Special to The Daily Reporter
There is a dark side to being a bright spot in the state’s construction market.
There are buildings to build in northwest Wisconsin, but intense competition from companies based outside of the region — from La Crosse north to Superior — is making it harder for local firms to land jobs.
“The (subcontractors) are local, but the main ones are from outside the area,” said Thomas Reiter, Eau Claire city planner. “They’re not busy anyplace else. They’re bidding low to get these jobs.”
Local construction kept local companies going five years ago, when construction was booming and there was plenty of work to go around. But when the construction market dried up, companies from outside of northwest Wisconsin spread their nets wider in search of projects.
Those companies caught work in the region, where the industry contracted, but pockets of intense activity kept the market alive.
Eau Claire’s housing market, for example, still is struggling, Reiter said, but the city’s tax base is booming with a $112 million addition to Luther Midelfort Hospital and two industrial projects, valued at $60 million, going up at the local Nestle plant.
“Those are huge construction projects for Eau Claire,” he said. “We’re setting a construction valuation record. It’s only the two big projects in the whole city, but they’re big.”
Local firms are working on the projects, Reiter said, but some of the biggest contracts have gone to firms from outside the area. The Boldt Co., Appleton, landed the Midelfort job.
But there are exceptions to the rule. Dan Market, CEO of Market & Johnson Inc., Eau Claire, said his company won work for Nestle.
“We probably have more employees working now than in the last few years,” he said. “By mid-2010, it’ll be lower.”
At that point, Market said, work on the Nestle plant expansion will be over. He said his was the only local firm interviewed for the job.
But, Market said, companies from Minnesota and eastern Wisconsin are submitting bids and landing contracts for any projects that come up.
“The competition on bid projects has increased three or fourfold,” he said. “It’s not surprising. In the past, you’d see three to five bidders for a major project, and today it’s a dozen or 15.”
For example, Fond du Lac-based C.D. Smith Construction Inc. has job sites in La Crosse. Shaw-Lundquist Associates Inc., St. Paul, Minn., is working on a two-year, $29.5 million job at the University of Wisconsin-Stout in Menomonie.
Dave LaPree, Shaw-Lundquist’s senior project manager, said the company saw the potential for public and private work in northwest Wisconsin and opened an office in Hudson. He said the office is not part of a short-term strategy.
“We are here to stay,” LaPree said, “barring any drastic cuts in our budget.”
LaPree is in charge of the Hudson office, he said, and the intention is for him to work on marketing, estimating and project development.
“The idea is I would have a self-sustained office here,” he said. “Things as they are, it’s pretty tough out there. We’re trying to ride out the bad times.”
The UW-Stout job was Shaw-Lundquist’s first for the state of Wisconsin in recent years, LaPree said, but it is not unusual for the company to look east of the Mississippi River for work.
“People recognize when work slows in one area, people stretch out to expand their area,” he said.
Wisconsin companies are expanding their areas as well.
“There’s more construction taking place in La Crosse, Wisconsin, than in Fond du Lac, Wisconsin,” said Michael Krolczyk, C.D. Smith’s director of construction services. “There’s construction there at the city, the county and the university.”
And traveling for jobs does not necessarily mean companies are outside of their typical territories.
“We’ve got employees that live in that region,” Krolczyk said, “and we do look at it like a local project.”
Given the scope of C.D. Smith’s reach, he said, La Crosse is a far shorter distance to travel from Fond du Lac than to company job sites in California, Missouri or Maine.
In Eau Claire, Boldt is following similar principles with its work at the hospital. The contractor and hospital owner worked together in 2005, and Boldt was one of a limited number of companies from whom the hospital solicited bids.
“We’ve targeted western Wisconsin and eastern Minnesota because there’s a potential for a lot of work here in medical and industrial,” said Jason Krueger, Boldt’s on-site project manager. “We don’t go into an area and be a big bully. We try to partner with local companies.
“We understand how important it is to stay established. That’s how we started.”
At last count, Krueger said, 45 to 50 percent of the work force on the Luther Midelfort job came from within 75 miles of the project.
Yet some firms based in and around the region still are feeling the pinch from the increased competition.
Wieser Brothers General Contractor Inc. is based in La Crescent, Minn., just across the state border from La Crosse. About 70 percent of the firm’s work is done in Wisconsin, and La Crosse city officials consider the firm to be local.
Company President Jeff Wieser said there are three to four times as many companies submitting bids.
“There isn’t as much work in the big metro areas,” he said. “Our work in this part of the state, we’re holding steady. We didn’t boom like everybody else did, but we’re doing all right.”
But the increased attention to every bid, Wieser said, makes it harder to win contracts.
“It’s just tough out there,” he said.