Turbulent Trades: With the drop in new privately owned housing units under construction during the downturn, many trades have been hit hard. Trades will need help adjusting their operations at the same pace that builders adjust theirs when volume increases. SOURCE; U.S.CENSUS BUREAU

More than once in my career I've heard someone say, “I don't need the labor, just show me the baby.” Meaning, “Get to the point.” Fact is if you don't work to understand the labor these days, there will be lost efficiency, increased cost, and high turnover, just as home building markets take a positive turn.

While manufacturing and home building got lean at a frantic pace in the latter part of 2008, the trade and labor base clung to hopes that the downturn was a blip. When the slump's depth and duration became clear, it was too late for some, who had no choice but to shutter their businesses. For survivors, a familiar displacement ensued, lagging their employers' downsizing by almost a year.

As a result, reduced workforces emerged with virtually no tolerance for fluctuation in demand. This lower tolerance for volatility spiked into view recently as our trades struggled to meet scheduled obligations before the tax credit deadline.

During a recent trade partner meeting, we addressed our respective partners' operation capabilities and staffing. Amid the discussion, one of our trades said, “We know we will be late completing several jobs this week. But if we can just get through it with our current staff, we will have plenty of people to handle the volume next week.” After digesting the statement, I thought, “Wow, this needs immediate attention!”

Solving this dilemma may seem like a task of simply hiring more trades. However, consider the fact most trades across the nation are operating in this manner daily. Further, a trade would not likely risk business by admitting it is not adequately staffed for more volume.

Combine this with the reality that your trades also work for other home builders with similar operational goals, and you can imagine the implosion that could occur if the market turns favorable quickly. If history proves right, the trades will need help adjusting their operations at the same pace you adjust yours when volume increases. Without help, trades will likely react slowly to increased demand, creating their own demise once again.

Alternatively, builders and trades can work proactively together to achieve a seamless transition into greater volume capacity. Builders and trades need to share knowledge of each other's operations. A consistent understanding of the operational goals and actual results of the home builder offers the trades a picture of current and impending volume.

Meeting at each trade's facilities is smart; it gives a builder opportunity to inspect and gauge how the trade is staffed, how it manages inventory, and the overall organization of its business. A tour of manufacturing plants provides insight into these partners' current and future production capacity, as well as options for added allocations as demand increases.

With an open mind and creativity, approaches like these can be used as a catalyst for success into and beyond economic recovery. The mode and method may vary from trade to trade, but the overwhelming theme is this: Home builders and their trade base must get into each other's business like never before.

Let's imagine what happens if this doesn't occur.

Reacting to the pains of a sudden labor shortage in a surging market tends to lead to desperate decisions that strain already lean departments within your operation. Missed opportunities in combatting inevitable rising costs, customer service, home completion, and selling all can lead to disorganization, lost revenue, and, eventually, lost income.

Having the foresight and discipline to increase the efficiency of your trade base will strengthen loyalty and will help you, the home builder, transcend the pain of unprepared competition.

Jeremy Koster is a director for Lennar Carolinas and may be reached at jkoster@bellsouth.net.