Manufacturing has been the star of the recovery, powering Michigan out of the Great Recession. But the outlook remains dim for another chief pillar of the nation's economy: construction.
The industry that builds everything from homes and offices to roads, bridges and power plants is a major economic weak spot.
Just last month, the nation lost 28,000 construction jobs. In Michigan, industry employment shrank by 3,000 jobs from April 2011 to April 2012.
The glut of homes, offices and retail space combined with fewer government-financed projects means things are not likely to significantly improve anytime soon.
"We keep waiting for an increase in volume, but unfortunately we don't see it for the next 18 months to two years," said Ken Lawless, executive vice president of Clark Construction, a Lansing general contractor, and chairman of the Associated General Contractors of Michigan.
Barton Malow, one of the state's biggest construction companies, doesn't expect a full industry recovery until 2015, said Alex Ivanikiw, the firm's senior vice president.
The grim outlook persists even as many subcontractors and other construction-related companies have quietly shut down their businesses because of too little work in recent years, with more failures expected. Even more worrisome for construction's long-term future, thousands of skilled workers have left the troubled industry.
Construction is a major economic driver, normally accounting for 4% to 5% of the nation's economic output, according to Kenneth Simonson, chief economist of the Associated General Contractors of America. Today, this percentage has dropped to 3%, a historic low.
In Michigan, some companies that have stuck it out through the tough times are seeing a slight increase in activity this year, but bids are so low that profit margins have never been tighter. And hundreds of carpenters, laborers, sheet metal workers and others are desperate for work.
"I've never felt so depressed," said Vincent DeMassa of Redford, a 36-year-old carpenter who used to work on commercial construction projects like hospitals but can now find only occasional repair jobs for homeowners.
To survive, the father of three has been getting financial help from his parents, pawning things and picking up empty beverage cans. He would like to go back to school to switch careers but can't afford it.
"Every week, I'm just looking for something, anything," DeMassa said.
Many subcontractors are in a similar predicament. Fastdecks, a Walled Lake firm that designs, engineers and installs concrete formwork systems -- the backbones of buildings -- used to employ 80 workers but is now down to 20. Last year was the toughest in the firm's 48-year history, and Fastdecks' three owners took 66% pay cuts.
To make it through the prolonged downturn, Fastdecks has taken on renovation projects and pursued work in other Midwest states.
"I never thought it would be this bad," said Todd Doenitz, Fastdecks' vice president and one of its owners. "We're having to be more creative."
In Michigan, the industry shed 85,000 jobs from 2000 through 2011, a 40.5% drop in employment. Only manufacturing fared worse, suffering an employment decline of 44%, said Bruce Weaver, a labor analyst at Michigan's Bureau of Labor Market Information & Strategic Initiatives.
Though automakers are benefitting from Americans' pent-up demand for new cars and trucks, the construction industry is still dealing with an oversupply of vacant homes, offices and retail space. Metro Detroit, for example, had an office vacancy rate of 27.1% in this year's first quarter, according to data from Grubb & Ellis.
"We're still on shaky ground," said Karen Blanford, research manager of global construction services for IHS Global Insight, an economic forecasting, research and consulting firm in Lexington, Mass. "2012 is going to be pretty slow."
There are signs, however, that the industry has hit bottom. Demand for new homes appears to be picking up for the first time in years. And nationwide, total construction spending is up 7% from April 2011 to April 2012, Simonson said. He forecasts that spending will rise from 5% to 11% this year, with industry employment growing by 4%.
"It's a gradual process that's already under way," Simonson said of the industry's recovery.
Several general contractors in Michigan said business has improved. Though new office and retail projects remain rare, these companies are a little busier working on apartment buildings, schools, hospitals, outpatient health care centers and a few government facilities, such as the Wayne County Jail.
"It's not going to go back to where it was anytime soon, but it's certainly getting better," said Tim O'Brien, president of O'Brien Construction, a Troy-based general contractor that is building a new affordable assisted living facility near the Detroit River.
Michael Aaron, business manager at Laborers Local 1191, which has about 4,500 members in Wayne and Macomb counties, also sees an increase in construction activity this year, mainly in the form of highway and bridge projects and building and maintenance work for Detroit's automakers. But his Detroit-based local still has on average about 200 members on its out-of-work list.
"We're not quite out of the woods, but we do have a dim light at the end of the tunnel," Aaron said.
Most Popular Stories
- Schedule packed with talent at the Fox
- Entrepreneurs Chase Social Media
- European Car Sales up First Time in 20 Months
- I never set out to be a role model but it's great to be one ; IN THE HOTSEATBetter known by his stage name Wretch 32, Jermaine Sinclair is a 28-year-old rapper from London. In 2011 his debut album Black and White sold over a million copies and scored three top five singles. His latest single Blackout was released this week
- Austin musicians point to a variety of reasons to appreciate McCartney
- Manila's Hollywood Week
- Promoter McLean 'provided more musical joy than Dylan and Prince combined'
- SINCE YOU ASKED [Pittsburgh Tribune-Review (PA)]
- Financial Times Twitter, Email Hacked
- The Blade, Toledo, Ohio, TK Barger column