Stimulus cash fails to pave way to new hiring in Minn.

  • Article by: STEVE ALEXANDER , Star Tribune
  • Updated: June 9, 2009 - 11:30 PM

About $3 billion in federal stimulus money was supposed to give Minnesota's workforce a jolt of energy, but so far it's just a tingle.

The federal stimulus money was supposed to give Minnesota's workforce a jolt of energy, but so far it's just a tingle.

As construction season gets into full swing, companies are starting to recall workers laid off last year. But even some companies that are beneficiaries of the new federal spending say they're unlikely to recall all their laid-off workers -- and less likely to hire new ones.

Minnesota got about $3 billion in stimulus money under the American Recovery and Reinvestment Act of 2009, including $502 million for road construction and $107 million for municipal drinking water or waste treatment facilities. All that spending must be in the works within a year.

"We've picked up two road construction projects funded by the stimulus money, on Hwy. 169 in Onamia and St. Peter," said Brad Mattson, corporate secretary of Shafer Contracting in Shafer, Minn. "We hope this gets us through 2009, because the economic forecasts for 2010 are more promising."

But Shafer Contracting probably won't need more than 40 or 50 additional workers for the stimulus-funded highway projects, and those would be drawn from a pool of 100 workers the firm employed last year but hasn't needed in 2009.

That contrasts with favorable forecasts about how the stimulus should work. The Minnesota Department of Transportation has $375 million to spend on state highways and bridges (the rest of the highway money is shared with counties and cities), and for every $1 million spent on road or bridge construction, 28 to 34 jobs should be created, said Tim Worke, highway division director for Associated General Contractors of Minnesota, a trade association based in St. Paul.

"But the road construction market has been depressed for a long time, and most companies have laid-off workers they would be calling back to work," Worke said. "It wouldn't be until after the established crews are back that they'd look at hiring any new seasonal employees."

It's a similar story at Rice Lake Construction in Deerwood, Minn., which says it won't hire new workers to renovate a Montevideo, Minn., wastewater treatment facility that is entirely backed by about $15 million worth of federal stimulus loans and grants.

Because the Montevideo project -- the largest of the four state freshwater and wastewater projects to get stimulus money so far -- was already in the planning stages using traditional city financing, Rice Lake Construction won't need any more workers just because the financing was switched to federal stimulus money.

"The stimulus is stemming the loss of jobs, putting a floor under it to some extent. But it's not really picking us up," said Luke Spalj, Rice Lake Construction's chairman.

Part of the problem is that only 10 to 20 percent of the Montevideo project's cost goes toward labor, he said. The other 80 to 90 percent goes to purchase heavy equipment. That means if new jobs are created by the stimulus-backed wastewater project, they are more likely to be at the non-Minnesota company that manufactures the heavy equipment than at his Minnesota-based construction firm.

Because Rice Lake Construction has about 40 percent fewer workers than it did last year, if additional employees are needed, "all we could do is call back people who were laid off," Spalj said.

But the hiring story looks better for some other companies, such as Ulteig Engineers, a North Dakota company with a large Twin Cities office that is hiring a modest number of new workers.

Ulteig does a lot of site preparation and design work for wind-generated electric power projects. Because the stimulus includes renewable energy credits, it has created enough confidence among customers to prevent wind power projects from being canceled, said Brian Long, the firm's chief development officer, who is based in Fridley. As a result, 420-employee Ulteig has hired about 50 employees this year. Ulteig has about 120 Twin Cities employees working on wind generator, city road and public utility projects.

"Some of these energy projects are being tided over by the stimulus," Long said. "We're adding people because we anticipate getting more business after the stimulus is over."

Steve Alexander • 612-673-4553

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