Washtenaw County construction industry still struggling to recover from recession
Ann Arbor-based O'Neal Construction is working on one of downtown Ann Arbor's latest high-rise projects: Zaragon West.
Angela Cesere | AnnArbor.com
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Despite an ongoing construction boom at the University of Michigan and several high-rise student apartment projects being built in downtown Ann Arbor, the number of Washtenaw County construction jobs has not rebounded.
From 2005 to 2011, jobs in the Washtenaw County construction industry were cut almost in half, according to an economic forecast conducted by the University of Michigan for AnnArbor.com. The industry continued to decline even as job growth started in the fourth quarter of 2009. The number of local construction jobs fell from 3,434 in 2009 to an estimated 3,143 in 2011.
To be sure, this data only includes jobs from contractors that are based in Washtenaw County and excludes those who are self-employed.
“You might be getting handymen or small construction projects of people doing it on their own — and that would not show up in our numbers,” said economist Donald Grimes, who conducted the forecast with economist George Fulton.
Although the forecast predicts some construction job growth from 2012 to 2014 due to an improving local economy and some residential building pickup, the gains are minimal.
The forecast predicts a total of 3,189 construction jobs in 2012, 3,306 in 2013 and 3,496 in 2014 -- which just exceeds the 2009 levels and is still 44 percent below 2005 levels. In the overall economy, the Ann Arbor area is expected to have more jobs by 2014 than it had at its previous peak in summer 2002.
Bill Kinley of Phoenix Contractors Inc. -- an Ypsilanti-based commercial construction company -- said his company’s staffing levels have remained stable throughout the past few years, but he has no plans to hire more employees.
He said certain areas of the construction industry are experiencing increased activity, such as education and automotive related work.
“We’re seeing many of the existing automotive facilities are now being prepped for upgrade,” he said. “It’s very important to Michigan, and there is certainly more activity in the dealership realm than we’ve seen in many years.”
The forecasted job gains through 2014, although slight, could also stem from the demand for new construction as existing office and industrial properties reach leasing capacity, Kinley said.
“When all the existing spaces are leased up, there will be a strong push and demand for building new, similar facilities,” he said.
He added: “I think the conditions are being set for that. Will we see demand this year in new building? I don’t believe so. But we could see it in 2013 and certainly are going to see it in 2014.”
On the residential building side, new construction came to a near halt during the recession and the housing market has only just begun to spring back to life.
Jim Haeussler, owner of Saline-based Peters Building Co., said that he’s just now starting to see a demand for new home construction in Washtenaw County.
“We’ve definitely been busier than we have been in the last three or four years,” he said. “It’s still a long way from where we need to be, but we’re at least heading in the right direction.”
He said as the Washtenaw County housing stock “wears out” with people coming onto the buying market, there will be a steady improvement on the building side -- which could account for some job growth down the road.
Another factor that’s affected the construction industry’s job decline in Washtenaw County is the competition from outside contractors in recent years, Kinley said.
Because Washtenaw County has more building activity than most other areas in Michigan, he said companies from the Metro Detroit area are coming here to find work.
“There is still a lot more activity in Washtenaw County with the University of Michigan and other institutions, and certainly that is appealing to [outside] contractors when their work load goes down in other areas,” he said.
He added: “We’ve expanded our horizon somewhat and are more active in the Greater Detroit area. With part of the private work drying up here, we just have to expand geographically a little more.”
Lizzy Alfs is a business reporter for AnnArbor.com. Reach her at 734-623-2584 or email her at lizzyalfs@annarbor.com. Follow her on Twitter at http://twitter.com/lizzyalfs.
Comments
Joe Baublis
Sat, Mar 31, 2012 : 11:59 p.m.
