Construction labor crunch sidelines projects and companies

BY TONY ILLIA

Las Vegas's building boom has stretched its labor force so paper-thin that some development plans are getting shelved. Contractors compete for skilled trades by poaching from one another, recruiting from out of state and paying top-dollar salaries, say local firms.

Construction was responsible for 113,500 jobs locally in July, a 10.8 percent gain over last year, reports the state Department of Employment and Training and Rehabilitation. It's now Nevada's fastest-growing and second-largest employer behind gaming.

Much of the breakneck growth is occurring along the Las Vegas Strip, which is a union stronghold. Roughly $14.7 billion worth of resort expansions are planned by 2009, reports the Las Vegas Convention and Visitors Authority. That figure includes 19,966 hotel rooms and 340,000 square feet of convention space. Another $6.45 billion of tentative projects are planned through 2009. "The unions don't come to job sites to organize anymore, they come to get bodies because they can't satisfy their own demand on the Strip," said Robert Potter, chairman of Affordable Concepts, a non-union Las Vegas general contractor.

And no job is bigger than Project CityCenter. The $7 billion, 18 million-square-foot Strip complex, being developed by MGM Mirage, is the largest

privately financed construction project in U.S. history, officials claim. General contracto, Perini Building Co. will employ up to 7,000 people during the peak of activity, or about one-third of Southern Nevada 's total union trades workforce, says Richard Rizzo, company chairman.

The company has been hiring headhunters to find construction managers and superintendents nationwide, along with paying signing bonuses, housing assistance and moving expenses. CityCenter isn't scheduled to finish until November 2009. It has subsequently raised the competitiveness among local firms for experienced hands, as well as the pay level.

"There are craftsmen that are making $90,000 to $100,000 a year with overtime, and project managers earning up to $250,000 annually," Potter said. "I won't announce any recent hires in the paper anymore because it's advertising for my competitors to come and steal them."

Unions, meanwhile, have been scrambling to fill contractor demand. Both the carpenters and laborers, for example, allow migration without penalizing members or levying additional dues. The added numbers have pumped-up unions locals to record numbers.

"We increased our membership by about 1,100 people last year," said Tommy White, secretary-treasurer for the Laborers' Local 872, which represents over 4,400 members in Clark County. "And we're projecting to add up to 2,000 more members by 2007."

The Laborers even chartered a new local, 702, in November in response to the union's growth. The new local addresses off-Strip light-commercial and residential work. Local 702 has been adding roughly 30 members a month, White claims.

The Carpenters are similarly seeing swollen numbers with 8,800 Las Vegas area members, says Marc Furman, senior administrative assistant for the Southwest Regional Council of Carpenters. He expects to reach 10,000 strong by 2007 when construction peaks at CityCenter.

"It's mostly guys from the Rust Belt, places like Michigan, Wisconsin and Ohio, who are coming to Las Vegas," he added.

Despite this, some building plans are being postponed until such mega-projects as CityCenter; Boyd Gaming's $4 billion, 4,200-unit Eschelon Place ; Steve Wynn's $1.8 billion, 2,000-room Encore at Wynn Las Vegas; and Ian Bruce Eichner's $1.8 billion, 3,000-room Cosmopolitan Resort & Casino can wrap-up.

"Owners want to do expansions but realize that the market resources aren't available to undertake their projects," said Rizzo. "The capacity is sucked dry for the next three to four years."

Contractors, as a result, must communicate early with subcontractors and suppliers on availability before booking additional work. CityCenter, for example, has one- to three-year commitments from companies integral to the project. It's become an increasing trend that's needed for a job's success.

"There is a lot work available, but we need to be selective about the jobs we pick," said Tony Dazzio, vice president of business development for Burke & Associates, a nonunion Las Vegas contractor. "We are trying to pace ourselves in the market and not get beyond what we can handle. It's tempting to take on more work because there is so much work out there. But we don't want to disappoint."

The workload, meanwhile, has brought many big-name national contractors to town, including: Tutor-Saliba Corp., Sylmar, Calif.; Bovis Lend Lease LMB, New York; Turner Construction, New York; and Clark Construction Group, Methesda, Md., among others. But such companies must still rely on the local subcontractor pool, which is 15 percent to 18 percent overtaxed by one estimate.

"It's all about subs. And you can't just invent experienced subcontractors and craftspeople," said Rizzo. "We're not taking on anymore work until 2008."