Contractors optimistic about 2002

But they remain aware of future's uncertainty

By Candace Doyle
Editor

The economy - and its myriad of mood swings - made headlines daily in 2001.

And almost every day, the news reports were conflicting. News of a shrinking economy was followed by reports that it was growing faster than economists anticipated.

Fears of a looming recession gave way to revelations that the recession started months ago. Analysts were befuddled to predict when or how the roller coaster ride the stock market was would end. And consumer spending - considered an economic savior - was down one day, up another.

The construction industry fared better than the nation's economy as a whole, but it faced some of the same twists and turns. Only in October was there an encouraging word: The Department of Commerce indicated that spending on construction projects, which had posted five consecutive monthly declines, advanced by 1.9 percent-the biggest monthly gain since January.

Needless to say, the ever-changing reports made it less than easy for contractors to plan ahead. Still, 2001 wasn't a bad year for several, and they face the new year with optimism.

"2001 wasn't really bad," said Gerald Bauman, president of Bauman Construction in Chippewa Falls. "2002 is looking pretty good."

Bauman Construction has about 50 employees and does about $10 million worth of work each year.

Roger Friede, president of Friede & Associates in Reedsburg, agreed that the doom-and-gloom reports in late 2000 about this year's economy did not pan out.

"We, in the spring of this year, were planning on a down volume year," said Friede, whose company employs 30 and has an annual volume of about $15 million. "Margins have been a little tighter. But overall, it had been an up year in terms of gross revenues and gross profits."

Projects lined up

So said Victor Aiello, director of business development for Beyer Construction, New Berlin, which has 93 employees and annually does between $38 million and $40 million in volume.

"We're very pleased with the type of construction we've seen in 2001, the ones we're seeing for 2002," Aiello said. "We aren't seeing anyone pulling the plug because of the economy."

Nevertheless, it's not exactly business as usual. Bauman said his company is doing a bit more advertising than it typically does.

And, the uncertain financial outlook means that equipment may be repaired rather than replaced.

"We're pretty cautious about what we're spending," he said.

Cautious, bot not overly, said Friede.

"We have a pretty active marketing program," he added. "We haven't delayed anything. The capital budget's the same. We're happy, I guess."

Friede said he's seen this year a switch in the size of projects on the drawing board, and he thinks the economy is driving that change.

"We have a mix of some of the smaller projects," he said. "I think some of the activity has shifted from some of the home-run projects to bread-and-butter projects."

He said Friede & Associates just finished a 200,000-square-foot manufacturing plant, and now the company is focusing on smaller projects.

"We're doing more in the area of maintenance and smaller renovations and improvements," he said.

Full steam ahead?

Aiello said, too, that Beyer has not changed the way it does business.

"I can't say we've changed any of our plans," he said. "We are committed to our marketing plan, our business plan. We are committed to our employees.

"I've had people tell me because we're in the mildly conservative fiscal environment of Milwaukee, we're not impacted by those national trends as dramatically. That may very well be the case."

Yet he is not unaware of the nation's precarious economy and is watchful of it.

"We have had nonprofits, which is a good percentage of our client base, talk about a slowdown," he said.

That, though, has not been realized, he said.

"We're still seeing a lot of activity in the church marketplace," he said. "We have six churches under contract right now. We think that's going to continue."

Friede, whose company is now working on a community center and fire station, shared that optimism.

"We are seeing more activity in the municipal market," he said. "I think, to a certain extent, we were fortunately positioned with some clients who were able to take advantage of reduced interest rates.

"We just finished our initial budgeting for next year. Our project activity through the second quarter, we think, is going to be the same. It appears it's going to be a busy year for us. That being said, we're seeing a little bit more margin pressure than we did a year ago."

Bauman said lower interest rates - and the fact that 2002 is an election year and candidates have promises to make - will help next year's financial outlook.

"Everyone's out trying to get things done," he said. "That's going to help. For the most part, it's looking pretty good for 2002."

Aiello went so far as to predict 2002 would be better than this year for his company, although he said much would depend on the war in Afghanistan and how that plays out, as well as if there are further terrorist attacks here.

"We would expect a slight increase in our revenue," he said. "Things are very tenuous, though. We are in a period of uncertainty."

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