Kolbe layoffs illustrate building supply woes (UPDATE)
Published: November 10, 2009
Tags: Associated General Contractors of America, Brenner, Deschane, Encore Construction, Kolbe & Kolbe Millwork, layoffs, Salsieder, Simonson, Wisconsin Builders Association, Wuebben
By Paul Snyder
Even though the residential construction market is experiencing a slow rebound, building supply and material company jobs could still be in peril.
“Unfortunately, unemployment tends to lag with recovery,” said Jerry Deschane, executive vice president of the Wisconsin Builders Association. “Even though we’re starting to see some signs of rebound, it’s still an awful climate out there.”
That climate took its latest toll on the industry Tuesday when Wausau-based Kolbe & Kolbe Millwork Co. Inc. announced it was laying off 334 of its production and office employees as a result of the continued decline in residential construction work.
Company spokeswoman Cindy Brenner said Kolbe & Kolbe intends to rehire all the laid off workers, but said the market will dictate how many it can rehire.
After Tuesday’s layoff the company still retained more than 1,000 workers.
“Our forecasts show that 2010 should have a pickup in the residential market,” Brenner said. “It just likely will not happen until spring.”
The residential market should see “spectacular gains” in 2010, said Ken Simonson, chief economist of the Associated General Contractors of America. But he said “spectacular” is relative.
“It’s easy to get large gains when you’re starting so low,” he said. “I think you may see some residential builders expand business, but at the same time, there are going to be a lot of builders still on the sidelines.”
Some contractors say the rebound is already taking place. Chad Wuebben, president of Madison-based Encore Construction Inc., said his company has built 14 homes in 2009, up from its total of 12 in 2008, and a 25 percent increase from its 2004 totals.
“I think people are seeing numbers and getting more comfortable about building and buying again,” he said.
But that does not guarantee a boom in residential construction after the spring thaw of 2010.
Deschane said WBA forecasts show the residential market hit bottom in 2009, but a return to normal construction amounts might take two years.
“We’re not expecting to bounce back or have the flood gates open on April 1,” he said. “We’re expecting a slow lob back.”
Kolbe has not discussed a date at which to inform the laid-off workers whether or not all jobs will be reinstated, Brenner said, because the company remains optimistic that the market will eventually restore all positions.
The company is under no obligation to file a layoff report with the state’s Department of Workforce Development, because the 344 workers make up 24 percent of the company’s employees — 1 percent under the state threshold for reporting mass layoffs.
Agency spokesman Dick Jones said DWD officials understand the layoffs are temporary.
But until residential construction returns to pre-recession levels, Deschane said suppliers may still experience reduced demand. He said he believes Kolbe & Kolbe can rehire all 334 workers, but it may take longer than they want.
“I think the fact that you’re still seeing layoffs happen to companies like Kolbe, which is so integrally tied to the industry, says a lot about the slow, steady nature of this,” he said. “And I think you’re going to continue to see that with other companies for the next few months.”