The construction industry is feeling the sting of the current nationwide economic trouble - but certain sectors of construction continue to hold their own.
Data from the city of Springfield illustrate the trouble facing the construction industry. The number of city building permits issued through Oct. 24 are down 10 percent from the first 10 months of 2007, and value totals for those permits are down 31 percent for the same period.
City records show that year-to-date as of Oct. 24, 1,373 permits worth $230 million have been filed, compared to 1,530 permits worth $334 million through October 2007.
Healthy project list
The sectors that are maintaining relative strength during this troubling period are, according to at least one local contractor, the sectors that seem to always weather difficult periods best: health care and institutional work.
"I think strong is a relative word, but health care is one of those markets that's always going to be in some type of a building program - either renovation, new construction or both," said Jim Blose, vice president and Springfield head of Tulsa, Okla.-based Flintco Inc.
One example of strength in the health care sector is CoxHealth, which has plans for $120 million worth of building projects.
Among the projects planned are an expansion to the Cox South parking garage, a new emergency department adjacent to the current outpatient center, a two-story ambulatory surgery center and renovation of the current surgery suite at Cox Walnut Lawn, and a new facility for the Cox College of Nursing and Health Sciences at Cox North.
CoxHealth Chief Financial Officer Jake McWay said funding for the projects comes through bonds, the majority of which were issued before the current credit freeze.
"We have a very solid credit rating ... and we've been working on a plan of finance for the better part of this calendar year," McWay said. "We were able to hit the bond markets at the right time, getting a big portion of it done ... and then we just sat tight a little bit until things thawed in the credit markets, which they did about two or three weeks ago."
Rod Schaffer, the hospital's vice president of facility management, noted that parking garage construction began in August and will be complete in April; the remaining projects should be complete by mid-2010.
School work
Flintco's Blose said work also is steady in the government and education sectors, where projects financed over a period of several years by large bond issuances are still moving forward.
Flintco, for example, is completing work on the state crime lab, due to open this month in downtown Springfield, as well as two school building projects in Springfield and one in Fair Grove.
Scott Wendt, director of capital construction for Springfield R-XII Schools, said that some of the 25 projects funded by the $96.5 million bond issue passed in April 2006 are still in progress, pointing to the new southwest elementary and Hickory Hills K-8 schools, and expansions at Weaver Elementary, Cherokee Middle School, and Hillcrest, Kickapoo and Glendale high schools, as well as 15 standalone air conditioning installations.
When those projects are completed, Wendt said, the district will still have work to do; he notes that there will still be 17 schools without air conditioning.
"I think everybody understood as went into this bond that we anticipated doing another bond issue after this," he said. "There's a lot of discussion with some of the older middle schools and the needs there. But the timing of that is something the school board determines."
Even construction in the school sector, however, may be slowing. At its Oct. 21 board meeting, the Springfield school district said it is not sending out surveys to gauge public interest in a new bond issue, though district spokeswoman Teresa Bledsoe told Springfield Business Journal that the district has not decided whether a bond item will be placed on ballots in the spring.
Private slowdown
It's important that sectors such as health care and education continue to offer work, Blose said, as the private sector has significantly slowed down for several reasons.
"The private markets are down, primarily because of the economy and the ability to lend to some of these developers," Blose said. "A lot of private developers are backing off, waiting to see what happens. The ones that do want to develop are very few and far between compared to what we experienced a year ago."
But there are notable bright spots even in sectors that are down overall, such as multifamily development, where building permits are down more than 51 percent so far this year.
Coryell Enterprises is on pace to hit $50 million worth of apartment construction in 2008, according to owner and President Sam M. Coryell Jr., who said that is the most construction his company has completed in single year. He said the projects the company is finishing this year - which will bring the total number of apartment units it owns and manages through TLC Properties to nearly 3,200 - were planned and financed in 2006 and 2007, before the current downturn.
"People always need housing, and when the economy turns south people tend to rent more or longer than usual, so business can pick up," Coryell said.
But even for a company doing well, Coryell is realistic about the future.
"You'll start seeing the ramifications of the credit crunch in six months to a year, as far as our industry is concerned," Coryell said.
"We've got several things we'd like to do, but lenders say they're not loaning money. Plus, there is a higher degree of risk to what we do than to someone who goes in and buys already existing properties that are already stable and already have shown a track record of turning a profit," he added.[[In-content Ad]]
