How the National Hispanic Construction Alliance Seeks to Promote Investing in Latino Contractors

A new trade organization called the National Hispanic Construction Alliance was formed with the goal of addressing representation and career advancement for Latinos in the construction sector. Hispanic workers accounted for 30 percent of the construction industry but remained underrepresented in managerial roles at only 14.3 percent, according to the latest data available from the Bureau of Labor Statistics.

The NHCA is led by CEO George Carrillo, a former executive director of LatinoBuilt, an Oregon-based construction trade association, and senior executive in government and human services. Along with the National Association of Hispanic Real Estate Professionals (NAHREP), an organization focused on advancing sustainable Hispanic homeownership with over 50,000 members and 100 chapters across the U.S., they are working to recruit an advisory board that can provide insight and accessibility to resources in crafting a new program for the association.

"There would be no real estate if there was no construction. Same for construction: we don't build if we are not selling," said Carrillo.

Based on the latest report by NAHREP, Hispanics reached 48.6 percent homeownership, adding a net total of 349,000 homeowner households in 2022. Latinos remain critical drivers to U.S. homeownership growth, given the fact that they are buying houses younger, growing in population rate and increasing their participation in the labor force.

Carrillo says Latinos lack the opportunity for advancement in the construction industry due to many challenges such as education, accessibility to capital lending and key components of running a construction business. He shares that lending institutions tend to see Latinos as a higher risk. In a recent study by Stanford University, when it comes to national bank loan requests between $50,000 and less than $100,000, White-owned businesses get 78% of the amount requested approved on average, compared to only 40% for Latino-owned businesses.

"We have to change that narrative, we have to show that we are strong at making payments," said Carrillo. "We are savers, we might not put money in the bank because we have it stashed under the mattress but that doesn't mean we don't have the accessibility to repay our debts."

Another key factor to advance in the sector, he says, is knowing how to properly run a small business, knowing about bidding and estimating, contract management, how to manage a change order and more. There's also the language barrier for some. To address that issue, the NCHA will provide programs in Spanish, not only written material but also instructors.

With over 64 million Latinos living in the U.S. and a purchasing power worth $3.2 trillion, according to a report by the Latino Donor Collaborative, Carrillo says more needs to be invested in the community. Latinos also face challenges in obtaining government contracts, from applying to understanding a contract and bond capacity. Bond capacity is like insurance, it's how much contractors have in order to cover the project. For example, if a company's bonding capacity is $10 million and the contractor has a government job worth $5 million, but also wants to apply for another government contract worth $10 million, it's not possible because the total net is $15 million which the contractor does not have. So, it's more common for a bigger company with a larger bonding capacity to frequently take on more government contracts compared to smaller companies.

"The government can provide audit exceptions, they can also say okay general contractor within all of your subcontractors we are going to allow you to use their bonding capacity so that way you can meet your bonding need, " said Carrillo. "With the urgent needs that we have today in building, we need to start eliminating some of those barriers."

The organization's goal is that within the next 18 months, they'll open up 20 chapters. They continue to collect data on strong presence and demand for Latino construction industry but also analyze government initiatives for potential investments in affordable housing. All these factors together will determine where the chapters will open. Big markets such as New York, Georgia, Texas and California are being considered.