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VOL. 7 | NO. 31 | Saturday, July 26, 2014

Contractors See Bright Days Ahead

By Amos Maki

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After slogging their way through the deepest economic slump in more than 60 years, Memphis area contractors say the near future looks much brighter than the dark days of the recession and its immediate aftermath.

“The economy is improving,” said Justin Grinder, vice president of Grinder, Taber & Grinder Inc. “I think we’re headed in the right direction and there’s a lot of work out there. Typically, if contractors are doing well the economy is doing well.”

The local construction industry appears to be expanding gradually and broadly without one particular sector, such as office, health care or education, leading the charge, contractors say.

Local maintenance projects include the parking lot at the Germantown Park Office Complex being repaved.

(Memphis News/Andrew J. Breig)

“I would say it’s across the board,” said Grinder, chairman of the West Tennessee chapter of Associated Builders and Contractors. “People are building more across the board because the economy is getting better across the board.”

For an example of the wide variety of construction projects helping lift the industry, look at some of Grinder, Taber & Grinder’s current or upcoming efforts. They include the Sears Crosstown redevelopment, the Frazier-Jelke Science Center at Rhodes College, the headquarters for National Bankers Trust, the new home of the Blues Foundation and the renovation of Memphis Area Association of Realtors headquarters building.

The same is happening at Linkous Construction Co., which is working on projects that include the expansion of the Shops at Saddle Creek, Christian Brothers High School’s Athletic Development Center, the University of Memphis Basketball Training Center and Madonna Learning Center.

Nationally, the construction industry added 6,000 jobs in June and its jobless rate dipped to 8.2 percent from May’s 8.6 percent. The 8.2 percent jobless rate in June improved significantly from the 9.8 percent rate recorded in June 2013, according to the Bureau of Labor Statistics’ monthly employment report.

Investors and companies are slowly pouring more capital into properties, tackling maintenance projects – such as the parking lot repaving project at the Germantown Park Office Complex – they may have deferred during and after the recession, said Paul Winter, leader of the project management team at CB Richard Ellis Memphis. That’s providing a bump for the construction industry but one that is still far off pre-recession levels.

“We’re starting to see the capital come back, but it is still slow,” Winter said. “We’re doing business in a different environment than we were pre-recession.”

The industry’s total employment has risen 3.2 percent since June 2013 to slightly more than 6 million. While that is a healthy indicator that construction activity is on the rise, it still is down by more than 22 percent from the 2006 peak.

That deep reduction in the construction workforce is being felt now. As the economy rebounds and more construction projects become available, contractors say they’re scrambling to find skilled workers.

“As our commercial construction market continues to improve, contractors, vendors and suppliers must keep up with demand,” said Rusty Linkous, president of Linkous Construction Co. “Of course, this comes on the heels of a four-year recession where quite a few companies significantly reduced their staffs.”

The recession forced subcontractors and other construction industry-related firms to trim staffs or venture to other cities for work. Now that the local construction industry is growing again, firms may not have employees to compete for projects.

“The subcontractors, in the real tough times you might get six to eight bids on one trade, but now you might get three or four,” Grinder said.

“Some of that is because people are busier and a lot of them are at capacity so they’ll pass on a project,” he said. “If they’re busy doing a contract they can’t bid the next one.”

As long as the economy continues to expand, even at uneven levels, and the cost of building materials is kept in check, contractors expect business to grow.

“So much depends on the economy,” Grinder said. “If the economy doesn’t do as well and the material costs increase you might see a slowdown, but right now I don’t see that.”

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