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Views differ on health of Carolinas’ construction industry

By Tara Ramsey

At least one economist sees the commercial construction industry in the Carolinas as recovering. But many industry experts have a different view for the industry they see as just now hitting bottom.

Anirban Basu, chief economist for Arlington, Va.-based Associated Builders and Contractors, analyzed the economy last week for the Carolinas Construction Conference in Wilmington. The construction industry in North and South Carolina is in a “recovering” mode, he said.

Among other things, Basu cited publicly financed construction activity stemming from the federal stimulus package approved in February 2009.

North Carolina, which has an unemployment rate of 10 percent, lost 20,300 jobs between June 2009 and 2010, Basu said. South Carolina lost 8,700 jobs during the same period and has an unemployment rate of 10.7 percent.

Basu said that despite difficulty with bank lending and poor job creation, the Carolinas have weathered the worst of the recession.

Dave Simpson, North Carolina building director for the Carolinas AGC in Raleigh, agrees that lending is strict and jobs are scarce. People in the industry are scrambling to survive, he said.

“From everything I’m hearing, the situation in the construction industry is grim,” he said Wednesday. “And there’s no immediate end in sight. Banks aren’t lending the money, and there’s just not much work out there. I was visiting with some contractors in the Triangle yesterday and they told me that in recent months everybody was complaining about having 30 to 40 different companies bidding on work as small as a $3 million job. Now they wish there was work out there for a $3 million job.”

Simpson said contractors are doing everything they can to cover payroll expenses and pay their bills.

“I always try to be as optimistic as possible, but in this case, I’ll believe it’s over when it’s over,” he said.

He said more work, such as road construction, and easier access to bank loans would give the construction industry a big economic boost.

Construction is one of the best ways to stimulate the economy, he said, adding that an extra $1 billion in nonresidential construction spending would create or sustain 28,500 jobs. It would add about $1.1 billion to personal earnings, according to the Associated General Contractors of America.

Residential construction is also struggling, in large part because of high unemployment, said Lisa Martin, director of government affairs for the Raleigh-based North Carolina Home Builders Association.

Martin said some of the members of the homebuilders association have struck an economical bottom.

“We’re starting to see some business coming back,” she said. “There is some optimism. Not that we are in a quick turnaround, but we might have inched up. But we’re not at a point where we’d say we’re recovering.”

In Charlotte, the home construction industry has not improved, according to Mark Baldwin, executive vice president of the Homebuilders Association of Charlotte.

“I don’t see new house prices going any lower,” Baldwin said. “We’re at the bottom. These are times we haven’t been through before and we really don’t know what to expect.”

In North Carolina, there were 171,400 people employed in construction in June, down from 173,000 in May, according to the U.S. Department of Labor.

There were 79,200 people employed in construction in South Carolina in June, up from 78,400 in May, according to the DOL.

On a national level, construction employment decreased by 11,000 between June and July 2010, while the industry’s unemployment rate fell to 17.3 percent, according to the national AGC.

Tara Ramsey can be reached at [email protected].

Construction cuts

There were slightly fewer jobs in construction in North Carolina in June than in May, according to the U.S. Department of Labor.

June    171,400

May     173,000

Decline: 0.9 percent

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