Breaking No New Ground
Area Builders Face Dwindling Job Opportunities, Stiffer Competition
When David Fontaine surveys the construction landscape in Western Mass., he doesnt like the little that he sees.
Unfortunately, this is the slowest weve been in at least 30 years, said Fontaine, president of Fontaine Brothers in Springfield. And its not for a lack of effort; we just cant seem to get the low bid.
Part of that is the intense competition that has arisen to procure a dwindling number of available projects as the recession lingers. In the most recent project we bid for, there were 18 bids. Its just something weve never encountered as long as weve been here.
Richard Aquadro, president of Aquadro & Cerruti in Northampton, has witnessed the same phenomenon.
Its brutally competitive, a very tough environment, he said. Last year wasnt bad, even though the economy wasnt great then, either. We did more volume last year than we had the previous two years. We lucked out, hit some good jobs, and did a fair amount of volume. But 2009 has been tough.
There are fewer jobs in what I call my market, Aquadro added, noting that he typically tackles projects between $5 million and $30 million. I see the bigger players chasing them and, surprisingly, getting some of them. They generally have more overhead, but theyre taking the jobs for nothing.
Its a common refrain these days, as builders across the Pioneer Valley struggle to keep their machines moving and income flowing and no one has a clear idea of when opportunities will pick up again.
One Job at a Time
A.J. Crane, operations manager for A. Crane Construction in Chicopee, said his small firm is weathering the storm, thanks to an effective network of relationship marketing that relies on repeat business and word of mouth.
It reflects the time weve put in, not with just cold calls or advertising, but more personally reaching out to people. Its tougher now. Youve got to sharpen your pencil.
Indeed, Crane said nailing down commitments has become more difficult as customers increasingly realize that theyre in the drivers seat.
We never had to quote much, he said, but people know the way things are now, and they know that contractors are hurting.
Some builders, Crane said, are cutting corners by not carrying insurance, which makes it more difficult for those who do.
I think people realize the value of being covered, he said. Someone who doesnt do that can fly under the radar. But we spend $2,000 a week on insurance, and there are still customers out there that appreciate that.
In these times, Crane said, it helps to be willing to take jobs of any size. The company is building a 5,200-square-foot home in Sturbridge and undertaking a $70,000 kitchen remodel in Ludlow, but is also taking on much smaller-scale work as opportunities arise.
We dont limit ourselves, he said. Were not above doing storm doors. And I think it hurts a lot of guys when they dont want to take small jobs.
Flexibility has long been a plus in construction, to insulate builders from slowdowns in particular industries, said Aquadro, who has tackled major jobs ranging from hospitals and schools to parking garages and athletic fields, and everything in between. But diversity has its limits, he said.
What has happened in the industry is that some jobs are being handled differently, Aquadro said, explaining that, as opposed to the hard, competitive bids of the past, theyre now being handled through an RFP [request for proposal] process, where you submit qualifications, fees, things like that. And you have to have a certain number of jobs similar to the one theyre proposing to do. So as opposed to being diversified and being able to do a lot of different things, its almost becoming a specialized market.
Colleges have always pumped a steady stream of jobs to area builders; Fontaine recently began work on Western New England Colleges new School of Pharmacy, for one, and noted that WNEC has always been willing to take advantage of a down market.
On the other hand, outside of education, it does seem like the private sector is pretty quiet, he said. The public sector is quiet, too, although bridges and roads seem a bit busier. Driving down the Mass Pike or the 91 corridor, theres a lot of activity.
Overall, however, the picture remains cloudy for area contractors. Some ongoing work for Aquadro & Cerruti at Amherst College was recently put on the back burner not an uncommon story for builders during uncertain economic times.
In some respects, theres not enough work on the ground for everyone, Aquadro said. Competition has always been keen in the Valley.
The difference now is that larger contractors are moving aggressively to pick up mid-range jobs, which has forced the company to adjust its strategy. Were forced to bid in smaller projects against smaller companies that have less overhead and may not have the labor-union agreements we have, which makes it even more difficult to bid.
I see us just trying to get through 2010, said Fontaine, who doesnt foresee a huge upswing in businesses undertaking new construction projects for the time being. There are a lot of studies out there, but it takes a good year before a study gets turned into work for a tradesperson.
In other words, theres not much to build on right now.
Joseph Bednar can be reached