Labor and health costs challenge dealers

Washington, D.C. -- When pro dealers gather to talk about their business, it's usually not long before they talk about the challenges of healthcare costs and labor shortages.

Such was the case during the National Lumber and Building Material Dealers Association (NLBMDA) Manufacturers & Services Council Meeting held here as a part of the NLBMDA's Spring Meeting & Legislative Conference.

Christopher Costello, CEO of Gloucester, Massachusetts-based Timberline Enterprises, said his four-location building supply dealer enjoys a strong workforce and a healthy labor pool. For his builder customers, however, it's a different story.

"We see the labor problem a little farther down the food chain," said Costello. "Our customers are reporting labor shortages of epic proportions on almost all fronts."

Costello was one of three pro dealer panelists to share their thoughts during the meeting. He said the framing component of the business is the driver of labor shortages for his customers.

"That is a skillset going away, and it's not being refilled in a way that is required in order for us to have a construction market recovery," he said.

For the company itself, he said, the biggest challenge is health care. "The rising costs of health care affects us all," Costello said. "I don't think we've scratched the surface of the true costs of the Affordable Care Act."

To illustrate the scope of the healthcare challenge, he said entry-level employees receive healthcare benefits of about one-third of their salary. All pro dealers, he said, need to be aware of the situation and the danger of escalating healthcare costs.

At Shepley Wood Products in Hyannis, Massachusetts, healthcare costs are the company's second largest expense after payroll, said Leah Kosnack Fennell, marketing director at Shepley.

"We're trying to get very creative in the ways that we continue to offer good benefits for our employees and not bankrupt our company at the same time," she said.

Another challenge for the four-unit pro dealer located on the affluent, resort area of Cape Cod is the cost of housing that creates barriers for new workers to enter the area. "The cost of housing is so high it's hard for young people to make a start where we live," she said. "It's an enormous challenge for us."

Brandon Coppage, general manager of Kelly Bros Home and Design Center, a three-unit dealer in Covington, Kentucky, echoed some of the challenges faced by his fellow panelists -- and previous panels organized by the MSC. The key challenge, he believes, is labor.

"It has been forecast for a while, but this is the year that the shortage of framers becomes reality," he said. "The level of business has come to the point where the shortage comes to light."

Also, Coppage said the company is looking down the road for future customers who might replace builders and remodelers who are retiring or getting out of the industry. It's not always clear where those new customers will come from, he said.

While discussing the challenges, all the participants in the panel said growth was in the forecast for 2015.