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December 22, 2006

Construction level in '07 - And there's much more in latest industry update

More room, down by the Bay

Grand Rapids Oks rules for responsible contracting

Detroit, Michigan AGC chapters join

Iron Workers use shovels, just this once Ground broken on new training facility

News Briefs

 

Construction level in '07 - And there's much more in latest industry update

Michigan's statewide construction employment is projected to remain about the same from 2006 to 2007 - but it will still be down about 10.5 percent from the peak level of 2000.

That work outlook for the near-term future of Michigan's construction industry may be the most significant tidbit of information to Michigan's Hardhats. But it wasn't the only one: earlier this month an industry leader offered one of the most comprehensive updates of the state of the state's construction industry in recent memory.

Ron Hausmann, president of Walbridge-Aldinger's Heavy, Civil and Special Construction Group, 2007 chairman of the Michigan Association of Constructors, and vice chair AGC-Greater Detroit Chapter, on Dec. 4 made a presentation at the annual Economic Outlook luncheon for the Economic Club of Detroit. He used information gathered from the Construction Association of Michigan, Associated General Contractors of America, McGraw-Hill Publishers, Ferris State University, the University of Michigan and the Engineering News Record.

Such a high-resolution snapshot of Michigan's construction industry has probably never been taken in recent years. Here are some highlights of Hausmann's speech:

  • Michigan's eight-year-long economic downturn, according to the University of Michigan, is the longest such stretch since the Great Depression of the 1930's.
    However, Hausmann pointed out, "in spite of our recent Michigan economy, our construction workforce employment picture appears pretty positive. In fact we will need to develop more tradesmen and women, and engineers and architects to fill the gaps that are certain to hit us as 'boomers' move on.
    "Overall, our employment needs will remain strong and healthy as an industry, but different markets will have varying project needs. Skilled crafts in particular will continue to be needed to execute complex projects, which will continue in Michigan."
  • Michigan's construction industry costs for 2006 will be about $15 billion, of which $11 billion dollars is wages. Michigan's construction industry employs 193,000. About 87,000 of these workers are employed in Southeast Michigan. The Michigan construction Industry contains about 26,600 construction companies, of which 10,600 are in seven counties in Southeast Michigan.
  • Our state's construction industry probably generates $36 billion in overall Michigan economic activity. That is nearly 10 percent of the State of Michigan's $376 billion gross-state-product.
  • According to one recent industry study, a majority of Michigan's construction companies are reporting increased sales in 2006 and a majority (60%) are projecting that their annual sales will increase.
  • The 2007 construction outlook for Michigan offers good news for unionized construction sector - simply because union trades are not heavily employed in the troubled housing market. Hausmann said residential construction in Michigan dropped 40 percent in 2006, and will stay at that level in 2007. Other sectors are expected to stay the same or improve.
  • In other building sectors in Michigan, according to Hausmann:
    • Office construction will be flat. So will retail.
    • Medical and hospital construction had strong starts in 2006, which will increase in 2007
    • Manufacturing & maintenance were up 10% in 2006, and will stay strong into 2007.
    • Educational enjoyed a very strong market in 2006, which will continue into next year.
    • Highways increased in 2006 by 25% and should jump another 12% into 2007
    • Waste and water will continue with 7-8 percent growth for several years.

Hausmann included national construction trends, also.

  • Construction is the only segment of the U.S. economy projected to see increased labor growth between now and 2015. Projections show that the need for workers nationally will be 15% beyond current replacement availability. Nationally, the construction industry employs more than seven million workers.
  • The U.S. construction industry represents about $1.2 trillion, or about 9 percent of our Gross Domestic Product.
  • Most projections show that nationally, 2007 construction starts should be about the same as 2006, for the non-residential sectors.
  • Looking into 2007, both nationally and in Michigan, the market sectors which have the worst outlook are a) motor vehicle-related construction b) homebuilding, and c) energy.
  • The homebuilding slump nationally started in 2005 and will continue through 2007 and into 2008. There were over 2 million new home starts in 2005, but that rate is expected to steadily decrease to 1.6 million in 2007.That would be a 20 percent drop. Some experts, Hausmann said, indicate that in Michigan, new home construction is currently down by 62% measured over the last few years.
  • The dramatic slippage in residential construction nationally masks an otherwise robust nationwide construction industry. Every non-residential segment of construction is not expected to decline in 2007.
  • The worst of construction material price spikes (steel and metals) in 2005 and 2007 appear to be over, mitigated to some degree by the downturn in residential construction.

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More room, down by the Bay

By Marty Mulcahy
Managing Editor

BAY CITY - The largest expansion project ever at the Bay Regional Medical Center will result in a new outpatient service building, improved patient flow in the facility, and more room for some several patient services.

The four-level expansion is being managed by design-builder HBE, which is overseeing the addition of 140,000 square-feet of space and 66,000 square-feet of renovated space.

"We have a very good, competent workforce," said Jim Bourdon, director of support service and facility management for Bay Regional. About 75 construction workers are currently on site. "They've done a good job, they've been cooperative, and the project is on time."

