Michigan Merit Magazine Spring 2015 Issue

SPRING 2015

MICHIGAN

A PUBLICATION OF ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN

SKILLED TRADES

TRAINING MEMBERS AND ABC TAKE THE LEAD IN MICHIGAN

ALSO:

PREPARING FOR A SUCCESSFUL BUSINESS TRANSITION CONSTRUCTION STARTS INDICATE STABILITY IN 2015

September 30 – October 2, 2015 Grand Hotel, Mackinac Island

The summit features world-class speakers on leadership, workforce development, safety, labor law, and an update on Michigan’s construction economy. Two large group sessions, one with Economic Development leaders from across the state, and another with major construction buyers in Michigan will highlight ways to keep your business successful in 2015 and beyond!

      

Keynote speaker Steve Ford on Leading with Integrity Networking with construction industry leadership from across Michigan Invitation-only cocktail reception at the Grand Hotel's exclusive Jockey Club Dinner & Dancing at the Grand Hotel Golf on the Jewel Golf Course Unique networking reception on the World’s Longest Front Porch And more!

2015 MCLS brought to you by:

CONTENTS VOLUME IX, ISSUE 2

FEATURES

24

6

Skilled Trades Training: Members & ABC Take the Lead in Michigan

12

Building a Structure for Skilled Trades in Michigan

14

Economic Update: Construction Starts Indicate Stability in 2015

by Don Wilson

21

Preparing for Transition

by Mary Van Skiver and Heidi Bolger

DEPARTMENTS

26

6

6

5

Executive Perspective

by Chris Fisher

24

Government Affairs: Legislative Day Recap and ABC Emphasizes State Authority Over Employment Benefits

26

Get to Know Your Lawmaker

30

Advertiser Index

Cover photo taken by Mark Sawyer

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EXECUTIVE PERSPECTIVE

M

ichigan is poised to be a leader in skilled trades training and strategic planning. And ABC is prepared to help lead the way.

This issue of Michigan Merit highlights some of the challenges and opportunities in skilled trades training in Michigan and shares some of the major efforts underway throughout ABC in Michigan.

Aligning workforce talent with employer needs is critical, and Michigan needs to ensure that the efficient and effective delivery of skilled trades training and education is both accessible and affordable.

CHRIS FISHER President & CEO ABC of Michigan 2015 BOARD of DIRECTORS Dan Murphy, Chairman MAG Insulation Greater Michigan Chapter Mike Houseman, Vice-Chairman Wolverine Building Group Western Michigan Chapter Dave Sheffield, Secretary-Treasurer Onslow-Sheffield, Inc. Southeastern Michigan Chapter Brian Stadler, Immediate Past Chair Wolgast Corporation Greater Michigan Chapter Chris Beckering Pioneer Construction Western Michigan Chapter Jim Cripps Cripps Fontaine Excavating, Inc. Western Michigan Chapter Rick Jackson Jackson Associates, Inc. Southeastern Michigan Chapter Michael Marks The MacKenzie Companies Greater Michigan Chapter Dave Mollitor Consolidated Electrical Contractors Greater Michigan Chapter Bill Molnar Wm. Molnar Roofing Co., Inc. Southeastern Michigan Chapter Jack VandeGuchte Western Michigan Chapter Mike Waalkes Lighthouse Insurance Group Western Michigan Chapter

Nationally, we must fill 1.6 million construction jobs by 2022. In Michigan the state predicts that demand for skilled trades jobs in the construction industry will increase at a breathtaking rate that approaches or even surpasses a 20% higher demand for many trades.

In Michigan the state predicts that demand for skilled trades jobs in the construction industry will increase at a breathtaking rate that approaches or even surpasses a 20% demand for many trades.

That’s why the great efforts of ABC chapters in Michigan, ABC of Michigan and ABC National all come together to advance and promote skilled trades training and opportunities. From top-notch employee training within individual ABC member companies, to major career exploration events, to award-winning academies run by Michigan ABC Chapters, there is no doubt that ABC is among the most active trade associations in the state when it comes to our commitment to workforce development.

Yours for the Merit Shop,

FEATURE

SKILLED TRADES

TRAINING

Michigan ABC Chapters and Members Take the Lead

S

killed trades training in Michigan takes almost as many forms as there are workers and construction companies in the state. But in Michigan, ABC operates the state’s two largest state-licensed proprietary schools devoted entirely to skilled trades education in 12 different construction trades. The Greater Michigan Construction Academy in Midland and Lansing, and Southeastern Michigan’s Construction Education Trust (CET) provide accredited training and apprenticeship programs to thousands of students each year. In Western Michigan, ABC members have banded with other stakeholders to provide the necessary training their members need. ABC member companies throughout the state take advantage of their own internal training programs and specialize in building their company culture of training both for their employees’ benefit and their own.

MAKE A GREAT LIVING MAKING GREAT PLACES The ABC Western Michigan chapter is a founding member of the Construction Workforce Development Alliance (CWDA), whose members also include the Home Builders Association of Greater Grand Rapids and the American Subcontractors Association of Michigan. The group offers the Jump Start Program, a 100-hour class taught full time over a three week time frame; tuition is 100 percent covered by scholarships offered by CWDA and Michigan Works!, and graduates are guaranteed employment interviews. The program positions students who complete the training to be ready to work in the construction field with needed basic skills, including basic construction math, site Photo taken by Mark Sawyer. All training photos are from ABC-CET

awareness, power tools, materials handling, and a 10-hour OSHA Certification course. According to Norm Brady, President & CEO of the ABC Western Michigan Chapter, in 2014, twenty-four employing companies were competing for fifteen graduates of the Jump Start program.

ABC Western Michigan also has created certifications in carpentry, concrete, and ironwork, along with a Construction Core Certificate. Member employers participated in creating the training and customized existing National Center for Construction Education and Research (NCCER, the national training entity for construction education) curriculum extensively. The classes are run by a NCCER-certified instructor and often, depending upon the type of class, include a presentation from a professional working for a contractor or supplier member company. Brady says that working with these contractor or supplier “Field Experts” in ABC classes makes a huge difference in creating an environment where students get a true feel for the day to day of construction.

“The focus is on meat and potatoes,” says Brady, “[and] generally the amount of training time is condensed compared to the NCCER program. At the end of the day, these are employer programs and we set them up based on the direction that the employer members provide.” Brady notes that while apprenticeship training programs have very specific requirements, the programs that ABC has created are Craft Training Programs and have more flexibility.

Brady says that while the training programs provided by ABC members are crucial, the “story” of construction has to be told well and often. He points out that ABC members “need to tell the real story of the construction industry. The real story is about great pay, numerous career paths, and collaboration. It seems to me that we all end up where we do because someone at some point in our lives took an interest in us. If we are going to be able to attract the workforce of the future they need to know about all that we offer. When we make a personal connection with them, the chances increase that they will consider a career in construction.”

ABC members did just that on April 28 at Career Quest 2015 in Grand Rapids. The event was at capacity, with 6,000 students registered, with approximately 100 employers who will showcase the hands-on “day-in-the-life” of a skilled worker. The event also emphasized the role of post-secondary training. While Brady and ABC members put a great deal of time into making these training and outreach events available industry-wide, a large number of ABC member firms also run in-house programs with strict standards.

Allied Electric in Grand Rapids runs an in-house NCCER-certified apprenticeship program, with classroom-style instructor-led training for company-specific policies and procedures and handson training with individual competency testing. Mike Powers, co-owner of Allied Electric, sees value in that in-house training, but also points out that he sees a strategic goal worth pursuing as well: construction companies and skilled tradesmen “need to assure parents and guidance counselors that a skilled trades career

is a successful path to economic and social prosperity. A change is also needed if high schools are evaluated based upon how many students attend college. Attending a trade school should be given equal weight to attending college.”

