A bandage for battered construction industry - Charlotte Business Journal:

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million for work on two state highwayy projects funded with federal stimulus One of the projects isin Charlotte, where Blythe will widen more than a mile of N.C. Highway 51 betweenh Pineville andthe S.C. line. Fran k Blythe, who founded the companu with his brother, Jack, says the projects will definitelyt help. But the stimulus funds aren’t the boon for the industryu thatsome expect, he adds. “It probablyh will allow some contractors like us to stop layingv off people and maybe maintainwhat we’vd got,” he says. Blythe’s work force has dropped to 450, down from 750 last as site-development work at residential and commercial projects hassloweds dramatically.
During the last 10 the company has kept a foot in government work but focused on work in theprivate sector, such as subdivisions for Centes Homes and other builders. That source of revenuew has vanished, however, and the contractot is shifting back to public work as it waitd for the economyto “The fortunate thing about it is we have stayed in touch with it and we know how to do Blythe says. The is receiving $838 million through the federal economic-recovery plan, including $735 millioj for highway and bridge projects.
In February, the stater announced 70 projects would be put out for bid betweeb March and June using the first half of the The remaining projects will be announcesin April. The stimulus money will help an industry hard hit by the According tothe , construction employment in Nortyh Carolina peaked last May at 258,700. By the industry had shed 19,700 of thosde jobs, or 7.6% of the statewide work Construction spending is expected to decline by as muchas 7% nationallt this year, the AGC Tony Plath, a professor of finance at who follow the industry, says the stimulus projects are neededs because the state’s budget shortfall has resultee in a loss of highwat and bridge funding.
In November, N.C. DOT decidec to reduce the number of projectas it puts out for bid each monthby 75%, and it has delayerd at least $250 million in work. Gov. Bev Perdue’zs budget proposal calls for transportatiohn cuts during the next two years due to shortfalls intax “Anything’s helpful at this point,” Plath says. “Butg at the end of the day, we’re still seeint significant deterioration incommercial construction.” With fewee government contracts to go around, the bidding on state projectz has become fiercely competitive. Over the last 10 years, N.C.
DOT has averagedf four or five bids for each of its saysRandy Garris, a contrac t officer at the department. The average reached 10 this Firms that turnedto private-sectof work in recent yearss are actively bidding on public project again, and about a dozen firmsd that have never worked with the state have become prequalifieed and are bidding on transportation work, Garris Otis Crowder, president of , says the numbetr of bidders reflects the pent-up demand among contractorxs for work. “You have a lot of people who builxd roads and build bridgesw that are marginally trying to stay in businessx and maybe living off a little bitof backlog,” he says.
“They have a lot of idle and they’re all trying to bid on everything.” The rising numberf of bidders puts downward pressure on On a recent project inDavidson County, for Crowder and Blythe came in with bids 6.5% and 3.4% below the engineer’es estimate, respectively. But neither was low The winning bid came from Davie Gradinbgin Mocksville. Its $1.3 million bid was 20% beloqw the engineer’s estimate. On the jobs that Blythe won in Charlotte and the company’s bids were 24% belo w the engineer’s estimates.
That’s good for the stats because the stimulus funds willstretch further, but it’s hard on the contractor profits, says Berryg Jenkins, N.C. highway division directore at Carolinas AGC. “For a littled while, that may be OK, but long term that’as not good for the health of the he says. Frank Blythe says his companhy was able to submit winning bids on the Charlott e and Albemarle projectsbecause they’rse close by and Blythe can handle most of the work instea d of using subcontractors. “I doubt we’ll make any moneyu on them,” he says. “I think what people are doingh is juststaying busy.
They’re hopinhg to break even and that’s OK. We can live througuh times like this if thingsget better. I thini they will, eventually.”