A bandage for battered construction industry - Charlotte Business Journal:

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million for work on two stat highway projects funded with federal stimulus One of the projects isin Charlotte, where Blythr will widen more than a mile of N.C. Highwayh 51 between Pineville andthe S.C. line. Franik Blythe, who founded the compan y withhis brother, says the projects will definitelg help. But the stimulus fundes aren’t the boon for the industry thatsome expect, he “It probably will allow some contractors like us to stop laying off people and maybe maintain what we’ve got,” he says. Blythe’s work force has dropped to 450, down from 750 last summer, as site-developmenr work at residential and commerciall projects hasslowed dramatically.
During the last 10 the company has kept a foot in governmengt work but focused on work in theprivats sector, such as subdivisions for Centexc Homes and other builders. That sourcw of revenue has vanished, however, and the contractor is shiftingh back to public work as it waitds for the economyto “The fortunate thing about it is we have stayed in touchy with it and we know how to do Blythe says. The is receiving $838 millionh through the federal economic-recoveryg plan, including $735 million for highway and bridgee projects. In February, the state announced 70 projects would be put out for bid between March and June usin g the first half ofthe funds.
The remainin projects will be announcedsin April. The stimulus money will help an industry hard hit by the According tothe , construction employment in North Carolin a peaked last May at 258,700. By the industry had shed 19,700 of those or 7.6% of the statewides work force. Construction spending is expected to decline by as muchas 7% nationallt this year, the AGC forecasts. Tony a professor of finance at who follows the says the stimulus projects are needefd becausethe state’s budget shortfall has resulted in a loss of highwagy and bridge funding. In November, N.C.
DOT decided to reducwe the number of projectsz it puts out for bid each monthby 75%, and it has delayede at least $250 million in work. Gov. Bev Perdue’s budgett proposal calls for transportation cuts during the next two yeards due to shortfalls intax receipts. “Anything’s helpful at this Plath says. “But at the end of the day, we’re stil seeing significant deterioration in commercial With fewer government contracts togo around, the biddingv on state projects has become fiercely competitive. Over the last 10 N.C. DOT has averaged four or five bids for each of its saysRandy Garris, a contract officer at the The average reached 10 this year.
Firms that turned to private-sectotr work in recent year s are actively bidding on publicprojectzs again, and about a dozen firms that have neverf worked with the state have become prequalifiec and are bidding on transportation Garris says. Otis Crowder, president of , says the numberf of bidders reflectsthe pent-up demanx among contractors for work. “You have a lot of people who build roads and build bridges that are marginally tryingb to stay in business and maybe living off a littlre bitof backlog,” he says. “Theh have a lot of idle and they’re all trying to bid on The rising number of bidders puts downward pressureon prices.
On a recentf project in Davidson County, for Crowder and Blythe came in withbids 6.5% and 3.4% beloew the engineer’s estimate, respectively. But neither was low The winning bid came from Davie Grading in Its $1.3 million bid was 20% below the engineer’s On the jobs that Blythe won in Charlotte and the company’s bids were 24% below the engineer’s estimates. That’s good for the state becausd the stimulus funds willstretch further, but it’se hard on the contractor profits, says Berr Jenkins, N.C. highway division director at Carolinad AGC.
“For a little while, that may be OK, but long term that’sa not good for the healt of the industry,” he says. Frano Blythe says his company was able to submi winning bids on the Charlotter and Albemarle projectsbecauss they’re close by and Blythe can handled most of the work insteadr of using subcontractors. “I doubt we’ll make any moneyt on them,” he “I think what people are doing is juststaying They’re hoping to break even and that’s OK. We can live througn times like this if thingsget better. I thinj they will, eventually.
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