Throughout 2019, the construction industry in Texas, Louisiana, Arkansas, Oklahoma and Mississippi performed well and anticipated continued success for 2020. But with the onset of COVID-19 and its increasing severity, contractors and associations have had to assess the short- and long-term impacts of the pandemic.
“Business for the most part has been good—not as robust as some of the other Texas markets, but not terrible either,” says Jerry Nevlud, president and CEO of the Houston chapter of the Associated General Contractors (AGC). While it’s still not clear what the total impact of the pandemic will be, Nevlud says some projects have been put on hold and a few canceled outright. “Members are still somewhat busy and are currently fairly busy looking at future work,” he says.
Heavy civil and waterworks contractor and material producer Webber has benefited from a backlog in Houston, with revenue growing steadily during the past 18 months, says Jose Carlos Esteban, president and CEO of the wholly owned subsidiary of Ferrovial S.A., Madrid.
Webber recently won the $301-million TxDOT Loop 12 Reconstruction Project in Dallas and has expanded its heavy civil operations to Atlanta and Fairfax, Va. Its PLW Waterworks division is showing continued demand across Texas because of population growth.
“While COVID-19 has forced us to adapt to changing working conditions, we have been blessed to be in an industry that is deemed essential,” says Esteban. “All of our projects have continued to progress. In fact, with reduced traffic flows, we have been able to accelerate some of our roadway construction timelines, and TxDOT has been a great partner in this.”
The construction industry in the Dallas-Fort Worth metroplex—and Texas in general—was “booming” throughout 2019 and the first quarter of 2020, says Emily Baker, marketing manager for TEXO.
She notes that monthly reports from Associated Builders and Contractors (ABC) and AGC for construction employment and spending consistently documented increases year over year, especially in the DFW region. Moreover, the AGC of America’s 2020 Construction Outlook survey showed that, prior to COVID-19, most contractors expected an increase this year in the dollar value of projects to bid. “The primary concern across the industry was the lack of qualified workers available to hire,” says Baker.
Most construction has continued with stringent health and safety protocols, but material costs have risen—the price of lumber, for example, has soared 50% since April 17, she says. This dovetails with a short supply of materials because of global supply chain delays.
Baker adds: “Most contractors believe the more daunting consequences are still to come as demand for new commercial construction projects decreases and contractors’ backlogs of work are diminished.”
Uncertainty in Louisiana
“In 2019, the Louisiana construction industry was coming down from historic highs and anticipating a strong 2020 fueled by the start of several industrial megaprojects across south Louisiana—many just ramping up when COVID-19 changed everything,” says David Helveston, president of the Pelican Chapter, Associated Builders and Contractors Inc. in Baton Rouge.
Almost concurrently, the pandemic and resulting stay-at-home orders decimated demand for many products, and the price of oil dropped significantly.
“The unfavorable and uncertain market conditions spurred many companies to quickly press pause on projects,” says Helveston. “We’ve seen many projects that have been delayed for 12–18 months or at least until there’s more clarity in the marketplace.”
Industrial contractor Performance Contractors Inc., also based in Baton Rouge, was set to have the largest volume year in its 40-year history before the pandemic began in March, says Lee Jenkins, Southeast region vice president. “But the outbreak and the reduced price of crude oil have negatively impacted our business in that several of our ongoing projects have been postponed,” he says. “With the exception for one project, we expect these projects to restart later in 2021 or possibly 2022.”
In Oklahoma, commercial construction has been very active over the last 18 months, says Doug Tapp, CEO of AGC’s Oklahoma Building Chapter. But, he notes, a number of privately funded projects have been put on hold or canceled.
Tulsa-based Manhattan Construction Group completed three major projects in March. These include the Texas Rangers’ stadium in Arlington and two highway projects, one in Oklahoma City and one in Little Rock.
“Throughout our five generations of family ownership, 2019 was an unprecedented year for us,” says Larry Rooney, the fifth-generation president of the building, civil, pipeline and specialty construction company. “This crisis is compelling people and companies in all market sectors to rethink how they operate. From health care facilities to office spaces, we will see changes in how spaces are programmed, how people interact in those spaces and, most importantly, how we can create building environments with safer distances between people to prevent the spread of illness in the future.”
Meanwhile, in Arkansas, “things are going real well despite COVID-19,” says Bill Roachell, president of North Little Rock, Ark.-based ABC of Arkansas.
He points to the robust northwest Interstate 540 corridor where Walmart, Tyson Foods and J.B. Hunt are headquartered. In Bentonville, Walmart is building its $3.5-billion to $5-billion global headquarters, currently the state’s largest project.
While members follow CDC-aligned steps for safety, “the numbers are very good for six to nine months, and few projects are delayed, so we are cautiously optimistic about the future,” Roachell says.
In Mississippi, commercial construction in 2019 increased 3% to 5% year over year, says Bob Wilson, executive director at AGC of Mississippi in Jackson. “Labor availability issues continued, but, all in all, business was favorable.”
Private projects such as restaurants, entertainment venues and hospitality projects have felt the impact. “Some bidding stopped or slowed, so [the long-term outlook] continues to be a worry,” he says. “Many had backlogs of business that they continue to work on.”
As the virus stopped Mississippi’s legislative session before budgets could be approved, some projects for state government and institutes of higher learning stalled. But with the extension of the state tax deadline to July 15, at least $250 million in tax revenue was shifted to the past fiscal year ending June 2020.
“That, coupled with the initial state stimulus, allowed the state to almost make our agency budgets whole, with most seeing a 2% to 4% decrease—certainly manageable. And that meant those state and university projects could move forward, as well as MDOT projects,” says Wilson. “We are cautiously optimistic about construction returning to pre-COVID levels by the end of 2020.”