Cranes dot the Ann Arbor skyline. Even though Washtenaw County led the Metro Detroit region in commercial construction last year, few entities - public or private - are lining up substantial projects.

File photo

Washtenaw County led the seven-county Metro Detroit region in commercial construction projects in 2009 as 2.7 million square feet of new floor space took shape in major and minor local building projects.

But as work on those buildings concludes, few major projects are filling the pipeline, leaving the local construction industry still careening toward its bottom even as other sectors start to hint about recovery.

“Overall, there hasn’t been any big improvement in any area of commercial construction,” said Gretchen Waters, executive director of the Washtenaw Contractors Association.

And it’s not going to improve soon: “The pipeline is probably as empty as we’ve seen it,” she said.

The construction industry is cyclical, Waters said, and “this is the lowest that anyone can remember.”

She added: “There’s a tremendous amount of competition everywhere.”

Regionally, nonresidential construction fell 38 percent from 2008 to 2009, according to a recent report from the Southeast Michigan Council of Governments. That represents 188 completed projects totaling 8.6 million square feet with a value of $2 billion.

Looking forward, according to SEMCOG, “preliminary data indicate continued losses through 2011. A modest recovery is hopeful for 2012.”

In Washtenaw County, 18 projects totaling 2.7 million square feet were in progress in 2009, representing a value of $1.13 billion. About half is medical development, including the C.S. Mott Children’s Hospital replacement project at U-M.

Yet this summer, many of those projects are concluding: Among them, the University of Michigan’s North Quad and the new 14A District Court building, which celebrated its grand opening on July 16.

Some new projects are filling the pipeline, including:

• A 600-space parking structure at Washtenaw Community College and major renovations to the Occupation Education building on that campus.

• The $42 million Pray-Harrold replacement at Eastern Michigan University and major renovations to EMU’s Mark Jefferson science building.

“Those are the bright spots for us,” Waters said.

However, beyond those high-profile projects, few entities - public or private - are lining up substantial construction projects.

“What I’m seeing is a lot of projects, but they’re all very small,” said Andy Shmina of A.Z. Shmina Construction in Brighton. “At the end of the day, they don’t add up to a lot (toward covering) our overhead.”

U-M, Shmina said, has moved through its major project list and now the scale of work on its campuses is shrinking.

“It won’t have the volume from the last 7-8 years,” he said.

Waters agreed. She said U-M typically has 3-4 projects of more than $300 million at a time.

Now, for the first time in 15 years, she said, “there’s nothing new (of that scale).”

At the same time, hospitals are postponing construction, while municipal work - including library and court expansions - has dried up as Michigan communities face funding crises and budget cuts.

“The last thing they’re thinking about is doing more construction work,” Shmina said.

That outlook is the same in most school districts, Waters said.

“What really has changed from a few years ago is the school work,” she said.

One exception: Detroit Public Schools, which is receiving $500 million in federal funds for demolition and construction.

That kind of construction volume is attracting interest from across the state, including Ann Arbor.

“Normally folks in this area wouldn’t consider doing Detroit projects,” Waters said, because it comes with additional levels of bureaucracy and travel distance.

Toledo also is attracting more interest among Washtenaw County contractors, she said.

Fred Beal of Ann Arbor’s JC Beal Construction started a Detroit office several years ago as it sought to do more work in the city.

Those efforts could pay off in the next year as “several major projects are coming together,” Beal said. “… A large majority of our work is in the city.”

The work includes a major renovation of the Detroit-Windsor tunnel and continued upgrades to the U.S. Customs office. A renovation of the Broderick building also may happen this year, he said.

Outside of Detroit, the company recently installed a wind turbine in Port Huron and renovated an office in Ann Arbor. Small jobs at Pioneer High School and the Ann Arbor Transportation Authority are on the list, too.

The key to finding the work, Beal said, is persistence.

“We have been in discussions with owners for literally years,” he said.

The company also is stepping outside of its traditional work sphere to take the smaller jobs, Beal added.

Meanwhile, as local contractors go farther to bid on work, more out-of-area contractors - lured by the relatively higher number of projects near Ann Arbor - are coming into the area, creating a more competitive field for less work.

“We don’t have more work,” Waters said. “We have more work than other places.

“What that means is it puts so much competitive pressure on everybody. Local contractors who used to be able to depend on local work … can’t do that anymore.”

The prolonged construction slowdown is challenging both large and small companies. A.Z. Shmina employs about 35, and hasn’t resorted to layoffs - though it’s not replacing people who leave. Some smaller companies have gone out of business, Waters said. And WCA membership has dropped about 20 percent to 100 corporate members.

“Everyone … has struggled,” Beal said. “With low volume comes tight cash flow. … It’s a constant refrain in the industry.”

Despite the pain in the industry, Waters said many local companies are surviving with an underlying optimism that better times will return. Some are bidding jobs at no profit just to keep staff working.

“They’re hunkering down and trying to make it through,” she said. “That’s all you can really do.”

Paula Gardner is Business News Director of AnnArbor.com. Contact her at 734-623-2586 or by email. Sign up for the weekly Business Review newsletter, distributed every Thursday, here.