A Surprising Finding

Survey of St. Louis Owners Suggests Construction Spending to Double

by Brian R. Hook

Commercial construction is expected to almost double this year in St. Louis, leading to a potential labor shortage, according to a new survey of building owners.

Spending on construction is expected to hit $5.23 billion in 2008 compared to $2.66 billion in 2007, reports the St. Louis Council of Construction Consumers, which conducted the survey late last year and early this year.

“We are seeing growth in activity,” says Dennis Lavallee, council president.

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Construction spending is expected to total more than $4 billion in both 2009 and 2010, before dropping off in 2011 and 2012 to levels comparable to the baseline years of 2006 and 2007, according to the confidential survey of 28 owners in St. Louis.

The report notes, however, that the economy has experienced a significant slowdown since the collection of data. Therefore, some owners might reassess their needs. For others, though, financing is already in place.

Some major projects driving activity include the$535 million reconstruction of Interstate 64 in downtown St. Louis, the $235 million BJC Institute of Health at Washington University, also in St. Louis, and the $225 million SSM St. Clare Health Center in suburban Kirkwood.

Another View

The survey contrasts sharply with data released by McGraw-Hill Construction, publisher of Midwest Construction, which shows that overall construction starts in St. Louis fell 5% to $476 million during the first quarter of this year, compared to $500 million in the same quarter last year. Including residential and infrastructure data, starts overall fell 20%, to $943 million from $1.2 billion.

Lavallee says that instead of tabulating construction starts, the council’s survey is based on what owners expect to spend throughout the year. Therefore, he says there might be some delays in project schedules that lower the final tally at the end of the year.

One of the largest increases is projected in industrial manufacturing construction, which is projected to reach $1.7 billion this year compared to $740 million last year.

Owners fear a possible labor shortage because of this increased commercial construction activity, Lavallee says.

“We are hearing from some of the owners who have large projects that they are concerned about whether they will have enough workers,” he adds.

Organized trades reported 90% to 95% utilization of available craft labor in the St. Louis region over the past year, according to the survey.

“There needs to be a continuing and ongoing effort to recruit, train and retain folks that are in the trades,” Lavallee says.

Boilermakers and ironworkers are already at full employment across the St. Louis region, says Jim LaMantia, executive director of PRIDE of St. Louis, which represents owners, contractors and building trades. He says both unions are using travelers, who are workers from other states and countries.

PRIDE has implemented several initiatives to get more people to consider working in the construction industry, including programs to recruit minorities, high school graduates and former soldiers who have recently returned from overseas.

PRIDE is also promoting a career manual on its Web site that highlights the construction industry. It has been translated into Spanish, Croatian and Bosnian.

More Skepticism

St. Louis-based S.M. Wilson & Co., a general contractor, is not yet having staffing problems, says Fred Jaeckle, vice president of preconstruction and estimating. However, he says he has noticed some shortages of mechanics and ironworkers.

Analysis by S.M. Wilson suggests that the known projects available in St. Louis will drop from $2.4 billion last year to just under $2 billion worth of work this year, contrasting with the reported figures provided by the St. Louis owner organization.

Jaeckle says S.M. Wilson goes through an elaborate process several times a year to track construction volume to weigh what is available to bid on.

“It is all based on what we can visualize in the market,” he says. “It tells us what we think we can get.”

Jaeckle expects construction at his firm to increase this year.

“We are going to do more volume this year than last year,” he says. S.M. Wilson reported around $450 million in volume last year. Jaeckle predicts the firm will almost hit $500 million this year.

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