The new building will consolidate outpatient service and together with the renovated space will allow the hospital to offer improved services in cardiology, nuclear medicine, endoscopy, and women's health. The fourth floor of the addition will remain empty to allow for future expansion.

Construction of the $40 million project began in December 2005 and completion is expected at the end of August 2007. A four-story building on the site was demolished to allow for the new construction. Bourdon said the hospital was fortunate because the addition is mostly being tied into hallway space in the main hospital building area, which simplifies the design and construction process.

"We haven't run into any major issues," Bourdon said. "We've had to move around a lot of our own non-patient departments and vacate some areas, but nothing has resulted in a disruption to patient services."

WRAPPING A DUCT section at the McClaren Bay Regional Medical Center's expansion/renovation project is Grant Glazier of Heat and Frost Insulators Local 47.

CUTTING BLOCK outside the Bay Regional Medical Center project in Bay City is Greg Hall of BAC Local 9.

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Grand Rapids Oks rules for responsible contracting

GRAND RAPIDS - Beefed-up responsible contracting guidelines for taxpayer-funded construction have been put into place by City Commissioners.

The state's second biggest city is now the largest municipality in the state to have a full set of responsible contracting regulations on its books.

"Responsible contracting isn't a union or nonunion issue," said Ed Haynor of the West Michigan Construction Alliance, and Michigan Association for Responsible Contracting, union-backed groups seeking to implement such policies in school districts and municipalities. "Responsible contracting means that contractors bidding for work have to rise to a level of quality that's laid out in the language. It levels the playing field for all contractors bidding for work, and that's in the interest of everybody."

The West Michigan alliance, through the MARC, has been a major advocate for responsible contracting for the last few years. Responsible contracting suggests that before school boards and municipal authorities enter into any construction-related agreements, bidding contractors should meet several standards. They include:

  • Documentation that contractors' training programs meet federal standards;
  • An alcohol- and drug-free workplace policy;
  • A local hiring policy, if applicable;
  • Credit for working with local schools to get youth involved in the building trades, if applicable;
  • Documentation of any civil suits, arbitrations, or criminal convictions that have occurred within the past five years.
  • Documentation of safety policies;
  • An explanation of the contractor's experience in the field.
  • Ratings for worker's compensation insurance.

A working group that included Haynor, union building trades agents, an Associated Builders and Contractors representative, and an AGC representative, made the proposals to the Grand Rapids City Commission, which accepted them on Nov. 21. As a result, Grand Rapids will be asking contractors to answer questions about those areas beginning in 2007.

Dianette Hight, the city's engineering services administrator, said Grand Rapids has maintained a contractor pre-qualification process since 1984 that was last updated in 2003. It applies to general contractors as well as subcontractors who do more than $10,000 of business with the city.

The working group, she said, is advising those requirements be stiffened by incorporating responsible contracting principles in five areas.
Hight noted the engineering department for the city of Grand Rapids typically oversees from $40 million to $50 million in construction activity in any given year. The new requirements, she said, should help ensure the city get what its citizens are paying for.

"We're trying to get the best quality product at the end of construction," she said.

Haynor worked in the study group along with Dick Brunvand of the Michigan Associated General Contractors, Buck Geno of Plumbers, Pipe Fitters and Service Trades Local 174, and Sean Egan of IBEW Local 275.

"We're dealing with an industry that doesn't like to bare its dirty laundry," Haynor said. "Our position is, is that if it's true that union contractors are best for quality and safety, then responsible contracting rules should help our ability to get work."

(Michigan Construction News.com contributed this report)

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Detroit, Michigan AGC chapters join

By Marty Mulcahy
Managing Editor

Members of the Associated General Contractors, Greater Detroit Chapter, voted on Dec. 7 to unanimously to merge with the Michigan Chapter, AGC. The vote followed a Dec. 1 unanimous vote by Michigan Chapter AGC for the merger plan.

On Jan. 1, the two chapters will form a new, statewide AGC organization to be called the Michigan Association of Constructors (MAC).

"I think the merger has a lot to offer our existing contractors on every level," said Bart Carrigan, president of the new MAC. "We will save some money in the reorganization, but more importantly, the merger will allow us to be more able to attractive new contractors, which is the lifeblood of an organization like ours.

"Plus in some cases it has been confusing for potential customers to know which group to deal with, and that was especially true when it came to lobbying. "

Odell Jones III, 2006 chairman of the AGC, Greater Detroit Chapter, from Jomar Building Co., Detroit, told his members that the merger process got underway last April. At that time he found a common sense of purpose with the president of the Michigan Chapter, AGC, Michael Emmenecker, from Spence Brothers, Saginaw, to build on the already strong foundation that exists between the two groups.

"Our goal was to strengthen AGC in Michigan for years to come," he said. "We felt that a merger would be worth the effort since a stronger AGC would mean a more resourceful and cost-effective association for contractors across our state."

The Greater Detroit Chapter was formed in 1916 and the Michigan Chapter followed in 1927. Carrigan said the merger "focused on the right things."

Jones added, "We knew that merger attempts had been made in the past, but by reducing dues, eliminating program redundancies, streamlining the staff, cutting overhead, and offering an expanded program of services to members of both chapters, everyone would benefit, so we were committed to making this merger work."

