Construction forecast is decidedly mixed
By Bruce Edwards
STAFF WRITER | March 31,2013
Albert J. Marro / Staff Photos
Workers for Naylor & Breen Construction of Brandon are busy putting up new government housing in Rutland.
Although it’s not the boom times of the 1980s, ’90s or even the early 2000s, business is looking up at Russell Construction Services.
John Russell III said his Rutland company is completing work on the Heritage Family Credit Union service center on Allen Street and the Alderman’s KIA dealership on Route 7 South in Rutland Town.
Next up for Russell is Green Mountain Power Corp.’s Energy Innovation Center in downtown Rutland, an addition to The Meadows assisted care facility in Rutland and, in Bennington County, renovation work at Bennington College as well as work on a VELCO power substation.
“We’re looking pretty good for 2013,” Russell said.
Russell’s outlook could prove to be the exception, however.
Cathy Lamberton of the Associated General Contractors of Vermont said that so far the feedback from contractors is not encouraging.
“From what I’m hearing it’s fairly limited,” said Lamberton, the 200-member trade group’s executive vice president. “Many of the contractors I’ve talked to are putting a lot of bids in or a few bids in and really not much is happening.”
She speculated that businesses may be delaying projects because of uncertainly over tax-and-spend policies at the state and national level.
The construction season isn’t looking so promising right now for Mike Pitonyak of Capital Earthmoving in Barre.
“Nothing,” Pitonyak said, when asked about the number of projects he has lined up.
He said too many contractors are chasing too few projects.
Just the other day, there were 21 bidders for an upcoming project in Woodbury, he said.
“Ten years ago there would have been three,” said Pitonyak, who has been in the excavation business for 20 years.
With so many contractors chasing fewer jobs, it means project developers have the price advantage. But Pitonyak said even submitting a bid below cost is no guarantee of a landing a job.
“We bid a job last fall in Sharon where there were probably eight or 10 bids and we bid it at below our cost and we were still $30,000 high and fourth bidder,” he said. “That tells me what’s out there and what isn’t out there and how desperate people are.”
Russell agreed that competition is fierce both for general contractors and subcontractors.
A spokesman for Works in Progress, a Burlington-based trade publication that tracks construction projects along the East Coast, was more optimistic.
“There’s definitely an uptick in activity from 2012 to 2013,” said Bob Weems, director of sales for Works in Progress. “The people out in the industry are telling us that they believe 2013 is definitely turning around.”
He said the turnaround began in the second half of last year and is “much better” than the previous three years. However, Weems cautioned that the rebound is occurring at “a very, very, slow pace.”
In Vermont, Weems said, several multimillion-dollar private sector projects are in the pipeline, as well as projects that were delayed but are now going out to bid. He did not identify the projects.
In addition, he said, highway and road projects are in the pipeline this year.
In terms of housing, while the market for existing homes continues to recover, economist Arthur Woolf said that when it comes to new construction “there isn’t a whole lot of new demand out there for housing.”
Woolf cited a simple reason for the lack of new home construction: Vermont’s stagnant population.
“Since we don’t have any population growth, and essentially very little household formation in Vermont,” he said, “we’re not going to have any demand for new housing from any internal population growth.”
A labor shortage could also be on the horizon.
The economic meltdown of late 2008 took its toll on the construction industry and the trades. Although the industry has made modest gains since then, Associated General Contractors of America has raised concerns about a shortage of skilled workers.
The industry trade group said that after years of declining construction jobs, many former workers either left for other employment or retired. In addition, the AGC added that the industry’s precipitous decline has deterred many graduates from pursuing careers in construction.
Russell said that if work does pick up, the demand for skilled workers in the region is going “to get tight fast.”
He said another problem facing the industry is that while construction workers are well paid, much of the work is physically demanding.
According to the national AGC, about 14,000 construction workers were employed (seasonally adjusted) in the state as of January, 600 fewer than a year earlier.
Woolf said construction employment remains far below the 2008 peak of approximately 16,000.