Nearly 30% of the statewide ABC membership (around 1000 companies strong) polled in 2014 said that finding skilled workers for their company was their biggest obstacle to growth. Michael Lawrence, training and development director at Allied Electric, says that “it has been difficult to find not only skilled individuals into the company, but also those that are interested without skills such as first year apprentices.”

THE JOBS ARE OUT THERE! Greater Michigan Construction Academy (GMCA), a state proprietary school run by the ABC Greater Michigan Chapter, offers two semesters each year in Midland and Lansing, with approximately 300 students per semester. Four year programs offer classes in insulating, carpentry, electrical, HVAC, plumbing, sheet metal, pipefitting, ironworking, and industrial maintenance mechanics. GMCA, founded in 1975, is an accredited member of NCCER. Stephanie Davis, Director of Education at GMCA, notes that: “The jobs are out there, and there are good jobs – careers!” While certification is part of the program for most if not all of the students, “we train our students for employment, not just a certification.” The focus on career-ready classes and skills pays off in a major way: students have a 100% placement rate. While enrollment is good, and companies eager to train, Davis notes that “we could absolutely use more help getting the word into schools about the skilled trades gap, and the need for trained skilled tradesmen and women.

Not so much at the student level, but making counselors, principals,

Photo taken by Mark Sawyer

MICHIGAN MERIT • SPRING 2015

7

FEATURE and even superintendents aware of the opportunities out there.”

Jimmy Greene, President & CEO of the ABC Greater Michigan Chapter and President of GMCA, says that his main strategic focus has been getting all stakeholders on the same page that there have been two big structural problems in the past: first, the “age gap,” losing qualified skilled workers through the attrition of aging out of the workforce; second, guaranteeing competency by ensuring that Science, Technology, Engineering, and Math (STEM) curricula is viewed as the crucial component to continued growth in construction that it truly is.

Over the past several years, Greene and his team have focused on partnering with high schools to show the practical, hands-on aspects of the skilled trades and show students how the core competencies in math, science, and engineering that they are learning in the classroom translate immediately to competency on the jobsite.

“We have to keep up with current technologies and build smart students to keep up with the future of construction,” says Greene. He says that partnering long-term will create the training culture that his contractor members desperately need. “This is not an initiative. This should be a sustainable program that will continue to pay dividends and requires constant maintenance and adaptability.” Randy Sherman, president of Midland-based Three

Photos taken by Mark Sawyer

8

ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN

Rivers Corporation (TRC) points out that students should be told that careers in the skilled trades can be challenging, rewarding and very gratifying. By enrolling TRC employees in GMCA classes, he says TRC is “developing a future workforce [with] a tailored training program that is nationally recognized,” and that an important element to their participation is supporting ABC in general, because they recognize that ABC’s training programs are a top-notch benefit to the skilled trades in Michigan.

NINETY-EIGHT PERCENT OF OUR STUDENT BODY IS EMPLOYED In Madison Heights, the ABC Southeastern Michigan Chapter operates the Construction Education Trust (CET), which has been instructing apprentices and craft professionals in the skilled trades for 32 years. Their mission is “to train tomorrow’s workforce to be skilled, motivated, and safety-conscious.” The CET’s apprenticeship programs offer four years of intense and trades specific training in the following crafts: Electrical, Carpentry, Plumbing, Sheet Metal, and HVAC. A three year Roofing program and two year Construction Laborer program are also offered. The CET is accredited by the NCCER, licensed with the State of Michigan as a non-profit education program, registered with the Department

Construction is a great career path with limitless possibilities Middle School

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Tied with the health

between 2012-2022 are

annual rate of

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related to construction.

2.6%

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2X

Career progression BuildYourFuture.org

Occupations typically requiring apprenticeship training are projected to grow

22.2% from 2012-2022.

More than twice as fast as the average of all industries.

US Department of Labor’s 2013 Occupational Outlook Handbook

workforceunderconstruction.com abc.org

FEATURE of Labor / Bureau of Apprenticeship Training, and is an approved training program for the Department of Veterans Affairs (VA) and for Michigan Works!

Mark Sawyer, executive director of both the ABC Southeastern Michigan Chapter and the CET noted that “as construction came to screeching halt during the Great Recession, the demand for training dropped off sharply. However, in late 2011, the economy showed steady signs of improvement and the demand for qualified workers has seen a dramatic resurgence. We are confident that the demand will continue – so much so that CET is expanding our already-impressive facility.”

CET enrolled dozens of new students in their courses this year. Sawyer says that the increasing enrollment is encouraging and acknowledges that there’s still a lot to do to put the numbers up where they belong. Sawyer says that the state should consider having additional scholarship funding for trade schools as an incentive for students, who may not have the financial ability to otherwise start a career in the trades. “Imagine the possibilities if we [as trade schools] had the opportunity to walk into a high school classroom and tell students: ‘Here’s a $3500 scholarship to attend your first year of training, and oh, by the way, we’ll assist you in finding a job once you start your training.”

10

ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN

Photo taken by Mark Sawyer

“Demand for qualified workers is such that for the first time in anyone’s memory, we now have a list of member companies that are looking to hire. At present about 98% of the CET’s student body is employed,” notes Sawyer. “The impressive number of employed students is both a function of the quality training students receive and a testament to the fact that ABC members are busier and simply need skilled workers.”

RCI Electric, Farmington Hills, is just one of those Southeastern Michigan contractors that stands out for their commitment to getting their employees trained. Jim Struble, owner of RCI, is passionate about training his employees – something he says gets paid back to him in the form of competent, safe employees who feel invested in the company. Struble originally joined the Southeastern Michigan ABC chapter more than 20 years ago so that he could take advantage of the training programs offered by CET. Now, he sits on the Board of Directors of the school.

Struble’s employees are all required to participate in the Southeastern Michigan Chapter’s apprenticeship program, and his enthusiasm for “developing not just knowledge and skills, but also character,” shows in the pride he takes in his employees. He says CET has been an integral part of his training strategy. While Struble provides this training to current employees, he, like other

ABC member firms, sees a great need for increased investment in skilled trades opportunities for high school students. He encourages the State and contractors themselves to keep working on telling students, parents, and guidance counselors that “construction is a great career path – there are a lot of opportunities for advancement. I started out in the trade and eventually worked at opening my own business. A lot of very successful construction company owners started out working with their hands.” MM

Bob Koster Jr.

RESOURCES: • CONSTRUCTION WORKFORCE DEVELOPMENT ALLIANCE: WEBUILDMI.COM • ABC WESTERN MICHIGAN CHAPTER: WWW.ABCWMC.ORG • CONSTRUCTION EDUCATION TRAINING (SOUTHEASTERN MICHIGAN): WWW.ABCSEMI.COM • GREATER MICHIGAN CONSTRUCTION ACADEMY: GMCACADEMY.ORG • NCCER: WWW.NCCER.ORG

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11

FEATURE

BUILDING A STRUCTURE FOR THE SKILLED TRADES IN MICHIGAN The phrase “skilled trades” is a buzzword in recent public discussion in Michigan, as the Snyder administration and Michigan lawmakers push for renewed efforts to match Michigan’s workforce with available good careers. “Skilled trades” is not a formal designation, so is often used in widely varying industries. A good working definition is that the skilled trades are those that build, repair, and create, typically requiring extensive formal apprenticeship or on the job training. Craft workers are carpenters, mechanical problem-solvers, electricians, machinists, welders, HVAC technicians, renewable energy specialists, and more.

ABC has been and continues to be a major player in assuring that long-term workforce planning includes flexibility, training options, and a well-developed outreach strategy to bring new

tries the near-term demand is much higher, approaching or even surpassing twenty percent, including for critical jobs like brickmasons, welders, glaziers, iron workers, HVAC installers, carpentry helpers, pipelayers and other essential construction-related occupations in Michigan. The shortage presents a challenge to the construction industry, but also provides career opportunities for men and women interested in construction.

