Electrical Belt Tightening in Los Angeles

By Erik Olson / The Daily News | Posted: Saturday, January 9, 2010 10:40 pm | (0) Comments

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New construction slowed to a crawl last year and will likely get worse, according to an industry trade group, and area contractors say they're cutting costs and trying to survive until better times come.

"People are having to really low-ball on bidding. And this is after they've already cut in other ways," said Jeff Richter, the incoming president of the Lower Columbia Contractors Association.

Nationwide, construction spending fell by $137 billion in November to hit a six-year low, according to an analysis released last week by the Associated General Contractors of America, an industry trade group.

The trade group is forecasting construction spending will fall by another 5 percent this year, said Brian Turmail, spokesman for the Arlington, Va.-based association.

"We'd love to be wrong on this, but we don't see much reason for the construction picture to improve before the end of 2010," Turmail said Friday.

Construction recovery won't happen nationwide until the labor market picks up, because people need jobs before they buy houses, said Scott Bailey, regional economist for the state Employment Security Department.

The decline in building has reduced construction employment in 324 out of the 337 geographic regions the trade group surveyed nationwide recently. In the greater Longview area, jobs in construction, mining and logging sector fell by 24 percent in the 12-month period ending in November, among the highest in the state, according to the U.S. Bureau of Labor Statistics.

For Andy Hamer, owner of Longview-based Advanced Electrical Technologies Inc., the recession has forced him to diversify.

The company started a decade ago doing electrical work mostly for lumber mills and the wood products industry, but Advanced Electrical has expanded to other sectors, Hamer said. The company did electrical work on the Cameron Family Glass plant in Kalama before it closed last year and helped build the new Pacific Surgical Institute on Ninth Avenue in Longview, he said.

Advanced Electrical has also partnered with another local company, Five Rivers Construction, on building a new truck shop at the Weyerhaeuser Co. sawmill, one of the few construction jobs in the area, Hamer said.

Advanced Electrical, which employs 28, has been able to avoid long-term layoffs, but the company's backlog of work is gone, Hamer said. The building climate was last this bad during the recession of the early 1980s, Hamer said.

"I've went through this before, but it was 25 years ago."

These days, area construction workers are managing their money more conservatively and expanding their job hunt to other regions, said David Myers, business manager for Longview-based International Brotherhood of Electrical Workers local 970.

That strategy has paid off during previous recessions, because construction is cyclical, with booms and busts going on in different places, Myers said.

It's harder this time, he said.

"This time, there is nowhere to go in the United States where there is excess work," Myers said.

Despite the gloomy picture, rays of hope are on the horizon. WalMart is expected to finish building two new stores in Longview and Woodland this year, and Portland-based EGT Development LLC broke ground on a $200 million grain terminal at the Port of Longview this fall. The port also expects to finish its new Berth 9 to accommodate the grain terminal this year.

Combined, those projects support nearly 1,000 jobs, though none of the general contractors are from the Cowlitz County area and many of the jobs have gone to out-of-state workers.

Richter, the Lower Columbia Contractors Association president, said he's trying to remain hopeful. The Kalama resident was the second employee hired at the Tri-County Truss plant at the Mint Farm in 2006, and he was the last one out the door when the plant shut down two years later.

Jobless for a few months, he started Northwest Home Automation last spring with two partners. The business integrates lighting, heat and other electrical systems in homes.

Work has been slow, but Richter said he started the business with the idea that construction will turn around eventually.

"I'm optimistic about the future of the industry."