Despite the national economy that is teetering on the edge of recession and a tightening of available credit, local general contractors say they remain busy.
“I expect we will meet our revenue and sales goals for this year,” said Craig Coursin, president of Oconomowoc-based MSI General Corp. “You are seeing people do additions and upgrades and moves.”
Contractors say commercial construction projects in the area remained strong last year, despite a report by F.W. Dodge (part of The McGraw-Hill Companies) that said the value of signed construction contracts in the Milwaukee area was down 30 percent in 2007 from the year before.
In the first quarter of this year, F.W. Dodge says area construction activity is up about 1 percent compared with the first quarter of 2007.
“We are seeing things slow down, but not 30 percent,” said John Hunzinger, president of Brookfield-based Hunzinger Construction Co. “There’s no 30 percent drop in this marketplace on the commercial side. For us, ‘08 looks a lot like ‘07.”
The F.W. Dodge numbers for 2007 could have been skewed by a large number of major projects that began in 2006, including the Harley-Davidson Museum, the Oak Creek power plant and expansions at the Milwaukee Regional Medical Center, said Dan Sisel, project development manager for M. A. Mortensen Co.
“I think it illustrates just how much work was put on the books in 2006,” he said.
As the national housing market has collapsed, the housing market in southeastern Wisconsin also has weakened, resulting in a drop in residential construction activity, contractors say.
However, commercial construction activity is holding fairly steady, despite the slumping economy.
“2007 turned out to be a fairly good year,” said Bob Ornst Jr., president and chief executive officer of Wauwatosa-based Selzer-Ornst Co. “2008 has continued on at about the same pace as last year.”
Still, contractors say they are seeing some signs of a slowdown.
Hunzinger said he has noticed that there are more subcontractors bidding for jobs.
“That tells us that the subcontractors are looking for work,” he said.
Coursin said MSI General had a good backlog at the end of 2007, but many clients were reluctant to pull the trigger on projects during the first quarter of 2008.
“We had a god year last year,” Coursin said. “We had a pretty significant backlog at the end of the year that kept us busy in January, February and March. The hardest thing now, it seems many clients were reluctant to move forward (with projects) in January, February and March. I think some of it is media hype (about recession), being a little afraid of what’s coming up.”
However, national news reports focus on the coasts, which obscures the fact that the Midwest economy remains much more stable, Coursin said.
Ornst also said he wishes his firm had a bigger backlog of work.
“The spring is not as busy as we hoped, but we are optimistic things are going to pick up this summer,” Ornst said. “Some projects are getting pushed off a little bit, but (the market) is not collapsing. We’re at what we can handle right now. All of our guys are working. We haven’t laid anybody off.”
The weak U.S. dollar has boosted Wisconsin manufacturers’ exports, which has spurred more industrial building projects, Coursin said. Grocery store development remains strong, but some retail projects are being slowed because of difficulties in obtaining financing, he said.
“I think there’s a lot of activity in terms of business development opportunities,” said Sisel. “I think that there’s going to be select industries that do well, health care will be strong. But we will not see as much speculative office or speculative multi-family residential.”
SBT reporter Eric Decker contributed to this report.