ABC member firms do put their training money where their mouth is to help fill the gap: member firms trained 280,000 skilled trades professionals across the country last year. Nationally, ABC has trade schools with total enrollment that exceeds 70,000 post-secondary students (even more than nationally known training schools like ITT Tech). Overall, ABC’s nationally accredited training exceeded 3

ABC has been and continues to be a major player in assuring that long-term workforce planning includes flexibility, training options, and a well-developed outreach strategy to bring new skilled workers into available jobs. skilled workers into available jobs.

Chris Fisher, president & CEO of ABC of Michigan, says that the industry’s commitment to talent and workforce development is absolutely vital to its growth. “Despite the many opportunities for training that exist, and despite the many benefits of a rewarding career as a skilled trades professional, our industry is experiencing a worrisome workforce skills gap as baby boomers begin to retire, taking with them hands-on experience and conventional knowledge they acquired over years in the industry,” says Fisher.

The “age gap” is on top of the last decade of economic decline where Michigan construction employment plummeted, causing many to leave the industry altogether. CBS News reported in a national study in November 2014 that the average construction worker is in his or her 40s or 50s, depending on the trade. This aging workforce, combined with welcomed growth in the construction industry, will result in a national shortage of 1.6 million construction workers by 2022, according to the national Bureau of Labor Statistics.

The state of Michigan alone predicts that demand for skilled trades jobs will be increasing by at least 8.5 percent by the end of the current decade. For many construction skilled trade indus12

ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN

million training hours, not including on-the-job training hours and not including training completed by individual member firms.

Skilled trades training is vital. But ABC of Michigan and the three state chapters – Greater Michigan, Southeastern Michigan and Western Michigan – also put state and national advocacy on this issue as a top priority.

Michigan has been working to increase opportunities for high school students. In 2014, legislation supported by ABC and sponsored by Rep. Ed McBroom (R-Vulcan) and Rep. Joel Johnson (R-Clare) was signed into law to improve the flexibility of the Michigan Merit Curriculum to help make skilled trades opportunities more accessible in high school, while maintaining the necessary academic rigor required for high school graduates.

The laser-like focus of educational institutions on preparing students to enter colleges and universities has meant that there are fewer students even exposed to the possibility of a skilled career, apart from the opportunities available with a “traditional” four year degree. A skilled trades career path could start out in high school with part of the student’s curriculum integrated into hands-on learning at local training institutions (proprietary schools, community colleges).

This would typically be followed by apprenticeship or post-second-

ary training (often a rigorous four year program) or with a college degree in project management, construction management, engineering, or in the emerging fields like renewable energy or robotics.

Students who pursue the skilled trades end up graduating high school with marketable skills, and in many cases, job offers. And, for the many students who are willing to continue on in their training (typically while also being paid), there is almost unlimited career mobility in the skilled trades. Research suggests that students who enter the workforce more quickly with skilled trades training can make more over the course of their working life than individuals who chose to enter a four year university and incur student loans.

Fisher recommends that the state consider a change to its available financial aid and tuition assistance to encourage this post-secondary training path as a feasible and attractive option. The state of Michigan has numerous state-supported financial aid and scholarship programs for college and university-bound students.

“This is, of course, a good thing, but unfortunately these fall short by not being readily available for students who seek other educational opportunities at accredited trade, proprietary and vocational schools,” according to Fisher.

The idea is being advocated both by Fisher and by ABC members. Fisher and ABC Greater Michigan Chapter president Jimmy Greene recently testified in front of a new State House Committee, the House Workforce & Talent Development Committee, chaired by Rep. Joel Johnson on the importance of seriously looking at the structural challenges that students who are interested in rewarding skilled trades careers often face. “After all,” says Fisher, “if we are serious about workforce development and equally emphasizing skilled trades, we can no longer make the mistake of denying students financial aid that enables them to obtain needed, rigorous, credentialed and relevant skilled trades education after high school.”

Senator Ken Horn (R-Frankenmuth) chairs a counterpart committee in the Senate, the Senate Economic Development and International Investment Committee, which counts as one of its focus areas the diversification of the workforce through the development of skilled trades programs. Sen. Horn says that the skilled trades gap is an “all-hands-on-deck issue right now” and his committee has been working to identify solutions. (For more on Sen. Horn, see pg 26.)

For Governor Rick Snyder, pushing skilled trades development has been part of a strategy that compels Michigan to develop a “world-class workforce” after the punishing period where skilled trades people left the state in droves in search of employment or advancement. Snyder’s stated goal is to make Michigan number one in skilled trades, which his office defines to include “jobs [that] typically require education beyond high school, along with on-the-job training, but not a four-year [traditional] degree,” including jobs in health care, maintenance and repair, public safety, manufacturing, and construction.

ABC National also works at the national legislative level to advocate for additional flexibility and funding with an emphasis on the available, well-paying, and rewarding career path for students, noting that “the construction industry provides good, well-paying jobs to American workers every year. To qualify for many of these jobs, however, workers need high-quality, flexible skilled training. Such training can lead to a lifetime career opportunity in a lucrative field.” Increased skilled training is vital to the future of the construction industry. ABC plans to continue to work to ensure construction companies’ training needs are addressed, and expand workers’ options to choose to train and work in the merit shop sector of the construction industry. MM MICHIGAN MERIT • SPRING 2015

13

ECONOMIC UPDATE

CONSTRUCTION STARTS INDICATE STABILITY IN 2015 explain and compare construction put in place with barometers of one or more economic indigenous factors that are a significant driver of non-residential construction activity in particular markets. The numerical reading of some barometers are moved forward from one, two or three years earlier to a later year in some exhibits. The purpose of this is to provide some concept of the amount of time that passes between change in the factor(s) and its impact on construction activity. When there is a decline in a factor or factors, measured on a statewide basis, construction reacts gradually because of the size, type and complexity of the work in process. When there is an increase in factors, construction reacts slowly because of the time required for the planning, design and acquisition of financing for the diversity of construction before it is approved to be started.

BY DON WILSON, ECONOMIST ABC OF MICHIGAN Approved construction starts, a leading indicator of construction put in place, plunged 53% in 2009 from 2008, rebounded 14% in 2010, slipped 1% in 2011, increased 6.3% in 2012, plummeted 11% again in 2013 and then jumped an estimated 8% in 2014, a sign that construction demand is stabilizing and providing a strong footing for 2015. The value of construction starts for all types of nonresidential building projects in Michigan are compared with the Michigan Business Barometer and private sector employment in Exhibit # 1.

Succeeding paragraphs and exhibits

MICHIGAN BUSINESS BAROMETER / NON-RESIDENTIAL CONSTRUCTION STARTS INDEX / PRIVATE SECTOR Business Barometer / EMPLOYMENT !

Construction Starts Index 120!

(2007 = 100)!

Business Barometer!

Non-residential Construction Starts index !

Employment!

Exhibit # 1!

Emploment!

(000,000)!

4!

3.9!

110!

3.8!

100!

3.7!

3.6!

90!

3.5!

80!

3.4!

3.3!

70!

3.2!

60!

Source: Michigan Dep't. Treasury, Public Service Commission, U. S. Bureau of Labor Statistics, Chicago!

Federal Reserve Bank, Michigan Association of Realtors, McGraw-Hill and Other Organizations !

50!

14

04!

05!

06!

07!

08!

09!

10!

11!

12!

ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN

3.1! !

13!

14 Est.!

3!

OFFICE MARKET Change in the number of employees occupying office space (moved forward from three years earlier to a later year) as shown in Exhibit # 2, portrays its significance as a determinant of construction work in these structures. Though job creation in those employer industries resumed in 2010, year over year improvement in construction did not resume until 2012. Construction then slipped slightly in 2013 and then returned to the 2012 levels in 2014, despite more job creation in 2011 and 2012. That job creation pushed employment rolls back over the one million level in 2013 for the first time since 2007.

