Pipeline Workshops: Dealing with the Skilled Construction Labor Shortage

Annual new home sales are currently at a level that is 60% below the average of the past 50 years – and there is, nonetheless, a shortage of skilled construction labor.  Over the next several years, annual new home sales are expected to almost double from their current level – and there is, already, a shortage of skilled construction labor.  

It scares the hell out of you, doesn’t it?

There is a valid argument being made for the homebuilding industry taking collective action to solve this problem, by increasing the supply of skilled construction trades.  However, there are vast opportunities for improving this situation that have nothing to do with increasing the supply of skilled construction trades;  as a component of overall production capacity, a significant portion of the existing supply of skilled construction labor is wasted outright, as a result of the industry’s archaic production practices.

Besides, relying on an increase in the availability of skilled construction trades is part and parcel with the larger mindset problem that has plagued this industry for time immemorial:  focus on margin and increase production capacity.

This penchant for relying on the ability to increase production capacity, at will, is not the same as finding the means to increase productivity.  Simply dialing-up more production capacity is a “more-for-more” proposition – the answer to more revenue and more output is more of everything else – more production capacity, more resources, more plans, more steps, more complexity, more reports, more money, more starts, more work-in-process.

We subscribe to a different proposition, a different mental model of what homebuilding production should be:  “more-for-less”.  The answer to more revenue and more output is to find ways to produce that revenue and output with less of everything else – less waste, less rework, fewer non-value-added steps, a simpler operating model, fewer-but-better measures, fewer-but-better resources, a smaller-but-more-intelligent portfolio of plans, less money, less work-in-process, and fewer excuses.

And, there are some areas where we want more;  in addition to more revenue and more output, we would also like more speed, higher velocity, higher quality, more accountability, more focus, more involvement, more partnering.

When I first started making the argument for a focus on velocity, the proposition was “do more with what you already have”;  it was essentially a “more-for-the-same” proposition;  a classic productivity argument;  not as good as “more-for-less”, but considerably better than “more-for-more”.  In the halcyon years known as the Age of Homebuilder Entitlement, a “more-for-the-same” proposition was an acceptable solution.

I think what builders have to confront, right now, is the market and economic reality of having to “do marginally more with significantly less”, slightly more production despite considerably less available capacity;  essentially, it is a “do-the-same-with-less” proposition.

True, sustainable competitive separation is the result of doing what your competition simply will not do, what they cannot do.  Things that are too tough, that require too much rigor, too much discipline, too much resolve.  Margin is important, but it is not the difficult part;  margin is the more natural part, where builders’ inclination lies.

True, sustainable competitive separation requires much more;  it requires doing the difficult part, the part to which builders are less-inclined.  It requires continually and relentlessly finding ways to become more productive, finding ways to do more with less.  It requires being as proficient on the velocity side of Return on Assets as the margin side of ROA.

That’s what a Pipeline workshop is all about.

Pipeline workshops are a two-day immersion into the production physics – into the principles and disciplines – that enable homebuilders to thrive on the velocity side of economic return, that enable builders to thrive on the velocity side of Return on Assets.

 

The next Pipeline workshop will be held at the Ponte Vedra Inn and Club, Ponte Vedra Beach, Florida, on October 15-16, 2014.  Cost is $795.00.  Early registration (open through August 15, 2014) is $645.00.

Delivered by SAI Consulting.  Sponsored by BuilderMT and Big Builder (Hanley Wood).

For more details:  www.buildervelocity.com