Builders brace for another tough year

  • Article by: JANET MOORE , Star Tribune
  • Updated: January 23, 2012 - 9:14 PM

Nevertheless, only a few plan layoffs, about one-third will add workers, and hope abides for 2013.

Two national reports indicate the construction trade is still beleaguered across the country and in Minnesota, but hopes are high that 2013 may be a bit better.

"This year feels a little bit like we'll be in a holding pattern, but there is hope that in 2013 we'll move back into a growth period," said Kendall Griffith, vice president of operations for the Minneapolis office of Mortenson Construction.

A survey of nearly 1,300 construction firms nationwide found only 9 percent expect to lay off employees this year, compared with 37 percent last year and 55 percent in 2010, according to the Associated General Contractors of America, an Arlington, Va.-based trade group. About a third responded that they plan to add new employees, but only at a modest rate. (The figures do not include residential construction.)

Minnesota's results closely mimicked national trends in the survey. Thirty-two percent of the firms in the state said they plan to add employees, but the biggest increase will come from firms expecting to hire only six to 15 employees. Last year, 68 percent said they added people, but the majority of those hires were for fewer than 15 employees.

With a national unemployment rate in the construction trade stubbornly hovering at 16 percent, any news of hiring is welcome, said Dan McConnell, business agent for the Minneapolis Building and Construction Trades Council: "We saw things picking up a little in 2011, and in 2012 it seems to be continuing, but that's only anecdotal."

'A modest increase'

Separately, McGraw-Hill Construction reported on Monday that December nonresidential construction contracts in the Twin Cities-metro area declined 61 percent to $57 million. This includes commercial, manufacturing, educational, religious, administrative, recreational, hotel, dormitory and other buildings.

But year-to-date, McGraw-Hill said metro-area nonresidential construction increased 77 percent to $1.8 billion.

"The industry overall is still experiencing a modest increase in terms of revenue, staffing and new projects," said Colin Barr, president-Midwest region for the construction and development firm, Ryan Cos. US Inc. "But it feels like the top-tier firms are very busy and hiring, both in architecture and construction."

Stephen Sandherr, CEO of the contractors association, said results of the survey show some promising signs for a national recovery, but the outlook overall is mixed and economic conditions "remain difficult."

The association found that the cost of construction materials continues to rise, while bid levels for new jobs remain low. And federal funding for construction projects is shrinking as stimulus funding dries up. Further, 68 percent of the Minnesota firms responding to the survey said bank credit has caused customers' construction projects to be delayed or canceled.

However, builders in Minnesota expect some construction activity this year in the power, manufacturing, hospital and higher-education sectors.

Optimism in Wisconsin

Interestingly, construction firms in Wisconsin were the most-optimistic in the nation in terms of hiring -- 57 percent said they expected to hire new employees this year.

Spokesman Brian Turmail said AGC officials were "curious" about the optimism in the Badger state. He said responses from Wisconsin show that builders are particularly upbeat about construction prospects in the manufacturing, hospital and higher education and private office markets.

"We've been seeing a lot of mid-midwestern states see a bit of a bump in construction employment as a lot of manufacturers retool or restart plants, especially plants related to the auto industry," he said in an e-mail.

Janet Moore • 612-673-7752

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