Construction Sector Looks Ahead with Optimism
The past year has been an unusual time for the construction industry — one marked by project postponements, soaring prices for materials, and the establishment of strict COVID safety protocols on job sites. But for most builders, it wasn’t a devastating year, and, in many cases, it led to a surprisingly promising 2021. After all, the need for projects to be completed hasn’t gone away, and the backlog is actually creating a surplus of projects to bid on. The aforementioned challenges still remain, contractors say, but the work rolls on.
By Mark Morris
For Dan Bradbury, 2020 was “a year of pivoting and finding new ways to get the job done.”
As director of sales and marketing for Associated Builders, Bradbury saw a slowdown at this time last year as several projects that were scheduled to break ground were instead postponed indefinitely.
By including construction as an essential industry, Gov. Charlie Baker allowed job sites to stay open and keep workers employed while following pandemic protocols. While Bradbury appreciated the ability to keep projects moving, other slowdowns were out of his control.
“There are a lot of hurdles to get over in a large industrial or commercial project, and COVID hit the brakes on all of them,” he said, noting in particular the new challenges surrounding what in the past had been routine business with municipal governments.
“We already had some projects scheduled to start this spring, but, more importantly, we’re starting to fill our pipeline again with projects that will take us well into the fall of this year and potentially into 2022 as well.”
“Because municipalities had to move to fully remote meetings, they occurred less often, which made it difficult to get building permits, zoning-board approvals, and the other essential documents we need to start and finish a building project,” Bradbury said, adding that Associated has projects in the works in a number of different sectors. One example is a 30,000-square-foot building in Bloomfield, Conn., where a local chemical company will occupy part of the building and lease the remaining space.
His company’s experience isn’t unique. BusinessWest spoke with several area construction managers to discuss how their industry looks this spring compared to a year ago, when COVID-19 suddenly changed the world — and the main takeaway is one of optimism and promise.
A significant part of Houle Construction’s business involves interior renovations for medical facilities. Company President Tim Pelletier noted that, when COVID first struck, business came to a complete halt as medical professionals were dealing with rapidly increasing numbers of COVID patients. One year later, he’s optimistic about the increase in construction activity.
“It’s absolutely busier than last year,” he said. “We’re seeing more projects taking shape, especially with our hospital clients.” In the meantime, Pelletier has picked up renovation projects at organizations that offer hall rentals, such as the Masonic Temple in East Longmeadow.
“The temple has not been able to host gatherings for the past year, so they are using the downtime to make renovations for when they can open again,” Pelletier said, adding that it’s a way to take advantage of what everyone has gone through and find a positive side.
Bradbury credits pent-up demand for the increase in projects his company has been taking on this year.
“As soon as the calendar page turned to 2021, our phones started ringing,” he said. “We already had some projects scheduled to start this spring, but, more importantly, we’re starting to fill our pipeline again with projects that will take us well into the fall of this year and potentially into 2022 as well.”
Dave Fontaine Jr., vice president of Fontaine Brothers, said his company has been fortunate to have several projects ongoing since before the pandemic hit. Many of his largest projects involve building schools, for which budgets are approved long before breaking ground, so funding for them was not affected by COVID concerns. Since the pandemic hit, Fontaine said some towns have delayed public funding approvals, but not as many as he had anticipated.
“In the last six to eight months, we’ve picked up more than $400 million in new work,” he noted. “Some of these projects are in pre-construction now and will start this summer.”
Among the projects scheduled to begin in June are the $75 million DeBerry-Homer School in Springfield and the $240 million Doherty Memorial High School in Worcester.
Infrastructure construction also experienced steady business last year. J.L. Raymaakers and Sons Construction specializes in installing water and sewer lines as well as site excavation for municipalities, airports, and private companies. After a busy 2019, co-owner John Raymaakers said 2020 was nearly a record year for his company, and he’s on pace to fill up the project list for 2021.
“It’s amazing the amount of infrastructure work that is out there for bid,” Raymaakers said, explaining that his company subscribes to a register that lists all the new public and private projects available for bid. Since the middle of last year, he has seen no slowdown in the volume of bidding opportunities. “Looking only at our category of construction, there were five to six new projects announced just last week.”
Raymaakers predicted bridge construction, another area of expertise for his company, will also see increased activity.
“In the next few years, I think we are going to see a lot of work on replacing aging bridges in New England,” he said, adding that this should happen even without a federal government infrastructure bill, citing two recent bridge-replacement projects his crews are working on in Stockbridge and Pittsfield. Still, he’s hopeful that some kind of infrastructure legislation passes, saying it would be “a huge boost to us and others in our industry.”
