February 18, 2014

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Article

Building and Construction

Discussion moderated by Rich Thorn, CEO of the Associated General Contractors of Utah

February 18, 2014


Utah’s construction industry is still reeling from the Great Recession, but our insiders say they’re optimistic about seeing a slow, but steady comeback. The residential market is gaining momentum, which means construction projects like grocery stores, schools and transportation infrastructure are close behind. But the industry continues to face challenges like finding skilled workers, increased risk liability and overall economic uncertainty.

Participants:

Back Row: Dave Zimmerman, Holland & Hart; Doug Savage, KK Mechanical; Rick Higgins, Mountain States Fence; Phil Walter, Moreton & Company; Scott Parson, Staker Parson Companies; Darin Zwick, Zwick Construction; Doug Welling, Jacobsen Construction; Rob Moore, Big-D Construction; Richard J. Thorn, Associated General Contractors; Brett Okland, Okland Construction

Front Row: Clegg Mabey, Sahara Construction; Bob Jones, Jones Excavating Company; Doug Snow, Beehive Insurance Agency; Slade Opheikens, R&O Construction; Melissa Beutler, Holland & Hart; Bryan Webb, Layton Construction;  Bill Garff, Garff Construction; Matt Klein, Klein’s Custom Countertops;  Paul Campbell, Wheeler Machinery; Terry Buckner, The Buckner Company; Jason Kilgore, Kilgore Companies

Seated: Mark Green, M.C. Green & Sons; Jeff Clyde, W.W. Clyde & Co.; Jody Jenkins, Cache Valley Electric; James Williams, J.M. Williams and Associates; Alan Johnson, IMS Masonry; Ed Cooper, Ash Grove Cement

How is the commercial building sector faring?

WELLING: We’ve been through a challenging period. We are all surviving through that and trying to make the best of the situation that we have. We’ve been fortunate enough to keep our revenues up and our people busy, and have developed some tremendous relationships with clients that we are able to work with and serve over a long period of time, and that’s helpful to us.

One thing we are encouraged about is the demographics of our community, which speak to the fact that there’s a demand, a need that is coming in the future. Utah seems to be leading the way in terms of its ability to be economically sound, and so we are optimistic about moving forward and seeing the private sector beginning to develop some projects. It seems like there is a little bit of momentum building into the future.

WEBB: This year there was $900 million in nonresidential building permits, which is almost a 30 percent increase from last year, but it’s still nearly half of what it used to be. There is a long way to go to get that construction built back up to where it needs to be.

OKLAND: About a year or so ago, building permits for residential went up significantly, and we were encouraged by that, because typically we follow closely behind. But we’ve been a little underwhelmed by that; I thought we’d see a little more. Surrounding states, which started to recover more slowly than we have, have actually picked up a little bit and have almost caught up to where we’ve been. We’ve had to dedicate more resources kind of on the periphery, which is sometimes hard to do. But we thought there would be a swifter recovery.

We look to the future with optimism. We are not sure exactly where the pipeline is going to come from, but we are optimistic.

GARFF: We are a smallish contractor. We still feel like we are kind of bouncing along the bottom. We’ve seen the private developer starting to come back into the market that we didn’t have two years ago. We were pretty well living off government work. We are seeing private work coming back in, but my gauge is how many bidders I get bid against on bid day, and it’s still very high. So that’s my economic gauge—but optimistic, improving slow and lethargic.

MOORE: Everyone’s in the same boat here. There isn’t a whole lot of low-hanging fruit out there. There are not a lot of jobs that are easy to come by. The projects that we are seeing are aggressively pursued by all of us.

We’ve all grown over the last few years, right? But to go after and keep the growth and opportunity alive here in Utah, we’ve had to branch out a lot more. We are out in other states where we haven’t been before. We are pursuing more work in those states, which means our guys have got to get on the road a little bit more. That’s difficult, because we’ve been pretty spoiled in Utah for a while because we’ve had some great work.

There is not one guy in this room that’s going to say, “Gee, business is bad.” But business is not what it was. We all understand that. We’ve just got to prepare ourselves for the future.

OPHEIKENS: We’ve been fortunate in Utah, all of us. We did hit a high high, but we never hit a really low low like the surrounding states. It’s been OK here. It is very competitive—15 different contractors will show up to bid.

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