Local construction work dries up, builders brace for lean times
By KATHRYN FLAGG
ADDISON COUNTY — After 30 years in the construction industry, Salisbury resident Jack Sheehan has seen economic ups and downs before — but never before has he seen business slow like it has this winter.
“Usually I’m about a year to a year and a half ahead,” he said, when it comes to plotting out his work schedule. “This year I have about half a year’s worth of work that I know of.”
And Sheehan, who runs a relatively small business with a crew of three other employees, is one of the lucky ones. He hasn’t had to lay off employees yet, and so far, he said, the spring looks promising.
Other local builders haven’t been so lucky, as construction around the region slows in the face of the national and statewide economic recession.
Work is tight in industries around the state. Unemployment in Vermont climbed to 5.2 percent of the workforce in October, up from 3.9 percent a year ago. (Statewide unemployment is still significantly lower than national unemployment, which at last count was a seasonally adjusted 6.7 percent.)
But with credit tight, and homeowners and business owners reluctant — or unable — to build, work is growing especially scarce for workers in the construction industry, which last year employed 5.5 percent of Vermont workers.
Slow business has forced some layoffs at businesses like Middlebury’s Bread Loaf Corp. and Apple Hill Design-Build.
Jim Pulver, the vice president of architecture at Bread Loaf, acknowledged that his company has had to downsize its workforce recently — though he wouldn’t say by how much.
The company, which specializes in industrial and commercial projects, is seeing fewer projects to bid on, Pulver said, as well as tighter budgets on projects that are moving forward.
“We see projects waiting for financing or really becoming very much cost-driven in terms of the decision-making process,” Pulver said. “Everybody’s really looking at trying to manage their money responsibly. It’s really made us look closely at all the decisions we make on projects.”
The type of construction work to be had — both for residential and commercial builders — is changing, too.
Sheehan, who works primarily in residential construction, said that the new “houses aren’t there, so I’m renovating.”
This is the case at Apple Hill Design-Build, where Vice President Peter Lackey said he expects the business to “muddle through” this winter on small projects like repairs and minor renovations.
Their workload, Lackey said, is lined up for only weeks in the future. Apple Hill is heading into its third winter as a business, and it’s the first time that they’ve had to lay off employees, Lackey said. The business has shrunk by nearly half, eliminating four or five positions recently.
And some projects are simply disappearing. Lackey said that he’s had several clients “renege” on projects they’d initially planned to tackle this winter.
“They’ll say, ‘We want to wait ’til spring,’” he said.
This spring, then, is the big question mark for local builders.
At the McKernon Group in Brandon, President Jack McKernon said that his company has been able to maintain its workforce of nearly 70 employees, and he anticipates being able to do that through the spring.
“After that, I’m not seeing a lot of work,” McKernon said.
To meet what he called the “non-demand,” McKernon said that his company has cut its prices significantly — 5 percent across the board, in fact.
But he’s not sure what, if any, impact that will ultimately have.
“If people don’t have the money, they’re not going to be signing contracts,” he said. “I can’t say whether it’s helped or not.”
Builders aren’t the only ones with an eye on the industry. Lincoln Zoning Administrator Bob Hall said he first took notice when he saw that zoning permits in the town were down this year compared to last.
“I’m concerned about it, obviously from the standpoint of the economy,” Hall said, who said that Lincoln hasn’t seen a building permit application for a new house all year. Typically, he said, the number of new houses in Lincoln falls between six and 12 homes a year. In 2008 the only new proposed construction is a yurt.
Hall isn’t alone. Shoreham Zoning Administrator Phil Kivlin said that not only is he anecdotally hearing of fewer garages and houses, but he’s also hearing from contractors that projects people had planned are being pushed off indefinitely. “People may have the permit, but then, for whatever reason … things may not be being built,” Kivlin said. “Things are being put off, delayed.”
LOOKING BACK, FORWARD
Longtime local builder John Tenny, vice president of the 30-year-old Mill Bridge Construction company in Weybridge, said the worst downturn for construction, in his recollection, came during the early 1990s.
“It was truly a depression in our industry,” Tenny said. “We had to go through a number of survival games during that period to be able to keep the doors open when we literally had no work at all and no income coming in.”
The current downturn — so far, at least — looks to Tenny to be more manageable than that rough spot in the early ’90s. His company currently has a few projects in the works.
That said, Tenny said the case might be different in a few months.
“There’s very little out there that’s being generated,” Tenny said. “The view forward, when we look forward to spring and summer, looks fairly bleak at this point.”
That sentiment holds true for builders — and for subcontractors like excavators, drywallers and painters.
When a turnaround might come is anyone’s guess. McKernon pegged 2011 as a point for an upturn — “basically,” he said, “after the housing market has finally taken up its overabundance of houses.”
But McKernon was of a mind that it would take two or three years for the construction market to turn around. Tenny was not any more optimistic.
“I’m afraid it’s going to be grim,” Tenny said. “This coming year will be tough. I’m sure of that.”