With the holidays behind us, we take down last year’s calendars and think about what transpired in the past year for the construction industry. The southwest Missouri area saw an upturn in activity last year with the number of projects of all sizes increasing in both the building and highway markets. Springfield saw several major projects completed and opened, including the $30 million Missouri State University Bill R. Foster and Family Recreation Center and the $20 million Springfield-Greene County Public Safety Center, two useful new tools for the community.
The area also had projects that were designed and bid, but not built because they may have been over budget or the owner decided to put things on hold. Projects such as the proposed equine center in Republic and the racetrack in Branson both caused a big stir in the community in 2012, but little came from the discussions.
As we pull out the 2013 calendar, we hope to look to a new year in which the construction industry will continue to see an upturn. Now that the elections are over and we have successfully avoided the “fiscal cliff,” the private sector has historically released and started projects that will further make the construction marketplace strong. Both the public and private sectors already have several projects slated to start.
Right now, we see a strong demand for health care facilities, educational facilities for all ages, churches and retail stores. The expansion of health care can be contributed to the growing and aging population. Projects such as Mercy’s $116 million, 200,000-square-foot orthopedic hospital helped contribute jobs to Springfield’s construction industry, with contractors, subcontractors and suppliers marinating their current staffing and the mechanical and electrical trades hiring additional workers to keep up with project schedules.
Mercy also will break ground on a $28 million rehabilitation hospital adjacent to the current project, keeping that corner of southeast Springfield a construction zone for the foreseeable future.
Other area employers such as Kraft Foods Inc. have 2013 plans to upgrade its entire facility and expand its manufacturing abilities, adding construction and manufacturing jobs to the region, a product of demand for newer, different and better facilities. Another of the area’s largest employers, MSU, will respond to changing demographics and population shifts with a major classroom upgrade project.
While numerous projects are on tap for the area, the news isn’t all good. Material prices dipped during the recession, making it an optimal time to build if you could afford it. But as the economy starts to bounce back, so have material prices. We are seeing several increases in the new year, such as ready mix concrete, gypsum drywall products, lumber materials and metal wall panels.
Some of this is due to increased demand both locally and in other markets, but some is simply an increase in raw material costs.
In other areas, we saw material costs holding fairly level, with the occasional increase or spike due to natural disasters, such as Hurricane Sandy, or uncertainties in supply and demand. One case in point is the stainless steel industry. Even thought there is a fairly high demand for stainless products, pricing was on a short-term basis due to the volatility of the market for raw materials.
The one segment of the construction industry expected to have a downturn in 2013 are the road, bridge and highway contractors. The problem isn’t that the area doesn’t need new and better roads and bridges, but rather the governmental agencies responsible for providing funding for these projects will have to find additional funding sources. With many of the projects five or 10 years down the road, the outlook is bleak.
The projects we see this year will mostly be the result of city and county transportation tax funding and with project numbers down this year, we can expect the competition for the available work to become intense.
Jerry Hackleman is vice president of the Springfield Contractors Association and senior vice president with DeWitt and Associates Inc. He can be reached at jlhcpe@yahoo.com.
