1. The changing nature of the work force raises questions about the role of unions in this region, said Rory O’Connor. | 2. Low interest rates have prompted companies to refinance, using the savings for new building, said JoLynne Bartolatta. | 3. Joe Sweeney observed that contractors do far more with less and may likely continue lean operations until the market recovers. | 4. Darin Heyen reflected on the cost of that development in terms of manpower and morale of workers.

“For years they had all the cards, and now clients are negotiating with other banks and there’s more competition for interest rates and length of the term. A lot of our non-profits are able to go and get a little compensation from the financial industry, finally, which they didn’t have for a long time.”

Lenders are more conservative, Dirk Schafer said, and they are trying to minimize their risk by pushing it downstream. “As a contractor, we’re being asked to do things that before, we have not been asked to do,” he said. “I think that’s a big thing. Not only is money harder to come by, but we’re being asked to take more risks.”

Mike Callahan said that’s more lik-
ely a product of increasing regulation. “Regulation changed during the height of the recession,” he said. “It made it difficult for them to lend, even though a lot of them probably wanted to. That trend has not been reversed. I don’t know if it’s a trend anymore, the regulations are what they are, put in place several years ago. The spigot hasn’t been turned on from the regulatory side.”

Regardless of the source, said Richard Wetzel, the community is paying for past practices. “We over-built, so if you want a piece of dirt and you want to build an office, and there’s no rent stream, I think that’s when banks are going to say, no thanks. In 2005, it was ‘Just give us the deal and we’ll give you money.’”

Tom Whittaker said private investment, with cash sitting on the sidelines, was looking for ways to access the market. “Right now, the equities market is a good place to park money,” but he thinks the private equity players, in looking for investment opportunities, are “putting a lot more risk on the contractors. They want an almost guaranteed return.”

The Next ‘Big Thing’

Noting the completion of many mega-deals in the region over the past decade, the conversation turned to how contractors sustain momentum in the absence of nine-figure projects.

“We still have that one great big job in the marketplace that’s taking us into this current year,” Rosie Biondo said, referring to the National Nuclear Security Administration’s $687 million project in south Kansas City. But after that, “I think the numbers are going to come down again on the inside work.”

Projects of $30 million or $40 million in value will come up occasionally, she said, but rarely. “We’re going to see more million-dollar, $500,000, even $100,000 projects.” As a result, “companies are going to have to rethink how they operate altogether. I think some are going to make it and some aren’t.”


An Altered Work Force

Asked about the impact of the downturn on the work force, Paul Neidlein noted the brewing crisis well down the road. The downturn masked concerns about the numbers of people entering construction jobs, but a rebound will demonstrate the depth of the problem, he said. And farther out, “30 years from now, who is the skilled labor going to be and where is it going to come from? The trend is ‘that’s a bad job’ that’s what people thought for a long time. People thought for a long time they had to go to college and have some sort of profession. But it’s not a bad thing to go be an electrician—you can make more” than in some degreed lines of work.

Rory O’Connor questioned how long Kansas City might remain a union market, given the disruption in longstanding wage rates and worker status within organized structures. “We are all familiar with the trends of how much construction goes union and how much goes non-union,” he said.