Construction increased only moderately because of slow growth in employment and continuation of high building vacancy rates. Employment, after rising 2.6% in 2010, 3.3% in 2011, 2.4% in 2012, and 1.3% in 2013, declined 0.8% in 2014. Office vacancy, after rising to 17% in the first quarter of 2010, was still at 14.8% at mid-year 2014 due mainly to overbuilding in suburban areas in the 1980s. Given these facts, it is expected that construction in the office market will again see only modest growth in 2015.

DISTRIBUTION MARKET The market for construction in distribution is composed of facilities operated by retailers and wholesalers. Retailer activity, consumer merchandise outlets and eating and drinking establishment revenues, as measured by the Retail Sales Barometer, is displayed in Exhibit # 3. Retail sales (moved forward from one year earlier to a later year in the exhibit), after declining to 94.9 in 2008 (2007 = 100) and 91.5 in 2009, climbed to 94.4 in 2010, slipped back to 92.4 in 2011 and increased in

each of the subsequent years.

Wholesale operations in Michigan include the wholesale functions of manufacturers, independent wholesalers, manufacturers’ representatives, branch offices and the warehouse supply operations owned by all types of retailers. Wholesaling activities, as tracked by the Wholesaler Operations Barometer, after bottoming out at 84.9 (2007 =100) in 2010, increased in 2011 through 2013 before declining in 2014.

Retail vacancy in southeastern Michigan stood at 8.8% on September 30, 2014 compared with 15.1% at the start of 2009.

In western Michigan retail vacancy was 15.1% at the start of 2014 down from 17.3% in early 2012. Warehousing space in southeastern Michigan was 8.1% vacant on September 30, 2014, down from 13.3% at the beginning of 2011, and space in western Michigan was 5.5% unoccupied, down from

Construction Index!

(2007 = 100)!

MICHIGAN OFFICE MARKET CHANGE IN EMPLOYMENT / CONSTRUCTION ACTIVITY!

Exhibit # 2!

Employment Change (000)!

120!

Office Construction Index!

40!

Employment Change (000 - Three Years Earlier)!

30!

100!

20!

10!

80!

0!

-10!

60!

-20!

40!

-30!

-40!

20!

-50!

0!

Source: U. S. Bureau of Labor Statistics, FMI Consulting & Census Bureau Building Project Surveys !

04!

05!

06!

07!

08!

09!

10!

11!

12!

13!

14 Est.!

-60!

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MICHIGAN MERIT • SPRING 2015

15

ECONOMIC UPDATE HEALTHCARE MARKET A barometer of Michigan’s healthcare industry, a composite measure of all types of service activities (medical, dental and social assistance facilities) is compared in Exhibit # 4 with construction put in place. Healthcare spending is dictated by the volume of treatment services and the charges for their delivery. The barometer, after peaking in 2007, contracted to 88.3 in 2010 (2007 =

9.1% at the opening of 2011. Construction put into place in retail and wholesale structures, after sinking to a level of 41 in 2010 (2007 = 100), has slowly recovered rising to 44.7 in 2011, 47.7 in 2012, 47.3 in 2013 and 51.3 in 2014. Many retail mall operators continue to stay clear of new construction projects with the continued growth of e-commerce in the household sector.

MICHIGAN DISTRIBUTION MARKET / CONSTRUCTION ACTIVITY !

Retail Sales / Wholesaler Operations Barometer !

(2007 = 100)!

110!

Exhibit # 3!

Construction Index !

(2007 = 100)!

110!

Retail Trade Sale Brometer ( One Year Earlier)!

Wholesaler Operations Barometer!

Construction Index!

100!

105!

90!

100!

80!

70!

95!

60!

90!

50!

85!

Source: Michigan Dep't. of Treasury, U. S. Bureau of Labor Statistics, FMI Consulting & Census Bureau Building Project Surveys!

80!

04!

05!

06!

07!

08!

09!

10!

11!

12!

13!

40!

!

14 Est.!

30!

MICHIGAN HEALTHCARE MARKET / CONSTRUCTION ACTIVITY! Exhibit # 4!

Construction Index!

(2007= 100)!

Healthcare Barometer !

(2007 = 100)!

105!

Healthcare Services Activity!

105!

Construction Index!

100!

100!

95!

95!

90!

90!

85!

85!

80!

80!

75!

75!

Source: U. S. Bureau of Labor Statistics, FMI Consulting & Census Bureau Building Project Surveys !

70!

16

100), expanded to 92.8 in 2011 and 97.5 in 2012, before leveling out at 97.4 in 2013 and declining to 95.2 in 2014.

The recession left many people with meager or no insurance resulting in rising charity cases and ballooning bad debts.

State Medicaid disbursements also slowed.

That was accompanied by the passage of the Affordable Care Act which caused the loss of healthcare coverage for millions, increased healthcare premium charges and deductibles and forced many employers to drop healthcare coverage. This is reflected in hospital bed utilization across the state, which declined from 57.8% in 2008 to 54% in 2013 and was probably at an even lower level in 2014. Construction put in place also bottomed out in 2010 at 80.9 before increasing slightly to 81.9 in 2011, 85.2 in 2012 and then slipped to 81.7 in 2013 and an estimated 79.3 in 2014.

04!

05!

06!

07!

08!

09!

10!

11!

12!

ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN

13!

14 Est.!

70!

EDUCATION MARKET Student enrollment in all schools, colleges and universities is compared with construction in Exhibit # 5. Overall head counts, as measured by the Enrollment Barometer, in decline since 2004, dropped to a level of 96.9 in 2013 (2007 = 100) and an estimated 96 in 2014. Based on late September and early October student tallies, the drop-off in the traditional elementary and secondary enrollment continues to be offset by the growth in charter and post-secondary level enrollees. Attendance at colleges and universities has been on an uptrend due to the need for remedial education, retraining because of job loss, qualifying for a better job, or earning an associate, bachelor or graduate degree.

Elementary and secondary enrollment has been shrinking with the decline in birth rates, relocation of more residents to other states than those immigrating here, and the increase in internet learning and home schooling. Construction has likewise been receding since 2007 with the exception of 2009, withering to a level of 76.8 in 2012 (2007 = 100), 71.1 in 2013 and an estimated 71.5 in 2014.

MANUFACTURING MARKET Exhibit # 6 contrasts readings of barometers (moved forward from two years earlier to a later year) in overall Michigan manufacturing with two of its most prominent segments, motor vehicle and office and institutional furniture production, and an index of construction put in place.

Manufacturing activity, per the Manufacturing Barometer, after falling to a level of 74.8 in 2009 (2007=100), turned upward to 79.9 in 2010 and has continued to expand since then. Automotive production, after falling to 43.8 in 2009 (2007 =100), rose to 63.2 in 2010, 75.2 in 2011 and 81 in 2012 and has risen every year since. Furniture production, following a drop to 64.3 in 2009 (2007 = 100), rose to 67.5 in 2010, 74.3 in 2011, before dropping to 72.1in 2012 and increased each year thereafter.

Construction put in place, as tracked

MICHIGAN EDUCATION MARKET / CONSTRUCTION ACTIVITY! Enrollment Barometer!

(2007 = 100)!

110!

Exhibit # 5!

Construction Index !

(2007 = 100)!

105!

108!

100!

106!

95!

104!

102!

90!

100!

85!

98!

Student Enrollment Barometer !

Construction Index!

96!

80!

94!

75!

92!

90!

Source: U. S. & Michigan Department of Education, FMI Consulting & Census Building Project Surveys !

04!

05!

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06!

07!

08!

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11!

12!

13!

14 Est.!

70!

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ECONOMIC UPDATE consolidation with other processes or products. Following an upturn in motor vehicle sales and the requirement to increase vehicle production in 2010, many steps were taken that minimized the need to add new space and capacity spending within the state and elsewhere. These included lengthening weekly work shifts, adding a second or third shift to weekly schedules and increasing production output by rede-

by its index, after slumping to 81.1 in 2011 (2007 = 100) from 127.8 in 2009, expanded to 91 in 2012, 95.3 in 2013 and returned to its 2007 level of 100 in 2014.

