If the recent declines in permits, starts, and new home sale prices haven't shaken builders' confidence, an emerging trend in the plastic building products industry may have them re-evaluating.
Gros Executive Recruiters, a recruiting firm serving the plastics industry, says manufacturers are stepping on the brakes when it comes to hiring. Nicole Butler, manager of BuildingProductsPeople, the building products division of the firm, says she's seen a dramatic fall-off in her hiring ratio, from one hire per six candidates interviewed in 2005 to less than one in 18 in the first quarter of 2006.
“[Manufacturers] are not pulling the trigger on hires [so far in 2006], where as last year they didn't hesitate,” Butler says.
Butler says when manufacturers, who produce products like vinyl windows, decking, and PVC pipe, retain her services but put searches on hold indefinitely, they are leaving money on the table. “When these clients are paying significant dollars for my services and then abandoning it, it says something,” she says.
But the question is whether this trend is foreshadowing things to come for the home building industry. With reports abounding that builders like Pulte Homes are slimming down staff in some markets while other builders like Centex Homes and Lennar are strategically reorganizing divisions, it appears that an acceleration of profit-protecting measures may be imminent.
Justin Roy, director of Midwest operations for design and construction search firm Sullivan Kreiss, says that some of the hiring hesitation from the building products sector is a direct result of oil prices. But, in true chain-effect form, if a home becomes more expensive to build, builders have to trim fat in other ways.
“When product prices go up or the products industry is affected, then you see the construction industry slowing down and [then] you see [builders like] Pulte Homes laying off some of their staff,” Roy explains.
But James McGuire, director for search firm Specialty Consultants, says that many builders are looking to upgrade the quality of their staffs as operations' costs come under scrutiny.
“Twenty percent of the workforce wouldn't have been hired [under normal circumstances], but builders were just desperate for a body,” McGuire says. “When things slow down, those are the people that are forced out.”