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Experts: Building boom not over: Big projects wind down, but new ones fill pipeline

September 8, 2008

The completion of $2 billion in city construction projects has left a gaping hole in contractor job schedules-as wide as when the roof opens at Lucas Oil Stadium.

Even so, industry leaders remain optimistic about staying busy despite the combination of a tepid economy and the end of a local boom that stretched the limits of the labor pool.

The $1.1 billion airport midfield terminal project, the $715 million stadium and $150 million Central Library expansion helped to create so many jobs that union contractors typically hired "travelers" to fill the gaps. Although the trades were rarely short-handed, the amount of work available made for hectic schedules, said John Griffin, executive director of the Central Indiana Building Trades Council.

"At that time, there seemed to be a lot of people running around with their hair on fire," he said.

While those three mega-projects are either finished or nearly finished, a pipeline of developments throughout the state should continue to feed the unions an ample amount of work that yet again could leave contractors scrambling to find enough skilled workers.

Locally, the $275 million Indiana Convention Center expansion and the $250 million hotel complex anchored by a JW Marriott are a few of the more high-profile construction jobs that will continue to alter the look of the downtown skyline.

Outside Indianapolis, the $3.8 billion expansion of the BP Whiting Refinery in northwestern Indiana and $1.8 billion expansion of Interstate 69-as well as the construction of ethanol plants, hospitals and schools-should provide an additional boost.

"I would say that I don't believe that we are going to see any sort of significant downturn in construction activity, believe it or not," said Gary Price, president of the Indiana Construction Roundtable.

The ICR, which consists of some of the biggest users and providers of construction services, commissions an annual labor report forecasting demand for labor.

Conducted by construction-industry consulting and investment banking firm FMI Corp. in Raleigh, N.C., the 2007 study predicts the value of commercial construction in Indiana will grow from $7 billion in 2004 to $17.8 billion by 2010.

In the meantime, to meet demand, the industry will need an additional 10,500 skilled workers this year and 13,400 in 2009.

"Major projects have quickly accelerated the growth of Indiana construction and will keep demand well ahead of the national pace through 2009," the report said.

Numbers may be skewed

Labor studies can be misleading, though, said J.R. Gaylor, president and CEO of the Associated Builders & Contractors of Indiana, an organization that represents non-union contractors.

He estimated that thousands of union travelers were brought in to work on city projects requiring project labor agreements, or PLAs. So, the amount of jobs on big local construction projects are not necessarily filled by Hoosiers, he said.

Indeed, the number of Hoosiers involved in state construction projects fell from 98 percent to 93 percent from 2004 to 2007, according to the report.

"It's difficult to judge what the free marketplace is when they have these restrictive deals," Gaylor said. "That has a real artificial effect on the supply and demand of labor when they ship in these people."

Civic projects typically are accompanied by PLAs that include no-strike provisions needed to ensure labor stability and to meet project time lines. The construction of Lucas Oil stadium and the midfield terminal, as well as the expansion of the convention center and building of the JW Marriott, all contain PLAs.

Non-union contractors are permitted to bid on contracts, but would have to supplement their work force with union workers. For that reason, merit shops often complain that the agreements give an edge to firms represented by labor unions.

The result is that ABC members are forced to take jobs out of state to stay busy. About 40 percent of their work is performed outside Indiana's borders, Gaylor said.

Yet, they are making some progress within the public sector, particularly in sections of the surrounding counties of Boone, Hamilton and Johnson counties. Certain municipalities are opting to pay contractors the common wage of the county rather than the more expensive union rate, Gaylor said.

Overall, health care facilities, schools and churches remain bright spots for both sides, he said.

At any rate, the construction industry in Indiana seems to be faring well compared with the rest of the nation. A report from industry research firm McGraw-Hill Construction estimates new construction starts this year nationally at $558.5 billion, a drop of 11 percent from 2007.

Retirements a concern

Down the line, an aging work force could lead to labor shortages during busy construction cycles. With more workers reaching retirement age, trade associations and construction contractors are trying to figure out how to attract more young people to the trades.

Their biggest challenge is overcoming the perception that blue-collar jobs offer less status, money and advancement than white-collar careers, and that college is the best choice for everyone.

Some craft workers can earn more than the typical college graduate. The average salary for a construction worker in Indiana is $41,825; in Marion County, it's even higher-$48,046, according to the U.S. Bureau of Labor Statistics.

To attract workers, the ICR has launched a diversity outreach initiative that aims to increase minority participation within the trades by rewarding contractors who support education and training, employ minorities and women, and mentor small minority- and women-owned businesses.

The benefits that union trades employees receive can sweeten the package. A union steamfitter, for instance, can take a job in northwestern Indiana, Illinois or wherever and not have to worry about reapplying for health insurance.

Their training also enables them to work jobs in the residential, commercial, industrial or transportation sectors.

"They don't just study one component; they're educated in everything from soup to nuts, basically," Griffin said.

Local construction companies anticipate keeping plenty of workers busy.

The area's second-largest contractor, F.A. Wilhelm Construction Co. Inc., for instance, has several big jobs it's bidding on, company Vice President Larry Roan said. Its most notable last year included the IUPUI Health Information and Translational Sciences Building and the state's Forensic & Health Sciences Laboratories, helping it grow billings from $405 million in 2006 to $518 million in 2007.

But in such a volatile industry as construction, it's typically wise to proceed with caution.

Said Roan: "I think the market is stable, and that's pretty darn good, historically."
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