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Experts see 'great concern' over local construction outlook

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A symbolic topping-off ceremony early this month to celebrate a milestone on the massive JW Marriott hotel project downtown can’t hide the anxiety felt within the construction industry.
 
Commercial contractors throughout the country have been hit particularly hard by the recession, and construction activity in Indianapolis is down substantially despite progress on a few high-profile projects.

Combined costs of the 34-story Marriott hotel, the Indiana Convention Center expansion and new Wishard Hospital total an impressive $1.4 billion. Yet industry leaders such as John Griffin, executive director of the Central Indiana Building Trades Council, paint a bleak picture.

“You have these sexy projects,” Griffin said. “But if you look at the bread and butter, the day-in-and-day-out work, the smaller projects, that’s the stuff that sustains the construction industry.”

The sector still is reeling from last fall’s economic meltdown and ensuing credit crunch that continues to crimp construction activity. In October, non-residential construction spending slumped to $652 billion nationally, an 11-percent decline compared with the same month last year, figures from the U.S. Census Bureau show.

Mass layoffs have pushed the industry’s national unemployment rate to 19.4 percent in November, according to the Bureau of Labor Statistics. That’s nearly double the country’s overall jobless rate.

The Indianapolis metropolitan area isn’t faring much better. The region shed 6,000 construction jobs, or 13 percent of its work force, in the 12-month period ended in November, BLS numbers indicate.

In Indiana, where nearly 9 percent of construction jobs have been lost, the industry has been hurt further by a state law that now requires big school building projects to be approved first by voters, Griffin said.

J.R. Gaylor, president and CEO of the Associated Builders & Contractors of Indiana, an organization that represents non-union contractors, sees little relief in sight.

“There’s no recovery in our industry; we think it’s going to be a long haul,” he said. “When it does come back, we don’t see it coming back quickly.”

Few in the construction trades could have envisioned the severity of the fallout. Just last summer, before the financial crisis peaked, industry leaders remained confident about the coming year’s pipeline of projects.

Gary Price, president of the Indiana Construction Roundtable, predicted then that central Indiana would not see a “significant downturn” in construction activity this year. The ICR, which consists of some of the biggest users and providers of construction services, commissions an annual labor report forecasting demand for labor.

But Price since has retracted his forecast, saying the dreadful conditions are worse than what he witnessed during the recession of the early 1980s.

“I have never seen a slower time,” he said. “So there is great concern about 2010.”

The expansion of the convention center and construction of the 1,650-room Marriott hotel both are expected to be finished in early 2011.

The $450 million hotel project also features a Courtyard by Marriott, SpringHill Suites and Fairfield Inn & Suites. The new hotels and the existing Marriott Indianapolis Downtown hotel a block away from the new complex will be marketed together as Marriott Place. They will have a total of 2,200 rooms.

Meanwhile, construction of a parking garage that will be part of the new Wishard should start in May, with completion of the entire project slated for December 2013. Wishard’s parent organization, Wishard Health Services, plans to sell bonds to finance the $754 million hospital just west of downtown.

To be sure, scores of construction firms have their sights set on the project.

Health and Hospital Corp. of Marion County, which owns the hospital, received 30 applications from companies vying to help oversee the project as construction manager. Health and Hospital CEO Matt Gutwein said the pool has been whittled to 15, with a selection possible in March.

Bids for much of the actual work will be let in September, but interest in the project already is mounting. A Dec. 15 presentation provided by the Indiana Subcontractors Association drew about 400 laborers.

“We plan to be very aggressive in ensuring that local Marion County companies, employers, laborers are aware of the opportunities of this project,” Gutwein said. “We want these local dollars spent locally.”

A project labor agreement, which shuts out non-union workers from participating, will be in effect during construction of the new hospital. Supporters of PLAs say the agreements ensure large projects are completed on time and on budget.

PLAs have been involved in many of the city’s large projects, including Indianapolis International Airport’s midfield terminal, Lucas Oil Stadium and Conseco Fieldhouse.

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  1. to mention the rest of Molly's experience- she served as Communications Director for the Indianapolis Department of Public Works and also did communications for the state. She's incredibly qualified for this role and has a real love for Indianapolis and Indiana. Best of luck to her!

  2. Shall we not demand the same scrutiny for law schools, med schools, heaven forbid, business schools, etc.? How many law school grads are servers? How many business start ups fail and how many business grads get low paying jobs because there are so few high paying positions available? Why does our legislature continue to demean public schools and give taxpayer dollars to charters and private schools, ($171 million last year), rather than investing in our community schools? We are on a course of disaster regarding our public school attitudes unless we change our thinking in a short time.

  3. I agree with the other reader's comment about the chunky tomato soup. I found myself wanting a breadstick to dip into it. It tasted more like a marinara sauce; I couldn't eat it as a soup. In general, I liked the place... but doubt that I'll frequent it once the novelty wears off.

  4. The Indiana toll road used to have some of the cleanest bathrooms you could find on the road. After the lease they went downhill quickly. While not the grossest you'll see, they hover a bit below average. Am not sure if this is indicative of the entire deal or merely a portion of it. But the goals of anyone taking over the lease will always be at odds. The fewer repairs they make, the more money they earn since they have a virtual monopoly on travel from Cleveland to Chicago. So they only comply to satisfy the rules. It's hard to hand public works over to private enterprise. The incentives are misaligned. In true competition, you'd have multiple roads, each build by different companies motivated to make theirs more attractive. Working to attract customers is very different than working to maximize profit on people who have no choice but to choose your road. Of course, we all know two roads would be even more ridiculous.

  5. The State is in a perfect position. The consortium overpaid for leasing the toll road. Good for the State. The money they paid is being used across the State to upgrade roads and bridges and employ people at at time most of the country is scrambling to fund basic repairs. Good for the State. Indiana taxpayers are no longer subsidizing the toll roads to the tune of millions a year as we had for the last 20 years because the legislature did not have the guts to raise tolls. Good for the State. If the consortium fails, they either find another operator, acceptable to the State, to buy them out or the road gets turned back over to the State and we keep the Billions. Good for the State. Pat Bauer is no longer the Majority or Minority Leader of the House. Good for the State. Anyway you look at this, the State received billions of dollars for an assett the taxpayers were subsidizing, the State does not have to pay to maintain the road for 70 years. I am having trouble seeing the downside.

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