Economy continues to nail builders

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Economy continues to nail builders
Published: Sunday, December 12, 2010, 6:45 AM     Updated: Sunday, December 12, 2010, 8:38 AM
By Roy L. Williams -- The Birmingham News
 

Nearly three in 10 Birmingham area construction jobs have disappeared in the past three years, and some in the battered industry glimpse few signs of immediate improvement.

Figures from the Associated General Contractors indicate that construction employment in the Birmingham-Hoover area totaled 25,000 in October, down more than 28 percent from October 2007, when nearly 35,000 people worked in construction jobs.

Statewide trends are similar, with Alabama construction jobs falling from a peak of 114,900 in October 2007 to 87,200 in October 2010, a drop of 24 percent.

Nationally, the number of construction jobs has contracted by 28 percent from the peak, making it one of the hardest-hit sectors of the economy, according to the Washington, D.C.-based trade group.

Birmingham construction industry officials hope the worst has passed. The industry's recovery prospects are a keen concern because Alabama's largest metro area is home to many big construction companies and the sector is a major employer.

Henry Hagood, president of Alabama Associated General Contractors, said he is optimistic that 2011 will see a continuation of a rebound in construction activity that has taken place over the past few months.

"We may be down about 28 percent in employment, but the good news is that things are picking back up after bottoming out in the fourth quarter of 2009," Hagood said.

Jim Young, a spokesman for the AGC, said metro Birmingham construction employment has largely mirrored national trends over the past five years. But during the past 12 months, Birmingham has suffered more, shedding 4 percent of its construction jobs, compared to 2 percent statewide and 3 percent nationally, he said.

John Wyatt, vice president of Birmingham-based contractor Gary C. Wyatt Inc., said the industry continues to feel the pain despite an improving economy that saw construction employment increase by 400 jobs from September to October in metro Birmingham.

"While the data shows some rebound in construction jobs, the rebound may be short lived," he said. "The availability of projects does not look to be increasing."

Still, Hagood, whose 1,000-member group includes 800 contractors and subcontractors statewide and the Florida panhandle, said the Alabama AGC chapter fared better than many of its regional counterparts, losing only about 50 members during the economic downturn.

Though McCrory Building Co. suspended work on several projects this year due to financial challenges and Brice Building Co. merged with a larger Louisiana contractor, Hagood said most metro Birmingham firms were able to hang on despite the fact that many downsized their staffs due to the slowdown.

"I'm starting to see indicators of a turnaround," Hagood said. "Builders are calling back some of the people they'd laid off."

Hagood said there has been an increase in contracts, as projects like the Westin Hotel and entertainment district at the BJCC, the proposed baseball stadium near the Railroad Park and Trinity Medical Center's planned move to U.S. 280 are coming up in 2011. The projects represent hundreds of millions of dollars in investment and potentially thousands of construction jobs.

Yet while there are other proposed projects, both public and private, in the works, Wyatt of Gary C. Wyatt Inc. said many of them lack viable funding options.

"The time that it takes to obtain funding in private work is stretching from six to nine months if approved at the institutional level (banks and private equity funds)," Wyatt said. "Many projects are being considered but are unable to gain approval due to lack of confidence of corporate boards and CEOs."

Wyatt said a boost in consumer confidence is needed to unlock the lending and spending that are critical to boosting the economy and construction industry.

"In order for that to happen, the risk of a double-dip recession must be addressed and removed from perception," he said. "Positive job growth in the construction industry will occur when private dollars start to flow more freely in our region."

 Source: http://blog.al.com/businessnews/2010/12/economy_continues_to_nail_buil.html