• Construction: Turning the corner, but slowly
    By
     | March 26,2012
     
    Cassandra Hotaling Hahn / Staff file photo

    Workers from DEW Construction Corp work on the interior of the new CCV academic building in Rutland.

    It’s not the boom years, but it’s not the depths of the Great Recession either.

    This year will likely see a modest increase in construction activity in the state, helped along by low interest rates and an economy that is improving, but at a slow pace, construction industry representatives said.

    According to the National Association of Homebuilders, 1,199 single- and multi-family building permits were issued in Vermont last year compared to 1,500 in 2010 — a 20 percent decline. It’s also a long way from the peak year of 2003, when 3,600 permits were issued.

    Nationwide, there were 610,707 building permits issued last year.

    New home construction is concentrated in Chittenden County. Nearly half of the permits last year, 560, were issued in the Burlington-South Burlington area.

    Josie Palmer Leavitt, executive officer of the Home Builders and Remodelers Association of Northern Vermont, said this year there has been a pickup in activity, with most of it concentrated in multi-family home construction.

    “It’s holding steady,” Leavitt said. “I think Vermonters are feeling more confident with the market and the economy, unemployment is going down, there’s a little more job security.”

    Building permits in the Burlington and South Burlington area for multi-family homes are up 18 percent in January from a year ago while single-family home permits are flat.

    She said contractors are seeing more remodeling work as well.

    Leavitt said a warmer than normal winter and an early spring has given contractors an early start to the construction season.

    Construction companies and independent contractors can use all the work they can find following the economic collapse three years ago that decimated the industry’s ranks.

    Economist Arthur Woolf said construction employment in the state peaked at 17,500 in the summer of 2006. Over the next three years, employment fell, hitting a bottom of 13,500 in the summer of 2009.

    “It stayed there through summer 2010 and then began inching up through the fall of 2011,” said Woolf, a partner in Northern Economic Consulting and co-publisher of The Vermont Economy Newsletter. “Since last fall, we’ve added about 1,000 construction jobs and we’re now at 14,300.”

    But Woolf cautioned that while the industry should continue to add jobs, it will remain a slow process and “won’t get to the peak level anytime soon.”

    Don Wells, president of D.E.W. Construction Corp., senses an overall industry uptick in business.

    But Wells also said that the experience of D.E.W.. Construction is atypical of most general contractors during the slump that began three years ago.

    The Williston company has seen its business grow from $70 million to $90 million a year to $156 million a year over the last two years. This year, Wells estimates business will top $120 million. During the peak season, employment reaches 120 workers.

    D.E.W. is the second largest construction company is the state. The largest is PC Construction Company (formerly Pizzagalli).

    The company continues its work at Jay Peak Resort, which has invested tens of millions of dollars in new projects, including an indoor waterpark and ice skating rink.

    D.E.W. will break ground this spring on a $20 million, 100-unit condominium project along the resort’s golf course.

    D.E.W. has also seen its share of work at Castleton State College. The company is completing work on a dormitory and was awarded the contract to build a $1.6 million open air pavilion for graduations and other events.

    Wells ticked off a list of other projects: A $25 million, 410-bed private housing project at the University of Vermont, a Toyota dealership in Berlin, a $12 million clothing manufacturing plant in St. Albans, and a $7 million to $7.5 million project in Derby for Canadian cycling helmet maker, Louis Garneau.

    Although Naylor & Breen Builders in Brandon has seen its workload pick up over the last two years, company president Robert Naylor said there are far more contractors than jobs to be had.

    “The industry is still deflated and competition is as fierce as ever,” Naylor said, “which is a sign that there’s not enough work to go around for the amount of contractors that have survived.”

    Prior to the economic crash, Naylor said, up to 90 percent of his business was negotiated work — clients coming to him to do their projects.

    “When the crash came all the negotiated work left, went out the window, and everything turned into completely hard bid(s),” he said.

    He also said 2008 was the first year the company resorted to layoffs, with half the workforce given pink slips.

    Today, he said the situation has improved with more clients again coming to him to negotiate the price of their projects. The company has also brought back all the laid-off workers and added new jobs. Naylor & Breen now has 65 to 70 people on its payroll.

    “It looks like we’re going to be able to maintain that for the foreseeable future,” he said.

    The company has a number of projects lined up this year including convenience stores, a car dealership, a warehouse, the second phase of the Hickory Street housing project in Rutland and an affordable housing project in Windsor.

    Although D.E.W. has weathered the recession nicely, Wells said the industry as whole has a long way to go.

    “There’s money available but there’s no confidence in the economy as a whole,’ Wells said, “and I think everybody is hoping the national scene will turn around and everything is contingent on that.”

    According to a survey by Associated General Contractors and Computer Guidance Corporation, construction firms are planning significantly fewer layoffs this year “than at any point in the past few years.”

    The survey found that while the overall construction forecast remains mixed, many firms anticipate that the private sector will expand this year.

    In terms of contracts, AGC reported that the majority of firms expect the dollar volume of projects to either grow or remain stable in every market segment.

    The national industry trade group also said that the many contractors are hampered by tight credit conditions which result in delay or cancellation of projects.

    “The construction industry will improve this year but we are going to have to wait until at least 2013 before contractors experience the kind of recovery this industry needs,” Ken Simonson, the association’s chief economist, said in a statement that accompanied the survey.

    Nationwide, construction employment is 5.55 million, or 1.2 percent higher than in February 2011. It was the sixth consecutive month that construction employment rose from the same month a year before. Meanwhile, the industry unemployment rate in February was 17.1 percent, double the national average.

    The industry has lost 2.2 million jobs since early 2006.

    bruce.edwards

    @rutlandherald.com

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