Manufacturers have tended to use existing facilities. With the decline in sales in many types of products during the recession and the accompanying cutbacks in output, existing facility space was either mothballed, torn down, or redeveloped for start-up or

MICHIGAN MANUFACTURING MARKET / CONSTRUCTION ACTIVITY

Exhibit # 6

140

Automo=ve / Furniture Produc=on Barometer (2007 = 100) 140

130

130

120

120

110

110

100

100

90

90

Mamifacturing Barometer / Construc=on Index (2007 = 100)

80

80 Manufacturing Barometer ( Two Years Earlier)

70

70

Construc=on Index Detroit Automakers Produc=on Barometer (Two Years Earlier )

60

60

Office & Ins=tu=onal Furniture Produc=on Barometer (Two Years Earlier)

50

50

Source: U. S. Bureau of Labor Sta=s=cs, Michigan Public Service Commission, Detroit's Automakers Report, FMI Consul=ng & Census Bureau Building Project Surveys

40

40 04

05

06

07

08

09

10

11

12

13

14 Est.

MICHIGAN TRANSPORTATION MARKET / CONSTRUCTION ACTIVITY!

Exhibit #7!

Construction Index !

(2007 = 100)!

Passenger / Freight Barometer (2007 = 100)!

115!

125!

110!

120!

115!

105!

110!

100!

105!

95!

100!

90!

95!

Passenger Traffic Barometer (Two Years Earlier)!

Freight Traffic Barometer (Two Years Earlier) !

Construction Index !

85!

80!

75!

70!

18

90!

85!

80!

Source: Michigan Dep't. of Transportation, Association of American Railroads, !

U. S. Army Corps of Engineers, FMI Consulting & Census Bureau Building Project Surveys !

04!

05!

06!

07!

08!

09!

10!

11!

12!

ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN

13!

14 Est.!

75!

signing work station procedures and conducting extensive worker retraining.

TRANSPORTATION MARKET Barometers of the annual number of inbound and outbound passengers travelling by air and rail and tons of airborne, rail and waterborne freight (each moved forward from two years earlier to a later year) in Exhibit # 7 are contrasted with an index of construction put in place. After peaking in 2005, passenger travel, as measured by its barometer, declined through 2007, rose in 2008, fell again in 2009 with the cost cutting accompanying the automotive recession and its effect on Michigan’s struggling economy. Other contributing factors included airline consolidation and changes in flight offerings. Quantity of air travel has continued to improve since 2009 with the exception of 2012.

Freight movement, as tracked by its barometer, which last peaked in 2003, continued to gradually decline through 2007 as the state economy weakened, and then plunged in 2008 and 2009 with the advent of the recession. Since then, freight volume has gradually improved with rising production in automotive, office and institutional furniture and other industries and their supply chains. Construction put in place, not very volatile in 2008 through 2010, declined in 2011, rose in 2012 and 2013, was an estimated 18% higher in 2014 than in 2010.

LODGING MARKET Barometers of highway vehicle mileage, airline and railroad passenger traffic and each sector’s impact on hotel / motel occupancy rates (each moved forward from two years earlier to a later year) in Exhibit # 8 portrays the impact of their change on construction put in place. Vehicle mileage declined 7.8% to a level of 92.2 in 2009 (2007=100) from its preceding high level in 2007 and has continued to decline since then due to various factors. Average car ownership per household peaked in 2005 while annual miles driven peaked in 2004. Application for drivers’ licenses has

decreased, and cars are being driven less with the higher prices for gasoline. Also fewer miles were registered as being driven with the rise in engine efficiency that began early in the last decade.

Following the burst of the housing bubble in 2005, spending on cars and travel began declining beginning in 2006.

Air and rail passenger traffic, after peaking in 2005, declined to their lowest point in 2009 with the cutbacks in spending accompanying the recession, then recovered slightly in 2010 and showed only moderate improvement thereafter. Hotel and motel occupancy, after topping out in 2007, contracted to its lowest level in 2009 and rose in both 2010 and 2011 with the pick-up in travel, convention and conference activity and has improved since

MICHIGAN LODGING MARKET / CONSTRUCTION ACTIVITY!

Mileage & Passenger Barometer (2007 = 100) / Occupancy Rate (%)!

Exhibit # 8!

Construction Index !

(2007 = 100)!

140!

120!

120!

100!

100!

80!

80!

60!

60!

40!

Highway Vehicle Travel Mileage Barometer (Two Years Earlier) !

Occupancy Rate (Two Years Earlier)!

Airline & Railroad Passenger Barometer (Two Years Earlier) !

Construction Index !

20!

0!

40!

20!

Source: Michigan Dep't. of Transportation, Travel Michigan Program, FMI Consulting & Census Bureau Building Project Surveys !

04!

05!

06!

07!

08!

09!

10!

11!

12!

13!

!

14 Est.!

0!

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MICHIGAN MERIT • SPRING 2015

19

ECONOMIC UPDATE then. Construction activity, following its last peak at 120.1 in 2008 (2007=100), declined to 28.9 in 2011 before increasing to 33.7 in 2012, 41.5 in 2013 and an estimated 51.5 in 2014.

Visitor Barometer is a measure of traffic at sporting events, cultural venues, exhibits, shows, and other events. After contracting to a level of 94.7 in 2010 (2007 = 100) traffic improved to a level of 100.8 in 2012, slipped to 97.8 in 2013 and then rose to an estimated 100.5 in 2014 (2007 = 100). Construction was cut back to a level of 69.2 in 2011 (2007 = 100) from its previous high in 2007 as attendance and visitor traffic softened with the weakening in consumer and business spend-

RECREATION MARKET Exhibit # 9 compares a composite measure of paid attendee and visitor traffic at select amusement and recreation facilities and construction put in place at those types of sites. The Attendance and

MICHIGAN AMUSEMENT & RECREATION MARKET / CONSTRUCTION ACTIVITY!

Attendance & Visitor Barometer (2007 = 100)!

120!

!!

Exhibit # 9

Construction Index !

(2007 = 100)!

120!

Attendance & Visitor Barometer!

Construction Index!

100!

100!

80!

80!

60!

60!

40!

40!

20!

20!

Source: Several venue and athletic association annual reports & press releases, FMI Consulting & Census Bureau Building Project Surveys !!

0!

04!

05!

06!

07!

08!

09!

10!

11!

12!

!

13!

MICHIGAN NON-RESIDENTIAL CONSTRUCTION ACTIVITY / NON-FARM EMPLOYMENT CHANGE !!

Construction Index !

(2007 = 100)!

120!

14 Est.!

0!

Exhibit # 10!

Employment Change (000)!

150!

100!

100!

50!

80!

0!

-50!

60!

-100!

40!

All Markets Construction Index!

20!

0!

20

-150!

Employment Change - (000 Two Years Earlier)!

-200!

04!

05!

06!

07!

08!

09!

10!

11!

12!

13!

ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN

14 Est.!

15 Fcst.!

-250!

ing accompanying the 2008-09 recession.

Construction then gradually picked up in 2012 through 2014 brought on by the recovery in household spending power and business revenues.

CONSTRUCTION OUTLOOK Exhibit # 10 compares an index of the value of construction put in place in all statewide markets with change in payroll employment in all labor markets (moved forward from two years earlier). After three years of decline in 2009 through 2011, construction in all markets rose moderately in 2012, flattened in 2013. Construction is expected to increase for a second year in a row to 74.5 (2007 =100) in 2015 from 69 in 2014, and 67.2 in 2013.

Employment in Michigan labor markets, as shown in Exhibit #10, after increasing 2.4% or 94,700 in 2011 from 53,400 (1.4%) in 2010, only rose at a declining pace, 1.9%, 1.3% and 1.0% in 2012 through 2014, respectively. This indicator helps portray some of the impact such change has on the need for construction, depending on levels of building vacancy and readiness of space for leasing --whether it requires an addition, alteration, redevelopment or renovation.

