Confidence is high for a workman-like 1997

Vermont Business Magazine, Apr 01, 1997 by Barna, Ed

There's an old Vermont saying that sums up the current construction industry outlook: "Not so good for a good year, not so bad for a bad year."

Sunlight seems to have broken after the post-recession overcast, at least in some parts of the state. Chittenden County continues to live by what appears to be a different set of conditions than the rest of the state, seeing far more projects. Rutland had a great year in 1996 and looks forward to more activity in 1997.

The job outlook seems to be improving, at least marginally. According to Michael Griffin, a Department of Employment and Training statistician, estimated total construction employment for 1996 was 12,600, up 300 jobs from 1995, or 2.4 percent.

That was the third straight year of increase, Griffin noted, the figures being 11,650 for 1993, 11,900 for 1994, 12,300 for 1995, and 12,600 for 1996. But in contrast, the figure from 1989, just before the recession of 1990-91 devastated real estate markets, was 17,850, he said.

There's another traditional Vermont saying for troublesome years that most emphatically does not apply to the situation: "Can't complain." While some in the industry believe the permit process has been somewhat streamlined, those living close to New Hampshire are more likely to make invidious comparisons. Nagging problems like workers compensation rates haven't gone away. And the prospect of comprehensive tax reform has company heads gritting their teeth. They wonder whether the Legislature's response to the Vermont Supreme Court ruling that education taxes create unacceptable inequities will result in a "solution" that chills the business climate.

Still, yet another old Vermont saying might be called upon: "Could be worse." Pierre LeBlanc, vice president of operations at Engelberth Construction in Colchester, brought up a potential problem that the industry hasn't had to face for years, but can probably live with: Given the low unemployment rate and the number of projects on the books that simply have to be done during Vermont's all-too-brief warm season, will there be enough qualified workers to go around?

OVERVIEWS

Checking with prognosticators and industry trackers, the picture seems mixed.

For instance, the Legislature played a wild card when it set a deadline last spring for school districts to qualify for state construction under the old aid formula (30 percent of the overall cost plus help with bond payments according to the town's position on the funding scale).

Faced with the prospect of having inevitable expansions cost millions more, voters passed a spate of school construction bonds, most of which swelled construction company coffers last year, but some of which will carry over to this year.

The ongoing battles of supermarket chains, with Grand Union and Hannaford especially aggressive in their attempts to gain market share, have also been a plus. There, too, there is some carryover.

But Jeffrey Carr, the economist behind Economic and Policy Resources in Burlington and a frequent state consultant, said a number of broader indices suggest that 1997 will be "as good as last year," which was a reasonably good year:

* Consumer confidence, which is being measured on a regular basis in Vermont for the first time, looks to be strong.

* Unemployment is low.

* A substantial number of housing developments have been approved.

Also, Carr observed, the proposed $50 million Husky plant in Milton, which will make machinery to make molds for plastic products, will be a large shot in the arm to the Franklin County-Chittenden County area, along with such things as a mall project in Essex.

Economist Arthur Woolf, who together with Richard Heaps publishes the Vermont Economy Newsletter, has been doing the consumer confidence research. The data from three quarterly periods isn't enough to say for sure what the trends are, he said, but the figures have been moving slowly upward. While not as strong as consumer confidence in the rest of the country, Vermont's attitudes led Woolf to say, "I think we're doing fairly well."

For the past nine years, Works In Progress has been helping construction companies identify bidding opportunities, among other clients. Founder Larry Cain said they have grown, and now have offices in Albany, NY, and Northampton, NH.

The company's own expansion to some extent parallels the fortunes of his clients.

"Last year was a good year," he said, and "this year looks to be like last year."

The lingering recession? "I think we're out of that," Cain said. "My only fear is that three or four years from now they may be looking back at this year and saying these were the good old days."

"Last year it was school work," Cain said. "This year, There is some school work But I think you're seeing that starting to be less of a factor."

"There's some good projects projected this year which I think indicate a lot of optimism," Cain said. As will be seen, these include institutional, industrial and commercial work -- and residential may at last be on an upswing as well.