Using generic specifications doesn’t work because different manufacturers have different tolerances on the same item, such as a valve. U.S. Engineering strives to design and manufacture to a tolerance of 1/32 of an inch, so designers must select the manufacturer and the model number of each part so that its embedded meta data goes into the BIM model. U.S. Engineering uses Navisworks and Autodesk Revit for the model, which has to be converted to ITM (item) content in Autodesk Fabrication CADmep to send digital information to robotic cutters for sheet metal or pipe. As Autodesk explains it, ITM content holds graphical and non-graphical information needed for modeling, fabrication, and installation of ductwork and pipework. ITM content is intended to replicate the manufacturers’ information as closely as possible, allowing for real-world, constructible modeling.

Bernhard MCC has taken a similar path, Catanzaro says. The majority of the firm’s pipe, plumbing, and sheet metal fabrication has been consolidated into one location. The facility has the space that allows process flows that can be staffed and monitored for safe and cost-effective production of fabricated components. Assemblies include plumbing fixture batteries, equipment skids, 2D and 3D modularized racks, and sectioned ductwork, with all of the palletized fabrication organized and tagged for specific areas of a job. Everything that can be measured, cut, assembled and shipped for simpler installation at the jobsite is considered.

Close tolerances

“The BIM Model is the key ingredient in our process,” Catanzaro says. “Everything that we fabricate is extracted from the BIM Model, which is coordinated with the other crafts on the said projects. So, in turn, we build it virtually, spool it with our dedicated group, then fabricate it.”

While manufacturing reduces field labor, it requires a lot of skilled people in the design and planning stages.

Bernhard MCC, which aims to fabricate to a tolerance of 1/16-inch, also specifies the manufacturer and model number of every piece that goes into the model. The contractor has a centralized purchasing group that works with the project teams and estimating to develop a “material matrix.” They use that material matrix to solidify exactly which manufacturers of all components it plans to use prior to detailing and fabrication.

This is all for naught unless owners, general contractors and construction managers see the value in it, and many do.

“Your best opportunity to manage field labor requirements is to get involved earlier in projects and try to level that peak push, but you only can do that if you’re allowed to plan the job,” Moormeier says. “When we start looking at projects with a hard bid and the design is complete and they want us to start two weeks later, that’s a bad project for us. We can’t execute our strategy and deliver the value to the project that we’d like to. It limits any mechanical contractor’s ability to deliver a project to the owner. We try to talk to owners and reason with them about why you want the subs involved earlier so that you get more value out of that process. You have more certainty of the price of project and more confidence that it can be delivered on or ahead of schedule. And you’ve got to show them through real projects that it actually plays out that way.”

That also requires general contractors who hold the schedule sacrosanct, especially when large assemblies have to be moved through the jobsite. If one of the subs asks, for example, to install something early, the GC has to be able say no.

Vigorously recruiting

The focus on fabrication aside, the contractors are still vigorously recruiting. Ivey’s Terrell says he’s short of superintendents and craftspeople.

Ivey has hired a full-time craft trainer and a recruiter who is trying to develop better relationships with staffing services and recruiters. The company ramping up its apprenticeship program, doing in-house mentoring, and is working with community colleges. The problem is that it takes a long time to train a qualified welder or pipefitter, Terrell notes.

Catanzaro says that Bernhard MCC will hire a full-time craft-recruiting manager nationally. Additionally, the company has increased exposure through outreach at various schools, vo-techs, high schools, job placement assistance agencies, disabled worker assistance agencies, veterans’ agencies, veterans’ re-employment schools, re-entry court programs, youth programs, as well as female and minority associations.

The company is also pursuing people with mechanical aptitude who are already working or have been recently laid off.

“In addition to commercial MEP, we currently target industrial and residential skilled-craft workers, temp workers, retirees, mechanical service and maintenance workers, trained but inexperienced workers, experienced helpers than can be trained up or enrolled in an apprenticeship program, and even sales, safety and other professional positions that started out in a trade,” Catanzaro says.

While manufacturing reduces field labor, it requires a lot of skilled people in the design and planning stages.

“As we move more into modeling and planning in construction, there has been an increasing need for individuals that are comfortable with 3D technology,” Catanzaro says. “Unfortunately, those individuals generally don’t possess the trade knowledge necessary to understand the components and complexities associated with building a job. Therefore, it has been necessary to take some of the more experienced craftsman in the field and blend their knowledge with the technology to produce an effective and coordinated virtual product that can move into purchasing, fabrication, and installation.”

As advanced planning and manufacturing become more common, it creates a conundrum for small- to medium-sized mechanical contractors. It takes a lot of money to invest in the plant and equipment and the BIM and CAD/CAM technology, plus the highly skilled people necessary to make this all work.

Moormeier says that the manufacturing approach is scalable up or down, but it still requires an investment, especially in the right people.

Contractor management will have to decide if they can prosper with smaller construction projects and mechanical service work or if they have to change their whole approach to constructing buildings.