Most members of the Utah Chapter of the Associated General Contractors say they are optimistic these days, and with good reason. Contractors have backlogs of work in nearly every sector, including major projects like the current replacement of the Salt Lake City International Airport terminal and initial RFPs for a new Utah State Prison on the horizon.
Those projects and a continued sunny outlook for the overall industry bolstered AGC Utah members as they gathered for their 94th annual convention January 21-23 at the Little America Hotel in Salt Lake City.
The local industry’s optimism for 2016 is warranted, according to AGC of America Chief Economist Ken Simonson, who delivered the 2016 construction forecast on the convention’s opening day.
“We should continue to see strong growth in almost all sectors of construction in the coming year,” Simonson said. He noted that Utah, in particular, should expect to see more growth in sectors such as retail, which have slowed or dropped significantly in other parts of the country in recent years.
“You are still getting new residential construction both in new subdivisions and multifamily, and there are still demands for retail to be near those neighborhoods,” he said. “There is also significant spending on transportation here on projects like the new airport that are not going on in other parts of the country.”
Simonson predicted slight drops or slowdowns in heavy rail projects, large warehouses and distribution centers. He noted that strong growth is still expected in energy construction but that sector would continue to shift away from exploration and refineries to the natural-gas conversion of coal-fired power plants.
“We should see associated growth in the construction of interstate pipelines for oil and gas as well,” he added.
Many AGC Utah members affirmed Simonson’s outlook.
“We had a very good year last year, and we feel like things are going to continue to be positive for the foreseeable future,” said Doug Welling, president and CEO of Salt Lake City-based Jacobsen Construction. “All our major clients are talking about new projects and expansions, and our backlog is as deep as it has been for years.”
He said that work for private owners has been growing, and projects like luxury hotels that have been on hold in past years now being brought to bid.
Welling, a member of the national Construction Industry Round Table, noted that at a recent meeting of the group, leaders from across the county expressed similarly positive outlooks. “Everyone was very optimistic. There was no area of the country that was really struggling,” he added.
Mike Whitaker, president and CEO of Brigham City-based Whitaker Construction, which specializes in utility infrastructure work, was also upbeat about the coming year.
“Last year was exceptional for us, and we exceeded our goals as a company in hiring and net and gross profits,” Whitaker said. “Going into this year, we feel like our team is even more polished and ready to compete.”
Whitaker said last year the company took on some challenging heavy civil projects and would be seeking more this year, in addition to launching a new service line that performs CIPP (Cured in Place Pipe) work.
“We feel the work is out there, and we’re ready to compete for it,” Whitaker said.
Rob Moore, president of Salt Lake City-based Big-D Construction, said the company has projects in all sectors for the coming year, particularly office buildings, warehouse and distribution centers. Additionally, Moore said current large-scale, long-term Big-D projects like the SLC Airport terminal and the recently announced contract with the state of Utah to serve as project management and technical consultants for replacement of the state prison should “propel” the firm through the coming years. Big-D will partner with Arizona-based Kitchell Construction on the prison job.
But Guy Wadsworth, president of heavy civil and highway contractor Wadsworth Brothers Construction, was predicting a “break even” year for highway construction in Utah.
“I’m kind of a pessimist though,” said Wadsworth. “There are plenty of smaller jobs out there, but the state it waiting for their bonding to open up before they take on any bigger projects. Even with the federal highway bill passing, those jobs have not filtered out yet.”
The president of Ogden-based Wadman Corp., Dave Hogan, was installed as the AGC Utah Chairman for 2016, succeeding Jeff Clyde, president of W.W. Clyde Co. of Springville.
Hogan said as chairman he will work to involve more members in grassroots outreach programs aimed at drawing a new generation of workers into the construction industry.
“There are plenty of kids out there in the high schools now who don’t want to go to college or are not sure what they want to do,” Hogan said. “Many of them are hands-on learners, and they like to build things and work with their hands. We need to let them know construction is a viable career. You can learn a trade and support a family and have a great life doing this.”
The Utah AGC convention typically coincides with the beginning of the state legislative session, which started on January 25.
AGC Utah President Rich Thorn said that last year the association was successful in its support for a slight increase in the state gas tax and in how those funds would be allocated, as well as ensuring the involvement of local member firms in the prison replacement project. Thorn said this year AGC Utah was not championing any particular issue or bill but would be monitoring activity and offering legislators support on construction-related matters.
“We are anticipating another busy session with at least 1,000 bills being introduced, but we don’t see any extraordinary issues this year,” he said. “We’ll still be at the Capitol, and our legislative committee will continue to meet every week during the session to keep our members informed.”
He noted the association would be paying particular attention to the funding mechanisms for the development of new water resources and construction of the new prison.
Thorn said Utah AGC’s membership has been growing and currently stands at about 475 members. “We expect to reach 500 before the end of the year,” he said. “In the past years, we’ve been able to build considerable member equity, which we are putting into things like training programs, scholarships and supporting our student chapters. We own our buildings in Salt Lake and St. George, and we are currently debt free.”