Regional Contracting Firms Struggle for Optimism in an Uncertain Market
When completed in 2022, the expansive mixed-use West Quarter project, being built by Jacobsen Construction, will be an epicenter of entertainment and nightlife in Salt Lake City.
PHOTO COURTESY OF JACOBSEN CONSTRUCTION
Uncertain. That’s the consensus among regional contracting leaders in describing the post-pandemic economy. Short-term uncertainty. Even more uncertainty, coupled with optimism, for next year.
Current forecasts are not encouraging. AIA says nonresidential spending will decline 8% this year and another 5% in 2021. Construction employment increased by an anemic 20,000 jobs nationwide in July, with gains limited to the housing sector, the Labor Dept. says. And the Dodge Momentum Index has dropped 18% since December.
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Despite all of that, many leaders remain upbeat. “We have been fortunate to avoid all but a few job closures and have been very successful on new project pursuits, with over $1 billion of new work booked in the first half of 2020, adding to an already robust backlog,” says David Layton, president and CEO at Layton Construction.
Another Utah firm, Jacobsen, is equally optimistic. “We are confident we can continue to maintain a robust pipeline of projects, even amid a national economic downturn,” says EVP Dennis Cigana.
Michael Gifford, president and CEO, AGC Colorado, agrees. “Firms have weathered the pandemic and downturn very well so far. We’ve had a few projects delayed, but most are moving forward.”
Others are more cautious. “Although there are some positive signs, economic recovery is dependent on management of the virus,” says Colorado Secretary of State Jena Griswold. Local forecasts are dampened by high unemployment, near 10.5%, and a declining state budget. “Our biggest challenges are the delays in the starts of projects that we expected to be awarded the summer of 2020 and the anxiety due to our uncertain environment,” says Jim Johnson, president and CEO, GE Johnson. “But we remain optimistic for 2021.”
That optimism is not universal, however. “Unfortunately, the commercial market in Idaho appears less bullish,” says Wayne Hammon, CEO of Idaho AGC. “While most contractors report a very busy and profitable summer, many are concerned with a growing sense of a slowdown in some sectors.”
And competition is increasing. “The trade market pulse has shifted in Colorado, with over 10 firms bidding on a single trade package,” says Justin Cooper, president, Saunders Construction.