Other factors than those featured in accompanying exhibits and mentioned in previous paragraphs, dictate the amount of expenditure and type of construction in any market. Credit conditions are improving with increasing occupancy rates and rising rental rates, meaning landlords are better able to make mortgage payments.

Construction lending is improving because the level of construction remains low by historical standards according to Moody’s Analytics. Many businesses, however, remain reluctant to add employees due to regulations stipulated in the Affordable Care Act and the uncertainty of government policy related to taxes.

Instead, some are extending the weekly work hours of current employees, hiring only part time employees, or cutting the hours of existing employees to avoid regulations. MM

BUSINESS DEVELOPMENT

PREPARING FOR

TRANSITION Early Strategies to Make a Business Transition Successful

BY MARY VAN SKIVER, CPA, MBA, PHR, CEPA AND HEIDI BOLGER, CPA/ABV, CM&AA, CGMA

T

he construction industry has seen great improvement in economic outlook, and now baby boomers are getting ready to transition their companies to new leadership, but the rules of the game have changed. Selling a business to a third party is becoming more competitive with fewer buyers often coupled with lower prices. As a result, there has been a measurable shift to “insider” transitions to next generation family or key employee owners. Working through the inside ownership changes with family members, management or employees is increasingly complex, taking longer than third party sales. The good news is that insider sales create less disruption, less financial stress, and afford more time to develop successor leadership. These changes, along with the fact that people are living longer than ever before and wish to maintain their lifestyles in retirement, demands an even more structured approach to planning.

Transition planning has always been important, but in today’s environment it has become critical. For most business owners, transferring ownership of perhaps their biggest asset (often 80-90 percent of their equity) – whether by sale, gift or bequest – is the largest transaction of their lives. Yet few owners have a formalized plan for making the transition. Recent studies indicate that failure to do pre-sale planning is the number one reason deals fail. In fact, only 1 in 5 businesses are successfully sold. The number improves to nearly 80 percent for organizations that plan for their transition.

To improve your chances of a successful outcome, you need to start planning now. A formal plan helps take inventory of your current business and personal financial situation, determine where you need to be when you reach retirement age, and implement strategies needed to get there.

We’ll help you get started, first by looking at three key objectives you need to be aware of, and then reviewing 10 essential items you need to prepare.

planning, but every plan is based on three key objectives: 1. Maximizing business value — Determine the current value of the business and analyze business drivers to identify opportunities to enhance value. For example, if your management team needs development, or is at risk for departure, or the business relies too heavily on you, training or recruiting needed management talent can increase the value of the business.

2. Ensuring that you’re personally and financially prepared — How does the potential value of the business fit into your personal and financial goals for retirement? What will you

Few owners have a formalized plan for making the transition. Recent studies indicate that failure to do pre-sale planning is the number one reason deals fail. In fact, only 1 in 5 businesses are successfully sold. need to support your desired lifestyle after you exit the business?

What resources do you have outside the business? Will you need to continue working for a time after you exit the business? The answers to these questions often determine whether the optimal exit involves a transfer to family members, a management buyout, or a sale to third parties.

3. Planning for the “third act” of your life — Even if you’ve done all the right things to plan your exit, it’s just as important to have a plan for what comes next and to understand your expectations. According to a recent industry study, 75 percent of business owners who sold their businesses regretted the decision within 12 months.

A good tool for understanding your perceptions and attitudes about retirement is the Exit Planning Institute’s “Retirement Satisfaction Predictor,” which you can find online at http://bit.ly/ retirement-satisfaction.

THREE KEY OBJECTIVES There are many strategies, and tools for business transition MICHIGAN MERIT • SPRING 2015

21

BUSINESS DEVELOPMENT TEN ITEMS TO PREPARE FOR TRANSITION Are you prepared to transition your business to family members, your management team members, your employees, or to a third party? What does being prepared mean? The following 10 statements provide an outline of the steps you need to consider to and help you gauge whether you are ready for transition.

1. You have spent some time considering the process and how your business transition might look; you have discussed the transition with your loved ones.

2. Your personal, financial and business goals are aligned, meaning they are defined, co-dependent, and linked to this possible business transition.

3. You have created an advisory team which includes your CPA/business advisor and tax specialist, your attorney, your banker, your insurance advisor, your investment advisor and any key

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4. You have created a contingency plan, which should include: buy-sell instructions, appropriate insurance and specific directions if something was to happen before the transition that was outside of your control, something that would prevent you from operating your business or unwillingly force you to transition.

You have reviewed this plan with your trusted advisors, including family members and/or partners if applicable.

5. You have a pre-transition value enhancement/preliminary due diligence project underway to de-risk the business, maximize its value, minimize taxes upon transition and improve the probability of a smooth transition to the next owner (including family, partners, or employees if applicable.) Family transitions should be treated no differently than other transition options.

6. You have a management program underway to ensure the

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post transition leadership is prepared to operate the company after you exit.

7. You have completed a strategic analysis, business valuation, and personal, financial and business assessment(s) within the last year.

8. You have considered all your exit options and optimum deal structure and weighed the pros and cons of each in relation to your stated goals and objectives.

9. Your transition plan is written and includes clearly-defined goals, tasks and accountabilities, definitions of your transition team and transition process, a plan leader or project manager (exit advisor), timelines, a budget, and clarification of your role before and after transition.

10. You have considered and designed a post business “lifeafter” plan. This plan is linked to, or is a part of, your wealth management plan which has been prepared by a professional financial advisor.

We also strongly encourage you to prioritize communication to give yourself the best shot at a successful transition. Communication and transition advisors help “grease the wheels.” They are critical tools to ensure an overall sense of fairness in the transaction for all parties involved. Communication helps maintain

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flexibility throughout the process and clarifies and assimilates the varying expectations of all parties.

BENEFITS OF PLANNING THE TRANSITION ARE MANY Planning maximizes value, minimizes taxes, ensures accomplishment of personal and financial goals, and includes contingencies for disability, divorce, death and distress. Planning provides the opportunity to influence strategic direction, attract and retain employees, develop leaders to grow the business, and build and strengthen culture and positive financial affects. Planning secures the family legacy, provides control over the timing and method of the transition and the most effective way to harvest the wealth tied up in business. It also provides a smooth transition.

Transition planning is a very complex process and consulting with experienced professionals will maximize the chances of an optimal outcome, provide objectivity, and free up your time to work on getting ready to reap the fruits of your legacy. MM MARY VAN SKIVER, CPA, MBA, PHR, CEPA IS A SENIOR MANAGER AT REHMANN. CONTACT HER AT MARY.VANSKIVER@REHMANN.COM. HEIDI BOLGER, CPA/ABV, CM&AA, CGMA IS A PRINCIPAL AT REHMANN. CONTACT HER AT HEIDI.BOLGER@REHMANN.COM.

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MICHIGAN MERIT • SPRING 2015

23

GOVERNMENT AFFAIRS

LEGISLATIVE DAY FEATURES HOUSE & SENATE LEADERSHIP, LEGISLATOR MEETINGS

S

peaker of the Michigan House of Representatives Kevin Cotter and Senate Majority Leader Arlan Meekhof headlined ABC of Michigan’s annual Legislative Day on Wednesday, February 11, at the Radisson Hotel in Lansing.

About 75 ABC members statewide, from Traverse City to downtown Detroit, representing each Michigan chapter, engaged legislators at a welcome breakfast. Almost forty legislators attended the breakfast, even as they prepared for a full legislative day with the Governor’s budget released that same day.

Members were able to talk to their legislators about top ABC legislative priorities over breakfast.

