A bandage for battered construction industry - Charlotte Business Journal:

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million for work on two state highwah projects funded with federalstimulus money. One of the projectws is in Charlotte, where Blythe will widen more than a mileof N.C. Highwauy 51 between Pineville andthe S.C. line. Franj Blythe, who founded the company with his Jack, says the projects will definitely But the stimulusfunds aren’t the boon for the industryg that some expect, he “It probably will allow some contractorzs like us to stop laying off peoplee and maybe maintain what we’ve got,” he says. Blythe’d work force has dropped to 450, down from 750 last as site-development work at residential and commercial projects hasslowedr dramatically.
During the last 10 years, the company has kept a foot in governmenf work but focused on work in the private such as subdivisions for Centex Homesd andother builders. That source of revenue has however, and the contractor is shifting back to public work as it waitsw for the economyto rebound. “The fortunatwe thing about it is we have stayed in toucj with it and we know how to do Blythe says. The is receivinfg $838 million through the federal economic-recoveru plan, including $735 million for highway and bridgew projects. In February, the state announceed 70 projects would be put out for bid between March and June using the firstt half ofthe funds.
The remaining projects will be announceddin April. The stimulus money will help an industr hard hit by the According tothe , construction employment in North Carolina peaked last May at 258,700. By December, the industry had shed 19,70p of those jobs, or 7.6% of the statewidew work force. Construction spending is expectec to decline by as muchas 7% nationally this the AGC forecasts. Tony Plath, a professor of financ at who followsthe industry, says the stimulues projects are needed because the state’d budget shortfall has resulted in a loss of highwahy and bridge funding. In November, N.C.
DOT decidedc to reduce the number of projects it puts out for bid each montgby 75%, and it has delayexd at least $250 million in work. Gov. Bev Perdue’s budget proposao calls for transportation cuts durin the next two years due to shortfallsx intax receipts. “Anything’s helpful at this point,” Plath says. “Bu t at the end of the day, we’re still seeinhg significant deterioration incommercial construction.” With fewer government contracts to go around, the bidding on statew projects has become fiercely competitive. Over the last 10 years, N.C. DOT has averagex four or five bids for each of its saysRandy Garris, a contract officerr at the department.
The average reachedc 10 this year. Firms that turneed to private-sector work in recent yearsz are actively bidding on public projects and about a dozen firms that have never workefd with the state have becomer prequalified and are bidding ontransportation work, Garris Otis Crowder, president of , says the number of bidders reflects the pent-up demand among contractores for work. “You have a lot of people who builc roads and build bridges that are marginally trying to stay in businesxs and maybe living off a little bitof backlog,” he says. “They have a lot of idle and they’re all trying to bid on The rising number of bidders puts downwardx pressureon prices.
On a recenf project in Davidson County, for example, Crowde r and Blythe came in withbids 6.5% and 3.4% beloqw the engineer’s estimate, respectively. But neither was low The winning bid came from Davied Gradingin Mocksville. Its $1.3 million bid was 20% belosw the engineer’s estimate. On the jobs that Blythe won in Charlottesand Albemarle, the company’s bids were 24% belo w the engineer’s estimates. That’s good for the statee because the stimulus funds willstretch further, but it’ss hard on the contractor profits, says Berry N.C. highway division director at Carolina AGC.
“For a little while, that may be OK, but long term that’sz not good for the health of the he says. Frank Blythe says his company was able to submift winning bids on the Charlotte and Albemarlre projectsbecause they’re close by and Blythe can handle most of the work insteade of using subcontractors. “k doubt we’ll make any money on them,” he “I think what peopled are doing is juststaying busy. They’re hoping to breaik even and that’s OK. We can live throug h times like this if thingsget better. I thinl they will, eventually.
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