Contractors swallow sour forecasts

Published: July 13, 2009
Tags: Berghammer Construction Corp., economy, Reichl Construction Inc., stimulus, Total Team Construction LLC

Sean Ryan
sean.ryan@dailyreporter.com

Wisconsin contractors face failure if they succumb to economic forecasts that the national construction market will only get worse.

Company owners who let pessimism guide them are not going to make it because nobody can find work if they’re hiding under a desk, said William Fuchs, president of Total Team Construction LLC, Waukesha. Even though everything is gloom and doom nationally, business actually improved during the last few weeks for Total Team, he said.

The company landed five contracts recently and on Monday started work on the first, an interior build-out at the Milwaukee Adult Learning Center.

“Sooner or later, it’ll hit,” Fuchs said of eventual economic recovery. “It’s just making sure you are still treading water when it hits.”

All of the predictions about the construction market are negative because it’s impossible to say when things will get better, said Ken Simonson, chief economist for the Associated General Contractors of America. The most optimistic scenario is the stimulus package works and gets businesses to spend money on growth and development again, he said.

“I think the risks at the moment are that the economy will do worse,” Simonson said, “not that we’ll get a surprise on the upside.”

The American Institute of Architects on Monday predicted nonresidential construction will continue to decline throughout 2010. But the group’s prediction calls for a nationwide decline in work that will not be as steep next year — 12 percent in 2010 compared to 16 percent in 2009.

It is easy to predict when the construction market will pick up again, said Jack Reichl, vice president of Reichl Construction Inc., Franklin. It will happen when banks begin financing projects again, he said.

“I think it’s very difficult to plan today because of the uncertainty,” Reichl said. “You could think you have good jobs coming up, and then they don’t get funded or don’t go ahead for some reason. And then what do you have?”

Reichl said his company has about 20 employees in the field, about half of what Reichl Construction had during recent peak years.

“We’re just a smaller version of ourselves,” he said.

National data can be a useful reference when deciding whether to grow or shrink, but it is more important to look at the local markets to figure out what the future really holds, said George Minnich, senior vice president of Berghammer Construction Corp., Butler.

“I think it reminds you of the importance of hard work and focus and accuracy and good performance that will help carry you through,” he said. “I’ve talked to some contractors that had very dim views of the economy, and maybe they’ve seen more of a downturn. But we need to focus on more than just survival.”

Minnich said Berghammer relies on an internal system that counts the number of opportunities to submit quotes for projects. During good times, Berghammer gets about five opportunities a week, he said. These days, the company gets about two-thirds of that average, Minnich said.

Fuchs said the increasing number of small retail projects is a reason to be optimistic.

“It appears to be improving slightly, and there appears to be a light at the end of the tunnel,” he said. “I just hope it’s not a freight train.”

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