Grader LeMoine Construction Co. Inc. has shut down after falling victim to the lack of new subdivision construction that is pummeling the earthmoving industry.
“Our primary work was building subdivisions,” said Bruce LeMoine, owner and president of the Watertown-based company, “and it was just like you took a faucet and turned it off. We had two years of red ink, and we just decided to get out.”
LeMoine said the last bidding opportunity he saw to move earth for a new subdivision project was in 2008. The company has been scraping by on smaller private commercial projects, but those jobs only last a few weeks compared with the six or eight weeks of work larger subdivision projects offered.
“Based on looking for work in January and February, we are at the bottom, hopefully,” said LeMoine, who joined his father’s 63-year-old company in 1970. “Because this year is worse than last year, or at least the worst I’ve seen it.”
Earthmovers will have to wait more than a year for the subdivision market to heat up again, said Bill Carity, owner and president of Brookfield-based housing developer Carity Land Corp. There are too many available housing lots on the market, he said. Carity Land Corp. has not graded land for a new subdivision since 2008, he said, and it has about 50 available lots in its inventory.
“There has been reduced demand,” Carity said, “and there is a backlog of available lots because of the supply that was created in 2005, 2006 and even 2007 that was not absorbed.”
There’s no reason for a housing developer to accept the risk of preparing new land for a subdivision when it is cheaper to buy the available lots that are graded and have utilities, said Tim O’Brien, president of Tim O’Brien Homes Inc., Waukesha, and president of the Metropolitan Builders Association of Greater Milwaukee Inc.
“It’s just a huge risk,” he said, “and it’s a huge amount of money that needs to be financed to put the infrastructure in the ground and then wait.”
Lack of work in the private housing market is even hurting larger earthmovers who focus on public road and highway projects more than private work, said Jack Arseneau, executive director of the Wisconsin Earth Movers Association Inc. The amount of earthwork in state highway contracts is declining, he said, and graders no longer have the private sector to fall back on for a supplementary source of work, he said.
LeMoine Construction’s closing puts the company alongside other earthmovers that are shutting down.
Arseneau said association members that have closed in the past two years include Pagel Construction Co. Inc., Almond; Koshak Construction Co. Inc., Park Falls; and F.H. Raemisch Sons Inc., Waunakee.
Bruce LeMoine, who auctioned off his company’s equipment on April 23, said he is now working with other contractors and engineers.
“There’s some work,” he said, “but it’s all smaller work.”