December 5, 2012

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Construction Industry Still Looking for the Upswing

Di Lewis

December 5, 2012

Despite hopes the industry would be looking up, construction companies are still trying to hold on and wait for an economic bounce back, according to a group of construction executives at Utah Business magazine’s roundtable Tuesday morning.

Many are also worried that the long-term depression in construction is has reduced interest in construction jobs and companies will face a future shortage of workers and an experience gap in leadership.

“While there is some work out there, is there enough? Several years ago, in 2008 and 2009, we had about $1.5 billion of work in the building industry that we could go after. Now we’re down to about $586 million and we’re still the same guys around the table going after that work,” said Rob Moore, president of Big-D.

He continued, “In my mind, the state of our industry is very similar to what it was three years ago when we all thought that in maybe three years we’re going to be out of this…How do we keep our companies going? How do we keep the overhead in check? Everyone is saying, ‘Gee, I’ve got to do about twice the volume to do the same amount of fee and return on my investment.’”

Paul Campbell, Wheeler Machinery vice president, said that lack of upward movement is reflected in the equipment side. Companies are simply replacing equipment, not expanding the fleet, and more people are renting rather than buying.

The overall feeling is flat, said Dale Campbell, R&O Construction president. “There are ups and downs throughout the year and there’s a little excitement, but then the project gets put on hold or something happens and the excitement dies,” he said.

The residential market is improving, but is still only about a third of what it was at the height of the market, said Jason Kilgore, president of Kilgore Companies. The subdivision side of residential is still a little worse than everything else. While he said news that the sector is improving is true, “30 or 40 percent of nothing is still nothing.”

Jim Gramoll, president of Gramoll Construction Company, said he is slightly more optimistic than most other attendees and there is some indication that the growth being predicted for the last four or five years may be about to happen.

In the meantime, companies at the table were finding work wherever possible, in jobs like renovations, medical facilities, or food and distribution facilities.

Another concern is a “lost generation,” said Jeff Beecher, Layton Construction executive vice president. Several years ago, there was high demand for people coming into the industry, but now not as many are looking into construction as a career. When business does pick back up, Beecher said he is worried that there will not be the same supply of qualified people.

Other attendees expressed concern that with fewer and lower-budget projects, the younger people in the company haven’t had the same opportunities to learn and grow into leadership roles that other employees are getting ready to retire from.

Moore said many people don’t realize construction still pays 7 percent more on average than other private sector jobs in Utah. The industry needs to do a better job of helping people understand that, he said, so they will have a steady supply of qualified employees.

A transcript of the discussion will be in the February issue of Utah Business.

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