Builders, labor unions open doors for small contractors

There’s nothing small time about starting a small business.

That probably goes double if you are in the construction trades. A person can master a skill to become a carpenter or an electrician, decide that being your own boss is too tempting to pass up, and then suddenly find he or she must become a little of a lot of things: accountant, marketing agent, human resources manager, tech expert and cash management whiz.

Take it from Herman Pride, CEO of Complete Mechanical Piping in West Garfield Park: “It’s not for everyone,” the veteran pipe fitter said of going independent. “You have to be sure it’s what you want to do. You have to plan it out and work at it.”

Pride knows plenty of people in the trades who prefer to do their jobs and leave it behind at shift’s end, while running your own business can take over your life.

So there’s no shame in seeking help from a source that can give a fresh entrepreneur an honest assessment while also aiming for a side benefit: providing connections for work and advancement to disadvantaged groups.

Pride found Hire360, an organization created in 2019 when leading developers, general contractors and trade unions in Chicago gathered to talk about how to get more minority- and women-owned firms into the fold. Everybody found themselves with a common interest in dealing with the problem.

Except this group was more about action than talk. Hire360’s executive director, Jay Rowell, said organizers quickly saw the biggest problem facing emerging contractors, especially those from communities that usually get passed over, was access to capital. Money is needed to hire people and procure supplies for bigger jobs.

Rowell credited David Carlins, CEO of Magellan Development Group, with pushing creation of a collateral pool to enhance contractors’ credit. The organization’s board passed the hat last year and collected $855,000 for the fund, which has been used to leverage $3.3 million in loans at the prime rate, Rowell said. He said 26 firms got the loans, and there have been no defaults. Hire360 partners with the Chicago Federation of Labor and unions that have an ownership stake in Sun-Times Media.

For Pride, the help has made a huge difference. He’s gone from handling small-scale home renovations to work on high-rises. His company has worked on the Jesse Brown VA Medical Center, the Illinois Tollway and O’Hare Airport. Starting with two or three people when he got going in earnest in 2016, he’s been able to put about 25 union tradespeople to work during peak times.

His line of credit “opened the door to expand the business. You’ve got to get the money to float these larger projects,” Pride said. Also invaluable, he said, were the connections Hire360 provided. Pride said he’s had about nine projects going at once this year and sees business continuing to be active in 2021.

The organization also provided a lift to Lou Ochoa, owner of Ochoa Mechanical Group in Logan Square, who has gone from two to three people on staff to around 10 to 12, although he’s seeing more of a slowdown connected to the pandemic. He was working on a building with the developer Related Midwest, where Senior Vice President of Construction Don Biernacki brought him to Hire360. Biernacki is a leading voice for inclusion in commercial real estate contracting.

“They got me some nice introductions to old and new contacts,” Ochoa said. Along came a line of credit from Wintrust Bank that could become a vital support. He said he was booked for three projects at Midway Airport that are on hold at least until mid-2021. On other jobs, “customers and lending companies are not releasing the funds,” Ochoa said.

Pride and Ochoa are among 28 employers that got federal loans under the Payroll Protection Program with Hire360’s advice, Rowell said.

From Rowell’s vantage point, he sees the pandemic’s impact in another part of Hire360’s work, its apprenticeship programs that bring minority and female workers into the trades. With slack in the construction labor market, Rowell said there is less demand for apprentices. But he believes the effort remains important because someday, hard as it may be to imagine, COVID-19 will be behind us.

Rowell wants everyone to focus on the opportunities. Public works and private construction in the area could be worth $100 billion over the next 10 to 15 years, he figures. Rowell is looking ahead to such work as O’Hare improvements, the CTA’s Red and Purple line modernization, Mayor Lori Lightfoot’s capital expenditure list, the megaprojects known as Lincoln Yards and The 78, perhaps even the Obama Presidential Center. Opportunities abound for construction cranes.

“Just think of what happens when government returns to restarting the economy and provides more opportunities,” Rowell said.