VOL. 126 | NO. 182 | Monday, September 19, 2011
Work Still Slow in Construction Sector
By MICHAEL WADDELL
The Mid-South commercial construction market is still trying to gain traction following a steady downturn spanning the past couple of years.
Despite several large-scale and government-funded projects, a dearth of small- to mid-sized projects is keeping the market depressed.
According to the U.S. Labor Department’s Sept. 2 report, the nation’s construction industry registered 13.5 percent unemployment, more than 4 percentage points above the overall 9.1 percent unemployment rate across all industries in August.
Mike Carpenter is the president of the Associated Builders & Contractors of West Tennessee, which is celebrating its 35th year in the Mid-South and represents more than 200 area commercial-construction companies. Carpenter believes the unemployment situation here mirrors what is happening on a national level.
“We’re experiencing a downturn, and consequently a lot of construction workers have been laid off. And there’s not a great deal of work on the horizon right now,” Carpenter said.
Big upcoming commercial projects involving Electrolux, Mitsubishi Electric Power Products Inc. and Kruger Inc., as well as other economic development projects, are expected to generate some work, but a lack of small- to medium-sized projects is tightening the job market.
“As big as those projects are, they will be limited to a relatively small number of contractors, and some of those contractors will come from out of town,” Carpenter said. “So we don’t expect to see a significant uptick in construction employment any time soon. As an industry, the greatest problem we face right now is an access to capital.”
Carpenter also pointed out that because of the lack of available work, the number of people being trained in both union and non-union apprenticeship programs is down – despite most of those programs being employer-sponsored.
“Employment in the construction industry is way down, and it’s not going to come back up soon,” said Harold McDonald, president of the Memphis Area Minority Contractors Association and owner of McDonald Plumbing. “There are less jobs coming available, and the city’s budget for capital improvements is much less than in previous years.”
McDonald feels the decrease in local housing starts and commercial construction is indicative that the recession is far from over. He now sees big companies bidding on smaller jobs that they would not have considered a couple of years ago, and that causes headaches for smaller contractors.
“People that historically bid on smaller projects are having a hard time competing with the larger companies because the bigger companies can work on volume,” he said.
Despite the slowdown, MAMCA’s membership numbers have grown over the past 18 months because, McDonald said, “up-and-coming contractors need more help in today’s tough market, and we offer training courses and mentoring programs.”
David Sink, executive director of the Mechanical Contractors Association of Memphis and the Sheet Metal & Air Conditioning Contractors Association of Memphis, who tracks employment figures for his association’s mostly union memberships, said numbers are down about 30 percent from 2007 levels prior to the 2008 crash.
“We’re definitely not seeing the volume of commercial work that we are accustomed to seeing, and that’s due to the recession,” Sink said. “We are pretty much at the mercy of the financial markets. We just aren’t seeing any improvement in small- to mid-size construction starts right now.”
Sink is starting to see an upward tick in employment numbers, thanks to some significant jobs in the area, including a large hospital project in Jonesboro, Ark., but he is waiting to see how the Electrolux, MEPPI and Kruger projects might affect unemployment.
Sink also noted that steam fitters are likely to find employment at the Allen Fossil plant five miles southwest of Downtown Memphis, where the TVA has allotted $400 million for improvements to the air pollution equipment.
The majority of local commercial projects coming up for bid right now are government-financed, according to Don Hanks, president of the Builders Exchange of Memphis and an electrical engineer at A/C Electric. His company has remained busy during the downturn, thanks to steady work on new schools being built in DeSoto, Crittenden and Shelby counties.
“It’s been good for our company and some of the other construction trades around town for the past couple of years. We’ve been fortunate,” said Hanks, who has also been president of the Builders Exchange for the past four years.
However, he points out that the Builders Exchange has lost some members during the recession. Some companies have gone out of business because there’s simply not enough work out there to go around.
“We’re hoping that we have hit rock bottom and next year we start seeing things improve back to normal conditions,” Hanks said. “The only place we can go is up.”