Regional construction industry still slow, but its reach is far & wide
From the street, the construction industry looks like a worker, usually a man, wearing a helmet, dust and Spackle covering his faded blue jeans, white T-shirt and leather work boots.
It looks like people wielding nail guns or paint rollers, pushing wheelbarrows, climbing scaffolding, carrying lumber or operating heavy equipment.
But the view from the street barely scratches the surface of the sprawling, multifaceted industry, said Troy Miller, director of the Colorado Mesa University construction management program.
“Our industry is very misunderstood and a lot of that misunderstanding is because it’s all around us,” Miller said. “What people see is the road construction. They see the house going up, the very visual part, which is the craft. What they don’t see is the management and the business side of things that it takes to bring that all together.”
“We talk about the construction industry, but what does that even mean?” Miller asked. “We have the heavy civil sector, the residential sector, the commercial sector, the industrial sector — power plants, manufacturing plants, refineries. It is so broad to where we have someone who is remodeling a kitchen to someone that’s actually building a nuclear power plant.”
All types of construction contributed more than $10 billion, or nearly 3 percent, of Colorado’s total gross domestic product in 2012, up from $9.3 billion in 2011, according to the U.S. Bureau of Economic Analysis.
Data regarding the impact of construction on the Western Slope economy was harder to quantify, but local experts said it extends beyond the hammer and nails.
Manufacturing of wood products, asphalt and paving materials, paint and adhesive, glass, cement, structural metals, refrigeration and heating equipment and furniture rises and falls with the construction industry.
Retail sales of lumber, electronics, hardware, construction equipment, appliances and gardening supplies are likewise affected.
The same is true for professional services like those provided by real estate brokers, mortgage brokers, architects, engineers, interior designers, lawyers and property managers.
As a regional hub, many of the construction materials used across the state — like sheet rock and wall studs — are manufactured in the Grand Valley or shipped through Grand Junction, said Rich Keller, director of pre-construction services for Shaw Construction.
“It’s huge,” said Traci Weinbrecht, executive officer for the Housing and Building Association, a local nonprofit trade association affiliated with both the state and national association of home builders.
“More than half the jobs in our area are affected by the building industry,” Weinbrecht said.
Shaw Construction, headquartered in Grand Junction, is one of several construction companies operating in the area. Keller said his company expects to clear $200 million in revenue this year, primarily from contracts it is performing in Denver.
Locally, the story is different.
“I would have to tell you that we are still in the throes of the Great Recession in western Colorado. There’s just not that many (construction projects) going on here,” Keller said.
“Grand Junction and the Western Slope, for as long as I can remember, have been driven by the markets in the resort communities — Aspen, Telluride or Vail — and if you were around in 2008, you would have seen a lot of projects going on. I’m up there now, and there are not a lot of projects.”
Until investors with disposable income feel more comfortable about the state of the national economy, building projects in the resort towns are likely to lag. However, the boom in Denver could lead to increased construction activity on this side of the mountain within a year, perhaps sooner, Keller said.
An increase in architect billing across the nation is another leading indicator that construction is ready to pick up, he said.
“General contractors are eternal optimists,” he said.
The Colorado Bureau of Labor Statistics tends to support the view, pointing to a 9 percent increase in construction-related employment during 2012.
Weinbrecht is also seeing some positive signs.
“We’re starting to see members come back (to the home builders association),” she said. “We’re gaining new members.”
In addition, the number of structures included on the association’s annual Parade of Homes grew to 14, up from a low of eight between 2007 and 2012, the fewest number of homes opened for the tour since it started, Weinbrecht said.
“The parade used to consist of dream homes, spec homes built for $500,000 or $1 million. Now with lending and everything, that’s all changed,” she said.
“To get a loan from a financial institution or bank to finance one of these projects, it’s very difficult,” Keller said. “You have to come up with a lot of equity.”
Cash flow may be the biggest obstacle to growing the construction industry on the Western Slope, Miller said.
