The New Jersey Situation
The New Jersey construction industry got an early Christmas present late last month: state funding for a program aimed at helping military veterans transition out of active duty into the building and construction trades. The $195,000 grant will be available under the state's Dept. of Labor and Workforce Development agency in partnership with the New Jersey Building and Construction Trades Council's chapter of the national Helmets to Hardhats program. The initiative will provide many veterans with jobs in the building trades, which has posted employment gains in six of the past seven months, the state says. But while industry executives praise the program for helping to maintain a highly skilled work force, they also wonder how these recruits will fare in a marketplace still reeling from the recession.
Both the creation and retention of jobs, as well as the steep dive in demand for construction projects, are major concerns for the industry nationwide. But executives say that New Jersey took especially big hits during the last few years. The 3-million-sq-ft retail and entertainment complex Xanadu, renamed American Dream Meadowlands, in East Rutherford, which once promised to create more than 30,000 construction jobs, stalled in 2008 (see p. 46). American Dream's new owners, Las Vegas-based Triple Five Worldwide Development Co., announced plans in May to complete the project, although the construction work force has been trimmed to 9,000.
“The key for job growth and a revitalization of the New Jersey construction economy is continued regulatory reform, use of tax incentives and an improved business climate compared to other states,” says Kevin Monaco, executive director of the N.J. Subcontractors Association in Manasquan. He credits Gov. Chris Christie's administration with addressing those issues and cutting some of the red tape impeding business in the state.
“The American Dream project is a prime example of this effort,” Monaco says. Triple Five arranged a financing package last May with the state's help in the form of a $200-million, low-interest loan, to be repaid over time by sales tax.
“You have to be optimistic that the construction market will turn around at some point,” Monaco adds. He notes the state's dense concentration of pharmaceutical firms, several of which have announced new building plans. These include Bayer Healthcare Pharmaceuticals, which has chosen to consolidate East Coast operations in New Jersey instead of relocating them to New York, another deal that the state helped with nearly $40 million in economic development grants; and BASF, which is building a new $100-million headquarters in Florham Park.
Other industry executives are also optimistic. There are some indicators, albeit small at this point, that New Jersey may be on the road to recovery, says Tom Spearing, president of the Project Management Group/Americas in Hill International's Marlton office. These include the state's year-to-date job growth rate, which is about 1.5%, ahead of New York's 1.3% and ahead of the overall nation's 1%, he says. “For the first time in three years, we are seeing job growth over a 12-month horizon,” Spearing says. “I think it's a glimmer of hope.”
Total construction starts for the state are also improving, with steep increases reported for utilities; hotels and motels; stores and shopping centers; and education buildings.
Those numbers are evident in projects under way statewide, Spearing says. But “it looks like South Jersey is in a position to ride the storm out a little easier than the rest of the state,” he says. “There are more projects, or potential projects, in the pipeline here. And if they receive funding, we really can have an impact on job growth in this part of the state as well as others.”
Atlantic City, Spearing says, is a good example. Projects there include two casinos: the once- stalled $2.4-billion Revel Hotel and Casino resort, restarted earlier this year, and Hard Rock International's planned $275-million “boutique” hotel. “With those two alone, there are probably considerable jumps” in jobs, Spearing says. Fishermen's Energy's proposed wind farm off the Atlantic City coast will also create jobs, he says. “They're targeting roughly $5 billion in investments to tie the [wind farm's] grid from Atlantic City to Norfolk, Virginia,” he says.
Central Jersey also is putting the industry to work, particularly with investments in transportation, executives say. These include building the $300-million deepwater port at Paulsboro along the Delaware River, a project aided by a $23-million grant from the N.J. Dept. of Transportation.
Other major projects in the region include the $2.5-billion widening of the New Jersey Turnpike, which the turnpike authority has split into 31 projects (ENRNewYork 6/6 p. 20). To date the NJTA has awarded 27 of the 31 contracts, says Larry Williams, NJTA assistant chief engineer for construction. By year-end, the agency plans to bid out two $20-million to $40-million projects and one $60-million to $100-million contract. The last of the four contracts is expected to be advertised for bid in 2014, Williams says. The total main line work is expected to be completed in May 2014, he adds.
“We've seen that bidders have been more aggressive in their bids [during the recession], resulting in lower bids—depending on the contract—that can range upward of 20 percent,” Williams says, adding that the turnpike project was originally estimated to cost $2.9 billion.
Thomas DiGangi Jr., executive director of the Associated General Contractors of New Jersey, says revenue from the Port Authority of New York and New Jersey's recent toll hikes will go a long way in helping to support several major planned transport projects, including the raising of the Bayonne Bridge to better accommodate port traffic. The American Automobile Association recently challenged those hikes, however, with a lawsuit filed in federal court.
The DOT's capital plan for the current fiscal year includes 63 projects totaling $650 million, DiGangi says. Another 54 projects valued at $235 million are expected through DOT's operations division. “There are a lot of road and bridge repairs in that but also some large-scale projects like work scheduled on major thoroughfares,” he says.
Meanwhile, some of the major agencies in northern New Jersey have projects on the books, “but some of those either lost steam or are waiting for better times,” says Luis Lugo, vice president for Northeast region business development at Hill International. New Jersey Transit's northern extension of the Hudson-Bergen Light Rail, he says, is one such example.
Nevertheless, North Jersey is coming along, says William Parrish Jr., president and CEO of NobleStrategy in Newark. Parrish says that the industry in Newark, one of the state's oldest cities, is benefitting from city and state incentives as well as the celebrity of its mayor, Cory Booker. “He's appeared on TV shows like “The Tonight Show” and “The Daily Show,” and he's good friends with Oprah,” Parrish says.
Parrish credits Booker's star power for drawing investors to the city. These include the Courtyard by Marriott, which is building a 150-room hotel in Newark. NobleStrategy won a $20-million contract to facilitate minority participation and the affirmative action plan for that project.
Booker, with the help of a $102-million state tax incentive, helped to broker a deal for Panasonic to move its North American headquarters from Secaucus to nearby Newark, Parrish says. The city, like the state, is gradually beginning to attract new investments, he says, but they are a long way from digging out of the recession.
Spearing agrees. While industry may see a short-term spike in job growth in the fourth quarter, largely as a result of the cleanup and recovery from Hurricane Irene, the year ahead is not likely to be easy, Spearing says.