YEAR IN REVIEW: Foxconn, election, building boom make 2018 one for the history books

Perhaps more so than any other year in recent memory, 2018 was momentous for the construction industry in Wisconsin.

Among other things, this year saw work begin on the biggest construction project in state history — the $10 billion factory Foxconn Technology Group is building in Mount Pleasant — even as a historic building boom continued to transform Milwaukee and other cities. Meanwhile, new federal tariffs and a seemingly endless labor shortage drove up materials prices and wages. And disaster struck in the forms of explosions in Superior and Sun Prairie and flooding in Dane County and western parts of the state.

But arguably the biggest story for contractors was one with ramifications extending well beyond the industry’s narrow interests: the defeat of Gov. Scott Walker by Tony Evers in November.

WALKER DEFEATED

Was Walker’s rejection by voters the result of his transportation policies rather than fallout from his ill-fated presidential campaign or his alliance with President Donald Trump? Probably not.

But that’s not for a lack of trying by a handful of organizations and officials that repeatedly chastised the two-term Republican for what they contended was poor transportation planning.

On one side, Walker was battered by the Transportation Development Association of Wisconsin‘s “Just Fix It” campaign, which argued that the governor’s policies had overburdened the state with debt. On the other, he was lampooned in print, on billboards and on the radio by a “Scott-holes” advertising blitz blaming him directly for the deterioration of state roads. Even Walker’s former transportation secretary, Mark Gottlieb, came out of the woodwork to take a swipe at his old boss.

It would probably be going too far to argue the election was a referendum on Walker’s transportation policies. Even so, Evers’ victory seems likely to alter the state’s course when it comes to roads and bridges.

Start with Evers’ appointment for the top position at the Wisconsin Department of Transportation. Craig Thompson, whom Evers nominated last week, has for years been the executive director of the same Transportation Development Association of Wisconsin that was behind the “Just Fix It” campaign.

With that history of lobbying for the very industry he could soon oversee, Thompson has not received the warmest of welcomes from the state Legislature, particularly Republican senators. That’s problematic for Thompson, since those same lawmakers will soon have an opportunity to reject his nomination.

But even should Thompson come up short in the Senate, little is likely to change with Evers’ transportation policies. The governor-elect, a Democrat who will have to work with a Republican-controlled Legislature, has already made his position on transportation clear: He thinks all options should be on the table, including increasing the state’s gas tax. On that much at least he may be able to find common cause with Republicans in the state Assembly who have publicly expressed concerns that the state is relying too heavily on borrowing for roadwork.

Meanwhile, construction officials are waiting to learn whom Evers will pick to lead other agencies overseeing parts of their industry: the departments of workforce development and safety and professional services.

BUILDING BOOM

Even as politicians saw their fortunes rise and fall in 2018, the state’s historic building boom showed no signs of abating.

In Milwaukee, 2018 brought the completion of a new home for the Milwaukee Bucks: the $524 million Fiserv Forum. That was just the latest in a series of projects — none perhaps more prominent than Northwestern Mutual’s new 32-story tower near the city’s lakefront — to leave indelible marks on Milwaukee’s downtown in recent years.

Although the Fiserv Forum most likely grabbed the biggest headlines in 2018, it was far from the only story. Cattycorner to the atrium structure attached to its headquarters tower, Northwestern Mutual oversaw the completion of the 7Seventy7 building, a 34-story apartment tower standing at the corner of North Van Buren and East Mason streets.

Meanwhile, a mere three blocks to the west, cars began running on the city’s new streetcar line.  Another two blocks over, at the corner of North Water Street and East Wisconsin Avenue, crews got going on a 25-story tower that BMO Harris Bank is having built just across the street from city hall. Outside Milwaukee’s downtown, work wrapped up on the second of two core phases of the ongoing reconstruction of the massive Zoo Interchange, although the project’s so-called north leg has still to be completed.

Milwaukee wasn’t the only city where construction crews were kept busy. In Madison, progress was made on the $186 million Judge Doyle Square development despite a lawsuit filed by the private partner in the public-private project. Plans for Judge Doyle Square call for bringing a hotel, apartments, retail and commercial space and more than 1,000 parking spaces to two blocks southeast of the state Capitol.

Then, of course, there was the start of work on Foxconn’s massive factory project in Racine County.

FOXCONN

Arguably no construction project drew more attention in 2018 than the $10 billion factory that Foxconn began building this year in Mount Pleasant. The contracts let so far have largely called for site preparations, utility work and the construction of a multi-purpose building.

But the development isn’t stopping at the site itself. Nearby, WisDOT is overseeing half-a-billion dollars’ worth of road projects, work that’s needed to accommodate the vehicles that will eventually be traveling to and from the new factory. Elsewhere, Foxconn has committed to opening regional research centers in Green Bay and Eau Claire and operating its North American headquarters out of a building in downtown Milwaukee.

RISING PRICES, WAGES

As most economists would predict during a time of strong demand for construction services, materials prices and wages were on the rise in 2018. Although the Associated Builders and Contractors’ latest report on construction inputs found that the average price of commonly used materials decreased by 1.8 percent from October to November, the figure was still up by 5.8 percent for the year.

But demand wasn’t the only contributor to higher prices. Economists also traced the increases back to the new tariffs the Trump Administration had placed on steel and aluminum imports.

Nor were lumber, steel, gasoline and other assorted construction inputs the only things to become more costly in 2018. Just as the materials that go into construction projects grew more expensive, so did the labor. In October, the Associated General Contractors of America reported that industry wages had exceeded $30 an hour on average for the first time ever.

One frequently cited driver of the pay increases has been the construction industry’s protracted labor shortage. This seemingly perpetual shortfall was once again evident in employment data in 2018.

The Associated General Contractors of America recently reported that the Wisconsin construction industry added 8,400 jobs from November 2017 to November this year, an increase of 7.2 percent. Nationally, the number of people once employed in construction who were still looking for jobs fell to 352,000 in November, the lowest such number ever recorded for that month.

DISASTERS

Even with the building boom filling contractors’ sails, this year was not marked entirely by good news. Disaster befell at least three different parts of the state.

First, in April, the city of Superior was rocked by an explosion at a local refinery run by Husky Energy. The blast, later traced to a hole in a valve, injured three dozen people, sent black smoke billowing into the air and forced the evacuation of a large part of the northwestern Wisconsin city.

Not even three months later, the city of Sun Prairie suffered its own deadly explosion. This time, the cause was a subcontractor’s accidental striking of a gas line after the ground above it had been improperly marked.

A firefighter, Cory Barr, was killed in the blast, 11 people were injured and a block of downtown Sun Prairie was leveled. Declining to press criminal charges, public officials later placed the blame on miscommunication.

Capping off the trio of disasters were the floodwaters that submerged much of Dane County and western parts of the state. In the capital city, rising waters in August swept a 70-year-old man away from his rescuers and to his death. Walker declared a statewide emergency and toured the flood damage, tweeting that the devastation was “amazing” and “heartbreaking.”

Now, as he wraps up his official business as governor, Walker has been working with the federal government to clean up the mess and find ways to prevent floods from causing so much damage again.

— The Associated Press also contributed to this report