Construction: Contractors cautiously optimistic | Business
Editor’s Note: This article was published in the Economic Outlook 2020 section of Record-Eagle. For more stories, click here to read the entire section online.
TRAVERSE CITY – Challenging times are nothing new for the resilient commercial construction sector of the Grand Traverse region.
An industry that has been grappling with financial crises, a housing bubble, labor shortages and much more for the past few years has had a turbulent 2020 triggered by the effects of the global COVID-19 pandemic. With Michigan’s six-week shutdown this spring, builders and contractors are cautiously optimistic that they will tackle their latest challenge again.
“Traverse City and Northern Michigan are definitely good markets,” said Jim Winter, project manager and appraiser at Spence Brothers, a statewide construction company with an office in Traverse City. “Even when there are downturns, they don’t seem to last that long and we’re recovering pretty well.”
Michigan’s construction sector is valued at $ 20 billion by the Association of General Contractors of America, which is about 4 percent of the state’s annual gross domestic product. The State Department of Labor estimates that Michigan’s construction industry employs more than 170,000 workers, excluding tens of thousands of others in related fields including architecture and design, engineering, materials and equipment suppliers, and others.
Winter said the region’s construction sector is in the middle of a “good long-term situation” ahead of the spring shutdown. A backlog of work caused by the interruption helped the industry rebound quickly during the summer and fall, though that wasn’t the only curveball the construction industry grappled with this year.
COVID-19-related shutdowns across the country have rippled supply chains and driven up building material costs. More recently, hurricanes in the southern states and widespread forest fires in the western United States have impacted the availability of lumber and materials such as PVC pipe. This forces contractors in the area to plan and order more proactively to ensure they get the materials they need.
“You really have to understand where the products come from and how they get here – you just have to do a little more homework,” said Steve Schimpke, director of customer and real estate strategy at Cunningham-Limp, a development and construction company with offices in Traverse City and Southeast Michigan. “This should really only be temporary. The supply chains are restarted. “
Despite the challenges, local industry leaders said the construction sector continues to make tremendous strides in its business in other areas, including continued technological improvements, occupational safety, and dealing with labor shortages that affect nearly every facet of the business.
Improvements in project management software help contractors keep their subcontractors, designers, architects and clients updated with real-time information on development projects. You can digitally share plans and drawings, hold meetings on applications like Zoom to reduce the need for face-to-face meetings, and work with local authorities on digital approvals and plan reviews.
Better technology in construction equipment also improves efficiency and lowers maintenance costs.
Digital imaging provides more information about workplaces ranging from residential and commercial buildings to road and bridge construction.
“The age of electronics has helped us tremendously,” said Jack Ocobock, co-owner of D&W Mechanical in Traverse City and president of the board of directors for Builders Exchange in northwest Michigan. “It gives us a lot more detail in terms of the information we need to build our projects.”
Securing a skilled workforce continues to be a challenge for the region’s construction sector, but that is improving too. Ocobock said the industry can better highlight career opportunities in the construction sector and that more educational institutions are promoting the benefits of careers in the craft sector.
“All the artisans are coming to the realization that, ‘Hey, you better get ready and train some people,'” he said. “It’s been a great career for me.”
Owners and contractors are cautiously optimistic that the sector’s recovery from the challenges of 2020 will continue.
“We have a good backlog this winter and then next summer,” said Jim Isenhart, owner of Isenhart Electric in Traverse City. “It was definitely another year for us, but it was okay.”
The weeks and months ahead will be crucial, however, as the spring and summer work backlog catches up and customers focus on the next year and beyond. The half-year outlook released by the Construction Association of Michigan in August predicts that the state’s construction sector will return to pre-COVID levels in early 2022.
“There’s demand out there, but there are some people willing to wait and see how things go,” said Charlie Sole, the controller for Hallmark Construction in Traverse City. “We haven’t seen the cycle of plans come to the table to bid for the future – we don’t know yet.”
In short, the northern Michigan contracting community remains confident that anticipated pent-up demand will result in viable projects for the foreseeable future.