It’s a staggering – and sobering – statistic.
While construction accounts for one fifth of the U.S. work force, the recession has battered the construction industry. The result has been the loss of 990,000 jobs and a climb in unemployment to 18.7 percent for the year ending in April, according to Ken Simonson, chief economist for the Associated General Contractors of America.
And that doesn’t include another three to four support jobs held by suppliers, subcontractors, lenders and equipment rental or manufacturing firms for every primary job lost.
In Colorado through first quarter, the state Department of Labor and Employment reported that the construction sector lost more than 20,000 jobs – a decrease of 15 percent on a year-over-year basis.
Much of that decline has been attributed to fallout from the recession. With less available credit to underwrite new development, for example, there’s less demand for new mountain community resorts or downtown Denver high rise buildings.
The Pikes Peak region has once again been spared the worst. Construction employment is down just 7.5 percent compared to the same period last year.
Even with some layoffs and declines in seasonal hiring, the area’s job losses increased by only 1,100 to about 15,000, Simonson said.
The area has 755 building contractors and 216 heavy and civil engineering firms, according to the Colorado Department of Labor and Employment. Thirty local companies deliver “machinery manufacturing” services, and 291 employers are categorized as “building material and garden supply stores.”
The CDLE also reported that 928 Colorado Springs companies provide repair and maintenance services for general contractors and construction companies.
The reason for the area’s employment stability is directly tied to its reputation for growing military installations.
Not only are contractors busy with residential construction at Peterson and Schriever Air Force bases, but there’s $1 billion in construction projects under way at Fort Carson. As many as 1,500 to 2,000 contractors, suppliers, tradesmen and laborers work at the Mountain Post on a daily basis.
Bryan Construction will complete between $50 million and $60 million in new projects for the Army this year, said company CEO Scott Bryan, and Mortenson Construction has been awarded the $70 million six-building Company Operations Facilities.
Infrastructure and capital projects are expected to continue for at least the next three years as new and returning troops, and their families, arrive.
Colorado is counting on the award of almost $500 million in federal stimulus projects during the coming year. All must be awarded by March 2010 – and so far 26 of 46 projects have been allocated, said Laura Driver, spokeswoman for the Colorado Contractor’s Association.
The Colorado Department of Transportation is responsible for the allocation of more than $420 million in road and bridge projects, and along with municipalities like Colorado Springs, is working to get people back to work.
“We’re among the first 12 states to get at least half of our projects awarded,” said spokeswoman Stacey Stegman. “Transportation funding is complicated, with right of way requirements and environmental approvals that have to be done. But the feds made it very clear – it’s use it or lose it, and we’ve got limited time.”
Castle Rock Construction Co. minority owner and CCA immediate past president Don Hanneman said his company has traditionally employed about 65 full-time and 45 seasonal workers. The firm is working on three Denver area and Lincoln County stimulus-funded projects worth about $39 million.
“We work all along the Front Range from Pueblo, Lamar and Burlington to Aspen, Denver and Greeley,” he said, adding that the company also was a SEMA subcontractor on the Interstate 25 COSMIX project.
However, while Hanneman said he does not expect to bid on the upcoming $35 million Woodmen Road Expansion, he believes contractor competition for the job will be fierce.
“Every company is trying to keep their crews busy so they don’t have to lay them off,” he said. “As a result, you’re seeing a lot of low bids. Some are … at cost which is dangerous because they’re not covering their overhead.”
Hanneman also said that many firms have been forced to expand their reach into new geographic areas.
“In the past I’ve gone to Wichita or to Casper just to keep our crews busy,” he said.
Hanneman credits passage of Senate Bill 108, or FASTR legislation, with supplying another $175 million in state funded infrastructure projects to help bolster construction employment.
“There’s not that much out there in the private sector right now,” he said. “With tax revenue down, school districts aren’t generating much – and banks are lending. If it weren’t for the public work, I’d be down to 60 or 70 employees and would have had to shut down one paving crew.”
Wilson & Co. transportation marketing manager Julie Kim said her company is beginning to see a slight increase in the number of biddable jobs. And, so far among its 17 offices, including one in Colorado Springs, few workers have been laid off.
The company provides design engineering, mapping and construction management for the transportation industry.
“A lot of the stimulus projects were already designed which doesn’t help us – that’s what we do,” she said. “The ripple effect is that more municipalities are able, because of stimulus funding for big jobs, to move projects up that they had in the budget for the future – and we’ll bid on those.”
And, like Hanneman, she sees opportunity growing in potentially new areas.
“We are beginning to look at new markets like federal energy projects,” Kim said. “It helps not to be limited to just one industry.”