After breakfast, ABC members split into teams and headed for 17 meetings with legislators Top: Legislator of the Year, Rep. Amanda Price (R-Holland) with ABC of Michigan president, Chris Fisher Center: Legislator of the Year, Rep. Aric Nesbitt (R-Lawton) and Chris Fisher Bottom: Senate Majority Leader Arlan Meekhof Right: Speaker of the House Kevin Cotter

in their offices. Teams met with legislators and staff and left packets of information on key ABC issues, including the repeal of Prevailing Wage and the development of more options for skilled trades training and workforce development. After the in-office meetings, members attended a briefing by Kathy Hoekstra of Job Creators Network that encouraged business owners to participate in keeping their employees informed on how political issues impact their jobs.

The closing luncheon featured an awards presentation to ABC of Michigan’s legislators of the year: Representative Aric Nesbitt (R-Lawton) and Representative Amanda Price (R-Holland). Rep. Nesbitt has been a tireless advocate of the principles of free enterprise and open competition that are the backbone of the Merit Shop. This year, while serving as the House Majority Floor Leader, he sponsored House Bill 4002, legislation that would help repeal Michigan’s Prevailing Wage Act, a key priority for ABC contractor members that employ nearly 25,000 men and women in Michigan. Rep. Nesbitt has also championed a 21st-century economy for Michigan and worked to ensure that Michigan job creators have the tools they need to succeed and grow our state.

Rep. Price has also been a strong advocate for increasing opportunity for all business owners in our state. Her 2015 legislation to repeal Michigan’s Prevailing Wage Law, House Bill 4001, was not only the first piece of legislation introduced in the 20152016 legislative session, but it represents the third time that Rep. Price has introduced similar legislation and pushed strongly for its passage. Rep. Price also serves as chair of the House Education Committee, and on the Workforce and Talent Development committee, where she has been a champion of increasing availability for skilled trades training.

The success of the event was due in great part to generous sponsors. ABC of Michigan wishes to thank them, once again, for their part in making the event possible: • The ABC of Michigan Self-Insured Workers Compensation Fund • The MacKenzie Companies • Verizon Wireless • The ABC of Michigan Health Benefit Trust

CONTRACTORS, BUSINESS COMMUNITY EMPHASIZE STATE AUTHORITY OVER EMPLOYMENT BENEFITS Associated Builders and Contractors (ABC) of Michigan, along with a coalition of ten business trade associations, is supporting House Bill 4052, sponsored by Rep. Earl Poleski (R-Jackson), to clarify that local employment mandates are preempted by state law.

“It is the belief of ABC and others that it is already illegal for local units of government to enact local wage and benefit mandates and/or regulate other benefits and terms and conditions of employment,” says Chris Fisher, ABC of Michigan president & CEO. “This bill straight-forwardly clarifies that the ability to regulate wages and benefits is a function of the state, and not political subdivisions.

We agree with this clarification and believe it is necessary to affirm because it helps protect against unwarranted and costly regulations at local levels that can deter growth, development and jobs.”

Local units of government erroneously believing they have ability to regulate wages and benefits is a serious and present

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problem. The requirements and ordinances are detailed and complex, and apply to both small and large employers equally, covering both full- and part-time employees.

House Bill 4052 would mirror legal precedent that currently prohibits local units of government from adopting, enforcing or administering ordinances, policies or resolutions establishing any requirement related to employee wages or benefits, such as local minimum wage ordinances, local prevailing wage ordinances, local paid or unpaid leave mandates, wage or fringe benefit mandates or scheduling mandates.

“Michigan’s 1800-plus local units of government should be put on notice that they are unable to enact their own rules and regulations governing private employers’ relations with their employees, creating inconsistency, confusion and a bureaucratic and red tape nightmare,” says Fisher. MM

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REPRESENTATIVE PETER PETTALIA State Rep. Peter Pettalia, representing District 106, has been a resident of Presque Isle Township since 1977.

He and his wife Karen have two grown children. Rep. Pettalia is an avid sportsman who supports outdoor recreation.

He and his business partner have successfully operated an auto repair business for 33 years, and he also operates a seasonal cabin rental business on Grand Lake, in Northeast Michigan. Pettalia previously served as Presque Isle Township supervisor for 16 years and as a volunteer firefighter for East Grand Lake Fire Department for 15 years. He currently is vice-chairman for the State Park Advisory Board for Negwegon, Rockport and Thompson Harbor State Parks. He was one of the founding members of the Presque Isle County Economic Development Commission and the Community Development Commission.

Rep. Pettalia was elected in November 2010 to his first term in the Michigan House to represent the residents of Alpena, Pr-

esque Isle, Alcona, and Iosco Counties as well as part of Cheboygan County. He was re-elected to a third term for the 2015-16 Michigan Legislature. Rep. Pettalia chairs the House Committee on Transportation and Infrastructure and is vice-chair of the Financial Services Committee. He is a member of the Committee on Energy Policy and the Committee on Tourism and Outdoor Recreation.

Why did you run for office, and what are you most passionate about in your position?

I served as township supervisor for 16 years and have been a small business owner for 36 years. I was not happy with the direction of state government. The Michigan Business Tax was treating Michigan businesses unfairly with job killing policies. I served 8 years as chair of the Board of Review, that added to my time as supervisor, totals 24 years of property tax experience. I was and am still passionate about how we tax properties in Michigan.

Do you remember your first interaction with ABC? What impact has that had on your legislative efforts?

My first meeting was with [ABC president] Chris Fisher in Lansing. Chris keeps me well informed on issues and concerns of ABC members which often mirror my own.

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ABC Workers Compensation Program Bonds Captive Insurance Programs L O O M I S , E W E R T, PA R S L E Y, D A V I S & G O T T I N G P. C .

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124 WEST ALLEGAN, SUITE 700 JEFFREY S. THEUER LANSING, MI 48933 jstheuer@loomislaw.com (517) 482-2400

ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN

Matt Waligorski, CIC, LIC, AIC 800-648-0856 lymansheets.com

GET TO KNOW YOUR LAWMAKER Of which legislative effort are you most proud?

What I am most proud of is my two Public Acts (PA 310 & PA 497) pertaining to property taxes. These two public acts allow property to be transferred within a family without incurring a pop-up tax.

What do you believe is the single biggest issue facing Michigan now and what do you think is the best solution to that issue?

It is hard to determine a single issue because it’s multifaceted.

What I believe is that we want to continue to push Michigan into the light of a good place to do business. I believe the structure for Michigan property tax is a job killer. I know firsthand of people that refuse to move because of the property tax that they will incur on new property. The best solution is to revisit Proposal A and find a better way to tax our properties.

would encourage you to continue to strengthen your membership base and help us continue to keep Michigan moving forward.

What are your top legislative priorities for 2015?

As chair of Transportation, my focus will have to be on improving our roads and infrastructure in Michigan and finding a funding source to fulfill those needs.

SENATOR KEN HORN Ken Horn has lived in Saginaw County for over 30 years. He currently resides in Frankenmuth with his wife Veronica; the Horns have two adult children and one grandchild.

Sen. Horn was a small business owner for nearly 15 years, owning and operating Horn’s

How can ABC members continue keeping lawmakers up to date on key issues and priorities for their businesses and employees?

Your organization does an outstanding job of keeping us legislators up to date on the needs and concerns of your industry. I

manpower Building Michigan takes muscle—and heart.

We’re a Make it Happen team. General contractors, developers and owners count on our capacity to perform on every job site. They know our people have a passion for getting the job done right.

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GET TO KNOW YOUR LAWMAKER Restaurant in Frankenmuth. In addition, he has served as a substitute teacher, in a leadership role with the Saginaw Community Foundation, and as a Saginaw County Commissioner for 14 years, representing Birch Run, Bridgeport and Frankenmuth Townships and the city of Frankenmuth. In 2006, Sen. Horn was elected to serve the 94th District in the Michigan House of Representatives.

From 2007 to 2012 he represented the cities of Birch Run, Chesaning, Frankenmuth and St. Charles in addition to 12 townships in Saginaw County. Then-Rep. Horn served as chairman of the House Energy & Technology Committee.