The MAC's headquarters will be located in Lansing in the building that's been home to the Michigan Chapter, AGC. The new MAC will retain its affiliation with the Associated General Contractors of America.

A regional office is to be maintained in the Detroit suburb of Redford Township. On staff will be:

  • Michael Smith, as executive vice president.
  • Viki Gotts, as director of education.
  • Sam Veltri, who will continue in his role in the region as director of labor relations.
  • Rick Mee, who also continue his delivery of safety services to AGC members in the metropolitan Detroit region.
  • Ronald L. Hausmann, PE, Walbridge Aldinger, Detroit, will serve as MAC chairman in 2007.

(MichiganConstructionNews.com contributed to this report.)

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Iron Workers use shovels, just this once Ground broken on new training facility

By Marty Mulcahy
Managing Editor

Iron Workers Local 25 officers, Joint Apprenticeship Committee members and members of their contractors' association dug into their new digs on Nov. 30, during a soggy groundbreaking event at their new apprenticeship training facility in Wixom.

The 32,500-square-foot building will be located on a six-acre site off of Pontiac Trail, significantly expanding the room available for training. The existing Local 25 training center, located along I-96 in Livonia, has housed Local 25's educational programs since 1973.

"It's just a real tight site in Livonia for what we need to do," said Local 25 apprenticeship coordinator Mike Relyin. "The new building will give us a lot more flexibility. We will have three classrooms, vs. only one in Livonia. We will also have an indoor shop, including hands-on mock-ups for all facets of the iron working trade. Our current shop only offers in-shop training for welding."

Schonsheck, Inc. is managing the construction of the new building, which will be on a single level. Site work has already begun, and footings were expected to start going in this month. Mark Schafer, director of project development for Schonsheck, said the period between approving the concept of a new building, finding the site and then getting the construction process rolling, took about two years.

"I'm glad that we've been able to get to this point," said Bill Treharne of Midwest Steel, who chairs the Joint Apprenticeship Committee. "I really believe that this facility will improve the way we train our future workforce, which will allow us to better compete in the future."

A steady rain pelted attendees at the groundbreaking, which included representatives from the Michigan Building and Construction Trades Council, and contractor associations: the Great Lakes Fabricators and Erectors, the Metal Building Association, the Reinforcing Contractors and the Conveyor Association.

"The effort to bring us to where we are today was truly a joint effort with our contractors and associations, who played a big role in making this happen," said Local Business Manager Jim Hamric. "Without them, we're out of the game. So I'm really excited about this project, and I think it's a tremendous positive for the future of iron worker training."

AMONG THOSE HOLDING SHOVELS at the groundbreaking of the new Local 25 apprenticeship training facility are (l-r) Schonsheck's Mark Schafer, Local 25 BA and JAC member Bill Sennett, Local 25 Business Manager Jim Hamric and Bill Treharne of Midwest Steel.


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News Briefs

Steelworkers stage Goodyear protests
WASHINGTON (PAI) - The Steel Workers are using protests to highlight their dispute with tiremaker Goodyear, which is trying to strip the company's 30,000 retirees and their 15,000 dependents of health insurance and break the union, too, USW President Leo Gerard told the AFL-CIO Organizing Summit on Dec. 9.

The United Steelworkers this month initiated protests and leafletting outside 168 retail tire stores nationwide.

The company forced its 15,000 USW members to strike on Oct. 5, walking out of 15 U.S. plants.

In their agreement three years ago with a company "then on the brink of collapse," as Gerard put it, Goodyear was allowed to cut costs by closing some U.S. plants and cutting wages. But it also agreed to card-check recognition and company neutrality in organizing drives.

Since it returned to profitability, Goodyear has invested millions of dollars in a new plant in low-wage China and its latest demands include more plant closures in the U.S. It also gave executives multi-million-dollar salaries and bonuses. Now Goodyear demands retiree health care cuts and union-busting measures. Gerard said it did so because it judged the political climate ripe for that - before the November election.
"This has to be a fight for all. This has to show the Wall Street, Gucci-shoed, latte-drinking, coupon-clipping, limo-driving, rotten bastards that we're not going to take it any more," Gerard declared.

One forecaster sees recession in 2007
WASHINGTON, D.C. - Weakness in the housing market is likely to push the economy into a recession next year, according to a forecast by the Center for Economic and Policy Research, an independent, nonpartisan think tank

"Recession Looms for the U.S. Economy in 2007," by economist Dean Baker, predicts that the economic recovery that began in November 2001 will come to an end in 2007.

"This recovery has been fueled by a housing bubble, just as the late 90s cycle was fueled by a stock bubble," said Baker. "Now that the housing market has weakened, Americans are looking at a recession in 2007." The study predicts residential construction will drop 12 percent in 2007.

Baker expects that the weakness from the housing market, which is already spreading over to other sectors of the economy, will have an even larger impact in 2007 as consumers lose the ability to borrow against dwindling home equity. With weak consumer demand dampening investment, the economy is likely to shrink by close to 1 percentage point over the course of the year, he said.

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