While business activity is brisk for everyone BusinessWest spoke with, they’ve all faced recent challenges; some are unique to doing business in the COVID environment, and others are chronic problems made worse by the virus. The issue of having enough workers was a challenge on both fronts.
“We’ve definitely lost people from the workforce due to COVID concerns,” Fontaine said. “They might be taking care of a family member, or they might be in a group that has underlying health concerns.”
He added that managing COVID on the job site is also difficult. “Anytime someone tests positive for COVID, that individual and anyone in close contact with them has to go home and quarantine for the time period,” he explained. “That can result in a lot of labor disruption on a daily basis.”
COVID also exacerbated the long-running problem of fewer workers in skilled-trade and general-labor jobs. Raymaakers said finding help in construction is a constant challenge. Co-owner Laurie Raymaakers pointed out that heavy-equipment operators and construction laborers can make a good living.
“There’s a misconception that laborers aren’t paid well,” she said. “The pay and benefits at our company are pretty good; the reality is there are just fewer people who want to do this type of work.”
She added that it’s also misleading to suggest laborers are not skilled, pointing out that her company’s laborers are highly skilled at making sure pipes are situated properly and secured to withstand years of service.
“Our workers also put together fire hydrants, which require about 50 bolts that have to be tightened in a certain pattern. Hydrants are under constant water pressure, so if it’s not built correctly, parts of the hydrant will go flying in the air.”
As older craftsmen such as plumbers and electricians continue to retire, their ranks are not being filled by enough younger workers. With projects increasing, Bradbury said an already-competitive labor market gets squeezed even further.
“Between the demand for commercial/industrial as well as residential, everyone in the trades is busy, and they can’t find enough workers,” Bradbury said. “On top of that, solar companies are hiring all the electricians they can find at a time when electricians were already in short supply.”
The biggest hurdle to doing business right now, according to Bradbury, involves managing enormous price increases for materials, in some cases rising by more than 100% compared to this time last year.
“Over a period of months, we’ve seen multiple price increases in steel and lumber products,” he said. “Those two create a trickle up that affects prices for every other building material.”
Bradbury noted that steel manufacturing has been affected by labor outages due to COVID, leading to product-supply shortages. He also pointed to increased demand for lumber, especially on the residential side, where housing starts are booming. In addition, his company and many others receive a great deal of lumber from Canada, where the U.S. still has tariffs in place on lumber.
Bradbury said COVID issues are not affecting project schedules because his firm will not start a job until it has a guarantee that materials are available. “We are also adding cost protections in our contracts as a way to guard against the constant increases in materials.”
It’s too early to determine what immediate impact the pandemic will have on building design, but Bradbury said clients from current and future projects have begun asking about air handling and filtration.
“For sure, air handling and using UV light to sanitize a space are areas where people have been putting more focus,” he said. “I think these requests will continue as there is an increased emphasis on clean air and other ways to keep facilities sanitized.”
At Worcester South Community High School, workers installed air-handling units that use bipolar ionization, or, as Fontaine described it, a system that cleans the air and removes many of the germs and bacteria from the building.
“The motivation to install this system was driven by COVID, but there are other benefits, too,” he said. “Systems like this provide a better environment for people with asthma and other health concerns.”
Spring of Hope
The arrival of spring and increased numbers of people receiving COVID vaccines gives all the construction managers we spoke to a sense of optimism about life and getting their projects done.
At press time, asphalt plants in the area had begun to open. Because the plants close for the winter, municipalities will not allow road construction because there is no access to repave the roads. So the plant openings are great news for companies like Raymaakers, which plans its water- and sewer-line projects around those openings.
Other managers look forward to a time when they do not have to socially distance their crews and wear masks all day.
“Masks are another nuisance to deal with,” Pelletier said. “If we can start to get distancing and masks behind us, it will speed things up on the job site.”
As part of planning for future business, Bradbury has begun to ask some fundamental questions about what lies beyond the horizon. “Where is the growth potential going to be as we come out of COVID, and which industries will still want to build and have the money to build?”
As he considers the types of industries that are prevalent in Western Mass. and Northern Conn., such as aerospace and manufacturing, he wonders if government spending will still drive those industries. He has also given some thought to the insurance industry.
“Typically, there has been a huge demand for office space for the insurance industry, and how they address that moving forward is a big question mark coming out of COVID.”
As the insurance industry reconsiders its needs, Bradbury added, there has been a sharp decline in demand for all office space. “We are definitely not building more office space anytime soon.”
But his and other firms are building — and that’s good news after a year of uncertainty and a pandemic that hasn’t yet gone away.