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A diverse labor force: The challenges facing minority contractors, and the tools needed to succeed

Troy Yardbrough of Preferred Construction Group.

With some industries that are built on word-of-mouth recommendations and connections in the field, like construction, how can minority workers and business owners get ahead? Here in Grand Rapids, contractors and their affiliates are beginning to see the light, working to diversify the voices and faces in the industry, and equipping them with the tools (pun intended) needed to succeed in construction.
With diversity at the forefront of public conversation in most industries, business owners are wondering about the best ways to employ talented staff that bring a variety of backgrounds and cultures to the table. Tech has taken the lead in many respects, training women and minorities in coding, and championing small ideas to become big ventures. Transportation, consumer products, and healthcare are also leading the pack, according to CVM Solutions, a supplier diversity consulting firm in Illinois.

But with some industries that are built on word-of-mouth recommendations and connections in the field, like construction, how can minority workers and business owners get ahead? And who are the organizations working to increase diversity in an industry that is so desperate for skilled labor? Here in Grand Rapids, contractors and their affiliates are beginning to see the light, working to diversify the voices and faces in the industry, and equipping them with the tools (pun intended) needed to succeed in construction.

For Dante Villarreal, Vice President of Business Services at the Grand Rapids Chamber and head of the West Michigan Minority Contractors Association, diversifying the construction industry is at the heart of his job. "The higher up you go in these companies, it's more white males," says Villareal. "If you go on a job site, you'll see more minority workers…there's a disparity there." But how do we solve the problem? For Villarreal, it all comes down to "helping the minority businesses understand where they can compete and how to do that," he says.

Dante Villarreal

"The WMMCA membership is made up of ethnic minority-owned, women-owned, and general contractors. Annual membership benefits include monthly meetings, bid announcements, networking, and the Wish List/Mileage Program, which is a platform designed to generate prospective business and collectively team with others for contracting opportunities," according to their website.

Villarreal leverages these resources to assist the minority contractor in whichever aspect of their business requires growth: be it financial, management, or human resources. "We want you to understand that it's okay if you're a trades person and you're good at that…let us help you with the other side of it," he says.

In order to accomplish this, the WMMCA hosts a yearly Elevate program for "second-stage" businesses, or those with at least 10 employees who pull in $1 million in contracts per year. Utilizing a rigorous selection process that accepts only women or minority business owners, last year's Elevate cohort trained five entrepreneurs on vital growth topics such as strengthening their management team and defending a marketing strategy.

However equipped minority business owners can be, they still face challenges that their white counterparts may not be familiar with, such as connections within the industry. WMMCA seeks to bridge this gap between minority and majority contractors by hosting informal meetings to allow for connections to form. "At the end of the day, from my viewpoint, [the challenge] is understanding opportunities and connections," says Villarreal.

Though the industry is currently in a high-growth period, general contractors need still be made aware of the talent in their own communities. "Because construction is booming, everyone is busy, including the minority contractors. However, now is the time to build the relationships with the general contractors. Now is the time to market to them," says Virrareal, arguing that minority contractors need to hustle, making new connections both in good times and bad.

One other challenge facing small, minority-owned construction businesses are financial. Frequently, large general contractors require a performance bond, or essentially "good faith payment," sometimes the amount of the actual payment of the project, before beginning work. This insures the quality and completion of the smaller contractor's work. The problem: sometimes bonds can be as high as $250,000 to $1 million, depending on the size of the project, and despite programs like the U.S. Small Business Administration's Surety Bonds that can guarantee a portion of the cost, smaller companies just don't have access to this type of capital.

"These are [the] real barriers that are out there," says Virrareal. He adds, "The more work you do, the less the bonds cost." So essentially, without a decent number of projects with the same general contractor under your belt, bonds are a hefty cost of doing business.

One such minority general contractor who has achieved years of consistency with two big clients—Grand Valley State University and Spectrum Health—is Troy Yarbrough of Preferred Construction Group. "I'm proud to be a successful minority contractor in the Grand Rapids area," says Yarbrough, who has worked in construction for the past 27 years. Opening his own business in 2011, Yarbrough sought to hire skilled labor, regardless of their race, gender, or background.

Troy Yardbrough

"We look to hire minorities as well as the majority…people that mirror our community," he says. The challenges he faces, along with other general contractors throughout the nation, is the decreased labor force. "We find it extremely difficult to find people that are able to perform our specialized field of expertise," adds Yarbrough.

In order to assist in the education of his staff and thus build up a pool of skilled workers, Preferred Construction Group has footed the bill for training programs through ABC Construction and GRCC. This knowledge on how to succeed in the industry, says Yarbrough, is the key to succeeding as a minority, or as anyone else, in construction. "Sometimes they are lacking the ability to run a solid company with all of the proper infrastructure in place," he says.

In the six years running his own company alongside partners Robert Johnston and Ellis McLaine, Yarbrough has also experienced the challenge of the comfort hire—that is, clients hiring people that they know or are familiar with. "I think people really like to do business with people they know," he says. "Sometimes the challenge is to create opportunity with entities or owners so that they can get to know you…I don't necessarily look at it as a racial thing."

Whether its equipping yourself with the knowledge necessary to manage your own company, connecting to vital financial resources like the SBA, or joining a helpful network like the WMMCA, there are great resources in West Michigan for the minority contractor. However, we've still got a long way to go. Villareal points to the statistic that minority-owned companies tend to hire minorities, so success among these groups can only empower others. "That's why this is so critical in our communities," he says.

“Constructing the future” is a new 12-part series from Rapid Growth that will explore issues facing, and related to, West Michigan’s construction industry and the numerous organizations, trends, and innovations seeking to create positive advances in our community. The series is sponsored by Triangle Associates, a West Michigan-based construction company that provides construction management, design/build services, general contracting, integrated project delivery, and more to projects locally and across the country.

Photos by Kristina Bird of Bird + Bird Studio
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