Andersen layoffs signal tough times for housing industry

Nation-wide, housing starts in October were down about 27 percent compared with October 2005. The local new housing market has been slowing, too. Through October of this year, permits for new residential home construction were down about 25 percent, according to the Builders Association of the Twin Cites.

"In the last few years, we got a little ahead on the inventory side of things and it needed a correction," says Curt Swanson, president of the Builders Association of the Twin Cities. "When you see a downturn, you have to readjust somewhat your labor force. Also just reanalyze what you're doing, try to make your business as efficient as possible."

It's naive to expect there won't be additional impacts on different industry sectors that have a housing component.

The decline in new home starts has translated into a somewhat proportionate drop in work for builders - and jobs for their employees and subcontractors.

The Minnesota Department of Employment and Economic Development estimates the housing slowdown has forced thousands of job cuts in the residential construction. And acting commissioner Ward Einess expects more job losses.

"It's naive to expect there won't be additional impacts on different industry sectors that have a housing component," Einess says. "That's just a reality."

In the last year or so, the state estimates Minnesota has seen a loss of about seven percent of its residential construction jobs and about three percent of its specialty trade jobs, such as plumbing and roofing.

Many of the workers who lost jobs may have found work in commercial construction or other fields, but it's hard to track how many have managed to do that.

At Andersen Corporation, spokeswoman Maureen McDonough says the company expected a drop in business, but not one so severe.

"2005 was really the peak for housing starts, so we anticipated there would be less volume in 2006," McDonough says. "What we did not anticipate was the real dramatic decline that happened about April of this year."

The lion's share of Andersen's $2.5 billion in annual sales comes from the new home construction market.

Andersen says layoffs will be done by seniority. The company says it'll help workers with retraining and finding other jobs. But Andersen doubts they'll be recalled to work. The company doesn't expect any further layoffs among its workforce of some 15,000 employees. Anderson will have about 2,200 workers in Bayport during its busiest times, down from about 2,600.

Marvin Windows and Doors, based in Warroad Minnesota, says its new-home business is down, too. But spokesman John Kirchner says residential remodeling and commercial sales remain strong.

"We have certainly felt a softening of the residential housing market, and we expect that to continue into 2007," Kirchner says. "That being said, other building markets do remain strong. And we currently have enough work. We have no plan to layoff any workers. In fact, we are hiring for a number of skill sets."

With builders having a harder time selling houses, they're offering deals. Swanson of the builders association says buyers should be paying attention.

"Certainly now is a really great time to buy," Swanson says. "They can open the papers, hear the advertisements, go through the model homes and see a fair amount of financing and other incentives."

Swanson argues buyers should grab good deals while they can get them and the housing market starts to turn around.