Without access to credit, contractors cannot build projects because subcontractors expect to be paid every week, but architects and owners take 30 to 60 days to pay invoices, he said.
Ken Simonson, chief economist for the Associated General Contractors of America, projects multifamily residential construction, which was up in 2013, should continue to grow into 2014 due to low vacancy rates in most Colorado cities and an increasing preference among Coloradans for urban living.
Simonson said he expects total construction spending to increase as much as 10 percent per year through 2017 despite fewer single-family houses being built and a decline in spending by schools and local government.
Material and labor costs could spike as much as 5 percent during the period due to labor shortages, he said.
For Miller, the construction industry is where the American dream lives for thousands of Grand Valley workers who may be highly skilled but not suited to a professional or academic career track.
“They’re smart,” Miller said. “They’re just smart in a different way.”
Most of Miller’s students are budding entrepreneurs, eager to learn the skills that will allow them to advance from the trades to management.
“To be able to become a contractor, it’s a small investment,” Miller said. “You need tools. You need a vehicle. But the real asset you need is your skill and knowledge. That’s what creates the ability for this demographic of people to become good at something. They go out and they start their business and it’s seriously the American dream in that sense.”
You can count Brian Clement of Clement Properties among those with skills, training and entrepreneurial passion.
During his time in the U.S. Air Force, Clement learned electronic and computer skills that he planned to use when he left the service, but when it was time to return to civilian life, he found the job market for computer technicians was already overcrowded.
Fortunately, his father, a Baptist minister, taught him carpentry and other trade skills that he used first to work as a handyman. Then he built an out-building that stood like a billboard on his father’s property in Unaweep Canyon.
As word spread about his talent, other projects started coming his way. Quality work and word of mouth has been his only marketing program.
“When work is needed, it just falls into place,” Clement said. “I don’t have to advertise. It just always comes together.”
Because he is capable of performing most aspects of a job from carpentry to plumbing, Clement said he really hasn’t suffered the effects of the Great Recession.
He maintains low overhead, employing one part-time worker. His faith, another byproduct of his father’s teaching, helps him trust that work will come when he needs it.
“Because I am so diversified and I can do it all, that’s how I stay employed,” Clement said.
Clement enjoys the work for the same reasons Daron Kelbaugh does.
Now field superintendent for Shoe Department, Kelbaugh started as a carpenter 25 years ago on the advice of a friend, who said before he started college to become an architect, he should work in the trades.
“I wanted to be an architect,” Kelbaugh said. “I was advised to spend four years in the trades. I was told, ‘You should learn what you’re doing before you draw it.’”
He found he could make more money being a carpenter and the job was more fun.
“I’m not the type who likes to sit in four walls all day long. Plus it’s a matter of when the job’s going to end, not a matter of if, and when you’re done with it, you can look back and say, ‘Wow, I took this from whatever it was to what it is now.’ It’s the pride of leaving a mark.”
Keller said construction is a good employment option for all kinds of people.
“It’s a good career. It’s always challenging. There’s always something happening. Plus, you have a skill set that when you’re tired of the Grand Valley, the same skill set will transfer to Austin, Texas, or San Diego, Calif.,” he said.
Residential building permits issued in October were up for Mesa County, but down for Grand Junction compared to the same period in 2012, according to a Nov. 1 report by Mesa County building officials.
Mesa County issued 26 residential permits in October, compared to 16 issued in 2012. In Grand Junction, the city issued 11 permits, down from 14 issued in October 2012.
The report showed Mesa County residential permits increased more than 50 percent in October compared to last year, but declined 22 percent for Grand Junction.
Including all permits issued this year, however, Grand Junction was up 35 percent overall while Mesa County was down 5.5 percent.
Permits issued through Oct. 2013:
Mesa County — 188
Grand Junction — 202
Mesa County — 1 Grand Junction — 7
Mesa County — 2
Grand Junction — 7