The 32nd District elected Sen. Horn to the Michigan Senate in 2014. He represents all of Saginaw County and the western portion of Genesee County. Sen. Horn chairs the Senate Economic Development and International Investment Committee and serves as vice chair of the Senate Transportation Committee. He has also been appointed to the Senate Energy & Technology and Insurance Committees.

Why did you run for office, and what are you most passionate about in your position?

I ran for office to solve problems. I initially ran for county commissioner in 1992 to address a very specific issue in the district. As I grew into that job, I found a lot of the solutions to local government problems could be solved at the state level. When I

was appointed Chair of the House Energy and Technology Committee, I came in with a grand idea of building a long range energy plan for Michigan. The task was so big that I couldn’t complete it in my two years as chairman. When I had the opportunity to run for the Senate, I was excited by the chance to continue the work I started in the House. As the chair of the Senate Economic Development and International Investment Committee, energy is still a hugely important issue, along with making Michigan a more investment and trade-friendly state.

Do you remember your first interaction with ABC? What impact has that had on your legislative efforts?

I would say that my first contact with ABC was with ABC of Michigan’s President Chris Fisher in Lansing when I served in the House. My interaction locally has been through Jimmy Greene when he became the President of the Greater Michigan Chapter.

Their ideas made sense to me and ABC will play a big part in revitalizing Michigan’s economy.

Of which legislative effort are you most proud?

Picking a favorite piece of legislation is like picking a favorite child. However, I think the most impactful for Michigan was limiting state cash assistance (welfare) to 48 months. The most

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bi-partisan effort I worked on was reforming the Michigan Medical Marihuana Act. Currently, the most significant piece of legislation I’m working on will change the way we deal with dissolved schools and better protect the taxpayers in any district facing a dissolution in the future.

power our homes and businesses. The last issue is our deteriorating infrastructure. One proposed solution is the ballot proposal up for a vote on May 5. Depending on its success, we may still have to determine, with a very tight budget, how we’re going to properly repair roads and bridges.

What do you believe is the single biggest issue facing Michigan now and what do you think is the best solution to that issue?

I have to toss three issues out there. First, the skilled trades gap. I believe that it’s all hands on deck with this issue right now, and the problem will be solved. I would rate Michigan’s energy crisis as the second most important issue facing us this year. In the next few years, the federal government is forcing us to shut down several power plants and we need a plan to replace them. The key solution for this would be building new high efficiency plants to

How can ABC members continue keeping lawmakers up to date on key issues and priorities for their businesses and employees?

Just retain good, active members. Feel free to call us directly, but as long as you are communicating with the leaders at ABC, you can be confident that they have full access to our offices.

What is so special about the number 11?

Maner Costerisan has extensive experience serving companies in 11 industries:

Education Employee Benefit Plans Franchises Telecommunications

Affordable Housing Closely Held Businesses Construction Nonprofits

Governmental Medical Practices Manufacturing & Distribution

2425 E. Grand River., Ste. 1 • Lansing, MI 48912-3291 T: 517 323 7500 • F: 517 323 6346 • www.manercpa.com • www.manersolutions.com

What are your top legislative priorities for 2015?

Let’s put it this way, I spent my final term in the House counseling freshman lawmakers that not every good idea deserves its own law. Constituent service is a top priority for me and my office is designed to solve problems large and small for residents of my district. That being said, I’m focused on measures that will continue our economic recovery and bring back our strong workforce.

We’re Michigan; we need to melt steel to build things and we need the energy to do it. MM

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ELECTRICAL CONTRACTORS ENERGY SAVING SPECIALISTS COMMERCIAL • INDUSTRIAL • AGRICULTURAL • PETROLEUM WIRING • RESIDENTIAL CONTROL WIRING • DESIGN - BUILD • EMERGENCY POWER SYSTEMS CABELING/NETWORKING • EMERGENCY SERVICES • CAR WASH SYSTEMS

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SPRING 2015

MICHIGAN

ADVERTISER INDEX

A PUBLICATION OF ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN

CONTRIBUTORS PUBLISHER Chris Fisher fisher@abcmi.com MANAGING EDITOR Mary Boardway, CAE boardway@abcmi.com COMMUNICATIONS COORDINATOR Elise Layton layton@abcmi.com ECONOMIST Don Wilson email@abcmi.com

ABC Self Insured Workers Comp Fund........32

K&S Plumbing Co., Inc................................11

AIS Equipment.............................................22

K&T Electric................................................11

Andrews Hooper Pavlik, PLC.......................31

Kent Companies...........................................27

Ann Arbor Fire Protection............................11

Kolbi Pipe Marker Co...................................25

Arrow Concrete Cutting...............................11

Liquid Calcium Chloride Sales.....................26

ASHA Safety.................................................11 Attitude & Experience..................................11 Bailey Agency...............................................11 BCT Benefits Plan.........................................15

Livingston County Concrete.........................26 Loomis, Ewert, Parsley, Davis, Gotting..........26 Lyman & Sheets Insurance...........................26 Maner Costerisan.........................................29

Blue Book Building & Construction Network...............17

Metrocom Technologies................................28

Brigade Fire Protection.................................17

Michigan Cat................................................28

C&E Pipeline Services..................................22

Mid Michigan Materials, Inc.........................25

Capital Insurance.........................................31

Mike’s Finish Carpentry................................22

GRAPHIC DESIGN Melissa Travis, Ink Ideas Graphic Design www.inkideasgraphicdesign.com

Capital Steel & Builders Supply....................29

Pamar Enterprises........................................19

CDI Construction.........................................15

Power Doors...................................................4

Covenant Occupational Health & Wellness....4

R Bruton Electric..........................................25

ADVERTISING Strategic Value Media www.svmmedia.com

Creative Window Treatments........................22

RCI Electric..................................................15

Crowe Horwath LLP.....................................27

Rehmann........................................................4

Desai Nasr Consulting Engineers..................29

Rock Products..............................................29

EHJ Construction.........................................29

Ronald B Rich...............................................15

Fisher Companies.........................................27

Schaefer & Bierlein.......................................31

Focal 5 Group..............................................29

Scientific Brake & Equipment......................17

G&G Electric...............................................29

Summit Electric............................................31

Grand Equipment Company........................29

Timpson Transport, Inc................................31

Guy Hurley Blaser........................................19

Titan Interiors..............................................22

HD Supply Waterworks................................28

Tradesmen International...............................31

Hickey Electric.............................................29

Universal Spiral Air......................................17

HNI........................................................19, 23

Universal Wall Systems.................................19

Independence Commercial Construction......31

Valenti Trobec Chandler...............................23

Jackson Associates, Inc.................................23

Valley Electrical Contractors.........................11

JBS Contracting, Inc.....................................11

Vanguard Fire Security Systems....................25

JE Johnson.....................................................4

Walton Agency.............................................11

Jimco Fire Protection....................................11

Wm. Molnar Roofing, Inc.............................11

PRINTING Keystone Millbrook www.keystonemillbrook.com

Michigan Merit (ISSN# 1938-9051) is the official publication of Associated Builders and Contractors Inc. of Michigan (ABC of Michigan) and is published quarterly at 230 N. Washington Sq., Suite 202, Lansing, MI 48933, (517) 853-2545. Please direct all inquiries to the previous address. Articles written by outside authors do not necessarily reflect the views of Associated Builders and Contractors Inc. of Michigan. ABC of Michigan reserves the right to reject or edit all material submitted for publication. The appearance of an advertisement in Michigan Merit does not constitute endorsement of the advertiser, its products or services, nor do Michigan Merit or Associated Builders and Contractors Inc. of Michigan guarantee or warrant any claims or offers made by the advertisers.

Permission to reprint in whole or in part is hereby granted, provided the following credit line is used: “Reprinted by permission from Michigan Merit, a publication of Associated Builders and Contractors Inc. of Michigan.”

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