Industry proves
anything’s possible
Nothing
lasts forever
By
Dick Snow
Nothing
is forever in the construction industry. There's ample evidence,
after reviewing the past and looking to the future, that there
is no such thing as rose-colored safety glasses.
Twenty
years ago, the Wisconsin construction industry was mired in the
doldrums of a stagnant economy. However, 1986 began the climb
out of the bottom of a bathtub curve toward, more or less, a high
rate of employment and the joy of increased dollar volume.
The
year before, in 1985, the collective dollar volume in the state
was about $1.8 billion. In 1986, that volume jumped 22 percent
to $2.2 billion. Following, there were more quantum leaps to a
relatively stable volume of $10 billion beginning with 1992.
Contractors
and subcontractors were in hog heaven for an entire decade until
2002 when the economy once again began stagnating and volume dipped.
Maintaining
stability
All
things being equal, there were stable, good times for a 15-year
period in contrast to the violent peaks and valleys of the previous
20 years, from the 1960s to the early '80s.
And,
during the strong growth period (those 15 or so years), construction
firms grew more robust and employment of craftspeople rose to
record highs.
Job
shacks and equipment left the yards to be employed on real, live
projects. Bidding activity became more selective. Construction
management and design/build delivery systems began to flourish
in all construction categories. And many contractors literally
dropped out of bidding public work, taking a surer route of negotiating
jobs with owners.
Signature
projects became more prevalent. Contractors signed on for jobs
such as the retrofit of Lambeau Field, construction of Monona
Terrace, the Bradley Center, Midwest Airlines Expo Center, the
exciting Overture project near the Capitol in Madison, a makeover
of the state Capitol itself and Miller Park. Institutional work
picked up with construction at Marquette University, the Milwaukee
School of Engineering, the new Bradley Tech in Milwaukee and rapid
expansions of the campuses of the entire University of Wisconsin
System. And the high-profile projects kept rolling along with
the new Sixth Street Viaduct, a major makeover of the State Fair
Park with a new Expo Center and, finally, the world landmark addition
to the Milwau-kee Art Museum designed by Santiago Calatrava.
A
plethora of church and school projects were also the order of
the decades.
This
was really exciting stuff, likely the most prolific period of
construction ever in the state of Wisconsin.
What
the future holds
Right
now, there's a great deal of uncertainty in the offices of many,
many contractors. A few, because they were stuck in specific markets
no longer viable, went out of business, and a few more will likely
follow.
Job
shacks are returning to contractors' yards. Public bid lists are
getting longer. Financing is being delayed or shut down entirely
for a number of projects. Profit margins are dropping.
Only
the residential side of the industry appears to continue its strong
showing. Pent-up demand and low interest rates are still the rule,
rather than the exception.
The
question of the day: Will contractors be forced to drop pricing
to take work at 10 percent of cost - as they were doing in
the late '70s and early '80s - to keep money flowing through
their companies?
While
a downturn in work is in play, it does not appear that such drastic
measures will become necessary for survival. For one thing, there
are a whole lot of Wisconsin contractors who have experienced
the really bad days, survived and learned some tough lessons in
the bargain.
Downsizing
and tightening procedures began as early as 2001 as signs of lesser
volume appeared.
There
are a few contractors, however, who haven't made the necessary
moves to tighten up their operations. Will they survive? Don't
know. Contracting is still a gamble. One lousy job can bring someone
down.
The
feeling here is that fiscal damage to the industry will be minimal.
The nation is more sophisticated, more marketing wise and more
stable than it was in the '70s and '80s.
The
purveyors of gloom and doom seem to get more media attention,
but we happen to believe our overall economic condition has a
solid foundation.
