With new-car sales up threefold from a few years ago at Murphy Motors in Williston, N.D., you might expect owner Pat Murphy to be hiring and expanding his store. Instead, he's buying houses.
Murphy has been snapping up single-family houses for about $135,000 a pop. They're not investment properties, but the cost of doing business these days at his Chevrolet-Buick-GMC-Cadillac store in Williston, which is about 60 miles south of the Canadian border and ground zero for western North Dakota's oil boom.
Murphy leases one home to one of his accountants, and another to a salesperson. A service tech will occupy a third. None of them can find housing because of meager availability and sky-high rents.
North Dakota's oil production has spiked to 464,000 barrels a day, up more than fourfold from 2006, thanks to breakthroughs in oil-drilling techniques. Williston's population has grown to around 20,000 from 12,000 in 2006 -- though that's just city officials' best guess. Transient oil workers live in "man camps" on the edge of the city, housed in stretched trailers. Last month, a two-bedroom basement apartment in Williston was listed on craigslist for $3,000 a month. A four-bedroom duplex ran five grand.
The oil boom has produced a gush of sales and stress for Murphy and other local auto dealers. They live in fear of losing workers to the deep-pocketed oil companies. The oil rigs that rumble through town are vexing for customers trying to get in and out of dealership lots. While sales to oil field workers are booming, deals often unravel at the finance desk because many of them have bad credit, dealers say.
"I feel more stress now than I ever have," says Murphy, 53, who started selling cars in his native Minot, N.D., in 1979, and has been a dealer for 28 years.
"Making a profit at this point is about fifth on my list," he says. "Our challenges are more about holding onto employees and getting customers in and out in an efficient manner than about how can we sell 10 extra cars."
Murphy's store is on Williston's main drag, Second Avenue West, known by locals as Million Dollar Way. His 2-acre lot is packed with 450 new and used vehicles on average -- roughly twice the inventory of just a few years ago. And he's selling more big vehicles than ever: crew cabs with utility boxes or long beds for use in the oil fields.
"We're selling more and bigger vehicles, we're servicing them more, we've got more people coming in and out," Murphy says. "We're like a sardine can now."
Keeping enough techs to service all those new customers is Murphy's biggest concern. He has been lucky: He has only lost a few to the oil companies, which can pay field workers six figures, including overtime.
But keeping his 38 employees happy has cost him. In the past few years, Murphy has hiked wages for service techs by roughly 20 percent. Pay for detailers, oil-lube techs and other laborers has grown 30 to 40 percent.
Since April, Murphy twice has raised the rate he charges for labor on service jobs, by a total of 15 percent, to $108 an hour.
The rising wages in western North Dakota have drawn service techs from out of state, says Mike Gaddie, co-owner of Ryan Motors in Williston, which sells Chrysler, Dodge, Jeep, Ram and Honda.
Gaddie has recruited three techs from the Minneapolis area in recent months. That gives him 10 techs at the store, which should ease the service backlog. But he still can't expand hours because there's not enough support staff.
"It would be nice to cut this back, to cut back on some profits in order to have a more controllable situation," Gaddie says. "The mental stress on your people, the constant search for new and good people. Those downsides are getting to be bigger problems."
Retention is critical because hiring replacements is almost impossible: Everybody in town already has a job. Hiring out-of-towners is difficult, too, because of the housing crunch.
In the past year, Murphy has bought four single-family homes in town to lease to employees. He says the going rate on townhomes is about $120,000. Murphy can remember when they were selling for $15,000, back in the 1980s, when an oil boom wasn't on anybody's mind.