Carolinas Report: Braced for a Tough 2010?
New faces are nothing new in the Carolinas, which have long been among the nation’s fastest-growing states.
But with construction activity at a standstill in many other parts of the U.S., local contractors increasingly find themselves vying with competitors representing a cross-section of unfamiliar area codes.
“The make-up of the market and owners’ mentality has changed drastically,” says Mark Griffin, general manager of Turner Construction Co.’s office in Raleigh, N.C. “Many owners retreated from prequalified, CM-at-risk procurement in favor of open bids in hopes of getting the lowest prices possible. That’s led to bid lists with 20 firms or more from up and down the East Coast and beyond.”
Though owners may find the resulting 1990s-era prices appealing, there’s a downside to hiring contractors on razor-thin margins.
“How many of these contractors will finish the project before they go out of business?” asks Steve Stouthamer, Carolinas general manager for Skanska USA Building in Durham, N.C.
Marty Moser, director of preconstruction services for Tarboro, N.C.-based Barnhill Contracting, says the bargain-basement pricing trend may be bottoming out.
“We’re starting to see a return to prequalified lists so that there’ll be a better chance of getting contractors with a local presence that can properly service projects,” he adds.
Hot and Cold On the whole, however, having to participate in a mass scramble for work at least means that there are opportunities out there, particularly with the commercial sector still hamstrung by tight financial markets and excess capacity in some locations.
For example, Turner is managing construction of the 500,000-sq-ft, 21-story Harrah’s Cherokee Hotel Tower III in Cherokee, N.C., and teamed with BE&K Building Group to land Boeing’s new $250-million, 986,000-sq-ft 787 Dreamliner final assembly plant in North Charleston, S.C.
“There’s also a smattering of industrial capacity being created for European companies that are taking advantage of lower construction costs,” says Luther Cochrane, president and COO of BE&K Building Group in Charlotte, N.C.
Cochrane adds that health care remains somewhat active with projects such as a new 215,000-sq-ft hospital, 91,000-sq-ft medical office building and central energy plant that BE&K is completing for Roper St. Francis Healthcare in Mount Pleasant, S.C.
Bob Ferguson, vice president of T.A. Loving Co. in Morrisville, N.C., says that this sector will receive a needed shot in the arm now that national health-care legislation has been signed into law.
“Owners have put projects on hold because they don’t know how certain services will be reimbursed, or even what they’ll be called,” he adds.
The Carolinas are also home to several major energy projects, although some of the biggest are being led by contractors with out-of-state addresses.
For example, The Shaw Group of Baton Rouge, La., is constructing the $1.8-billion modernization of Duke Energy’s Cliffside Steam Station on the Rutherford/Cleveland county line in North Carolina to clean coal technologies, while...