Please be advised the Federal, State and municipal governments were all enriched by taxation in the era of governed inflationary policies. They taxed income, they taxed housing, they taxed business, they taxes gas, they even tax gambling, alcohol, and tobacco. The more we earned the more the government taxed. But when government inflation burst, their tax revenues fell and the government became insolvent. The government's response is to create another inflationary spiral by "kick starting" the economy with "bail outs" and "quantitative easing". It's all a sham, and the People suffer as a result. One of the primary causes of inflation is the Federal Reserve which is completely unregulated according to the Von Mises Institute. A companion cause of the inflationary spiral is Federal government policy, which drastically altered our Nation's organic free market economy with laws and regulations for over 100 years. Ann Arbor is the seat of a major component of the State government - the University of Michigan. Although our local community has benefited from the UM we should be aware that UM funding is largely a result of the government's forced extortion of tax revenues from people across the State including many who do not benefit from the UM construction. We are lucky to live in a little economic bubble, but the plight of our brothers and sisters across the State should not be ignored, nor the fact that people and businesses have been fleeing from Michigan's government in search of freedom elsewhere.
lefty48197
Sat, Mar 31, 2012 : 5:40 p.m.
Construction jobs pretty much suck these days anyway. Everybody wants to treat construction workers as if they're laborers without any skills. Then, of course, they offer menial wages for the skilled and dangerous work that construction tradesmen endure. You want the guy that roofs your house to make $9 per hour? You want carpenters who earn $12? You want electricians to wire YOUR home for $14 per hour? Are you KIDDING me? How about if YOU do YOUR job for $12/hour? Construction workers get no respect. Most construction jobs offered these days are not desirable jobs. When the market rebounds, we should all band together and go on strike. Construction workers make less than 50% in real wages compared to construction workers 40 or 50 years ago. Some guy said he knew painters making six figure salaries? Painting contractors maybe, but not painters. Not unless they worked 75 hours per week year round.
ann_arbor_guy
Sat, Mar 31, 2012 : 2:57 p.m.
Why do we keep comparing our current construction levels with the fraud fueled housing bubble? The fraud based housing bubble will always look better on paper, but we know how that story ended. The construction industry should be compared on a longer scale and should exclude the numbers from 2004-2008.
Tru2Blu76
Sat, Mar 31, 2012 : 2:33 p.m.
Quoting Coach Brady Hoke's response to a question about his close connection to his players: "It's about trust, trust and honesty." Coach Hoke also frequently mentions personal accountability. Too bad our financial and political systems don't pick up on that. Thanks for this article, at least now we better understand the connection or lack thereof between the complete transformation of Ann Arbor's skyline and local construction jobs. I moved to Ann Arbor about 38 years ago: I and the "old timers" I know are astounded by the transformation of this city. I take photos of the our skyline and send them to former residents who've not been back in years: they all say they'd be lost here if they did come back.
Dog Guy
Sat, Mar 31, 2012 : 2:28 p.m.
What we need to do for the construction industry is issue bonds to build a new high school, a new city hall, two new water treatment plants, bicycle paths going over a cliff, and a great big hole in the ground. Then we will all be rich.
Stan Hyne
Sun, Apr 1, 2012 : 3:24 p.m.
First time I ever agreed with you
tim
Sat, Mar 31, 2012 : 2:12 p.m.
Had the government and the banks ( and the people borrowing from them ) done the right thing there never would have been such a big boom/bust. I knew painters making well over six figures during the peak, had the money not been so easy many would have pursued other careers and would have been better off in the long run. I certainly would not bet the farm on building coming back strong.
u812
Sat, Mar 31, 2012 : 1:47 p.m.
We will never recover when we have shared sacrifice from industries that are not suffering and 4 dollar a gallon gas.
xmo
Sat, Mar 31, 2012 : 11:25 a.m.
I am tired of this recession, summer of recovery, economic up turn, depression, jobless recovery or what ever you want to call it. I want to return to the times when we made lots of money and we spent it like drunkin' sailors!
zip the cat
Sat, Mar 31, 2012 : 11:12 a.m.
Why buy a new house and sign your life away for 30 yrs at a grand or more a month, when you can buy a foreclosuer for a fraction of the cost of a new one. I was in one the other day north of dexter 2200 sq ft all brick on 2 acres and it sold for $150.000. Same new house would set you back $350.000 for starters. Look around there everywhere.