The $414 million Kauffman Center for the Performing Arts is a done deal Downtown. Work is winding down on a $330 million expansion of Saint Luke’s Hospital near the Country Club Plaza. And out west, at Turn 2 of the Kansas Speedway, the $368 million Hollywood Casino project has moved to interior work, anticipating completion in early 2012.

All told, more than $1 billion worth of construction project work is phasing out at those three sites as the construction sector continues to fight off the most stubborn downturn since the Depression. That might be bad news, were it not for some other large-scale projects already under way or coming down the pike, construction professionals say. Among them: The $687 million National Nuclear Security Administration facility in south Kansas City, $200 million worth of work for the new Wyandotte County offices of Cerner Corp. near the casino, and farther away, $650 million for the National Bio and Agro-Defense Facility in Manhattan—a massive venture sure to command workers from Kansas City and beyond.

That’s more than $1.5 billion in work right there, which will go a long way toward keeping contractors busy and subcontractors solvent until smaller-scale projects come back on line in greater numbers. And that figure doesn’t include other work like the $57 million Polsinelli Shughart headquarters at the former West Edge development or regional projects like the anticipated $513 million replacement for St. John Mercy Hospital, wrecked by the May 22 Joplin tornado, or even the $564 million headquarters of the U.S. Strategic Command at Offut Air Force Base in Omaha.

But the Biggest of the Big, says David Kendrick, may be the $1.1 billion that Ford Motor Co. will spend to upgrade its Claycomo Assembly Plant operations, a figure that includes construction of a $250 million stamping plant. Ford’s commitment vastly exceeds the $400 million in upgrades previously announced for Claycomo, and is reason for optimism that goes well beyond parochial interests of the region, said Kendrick, business manager for the Kansas City Building Trades Council.

“Ford is far-sighted; Ford saw this thing coming” with the economy when it began scaling back on U.S. operations nearly a decade ago, Kendrick said. “So to see them bring the investment they’re bringing to this area and across the U.S.—I trust the wisdom, the vision and the knowledge of Ford. They’re seeing something on the turn” for the broader economy.

Far from being just a boost for Ford’s employee head count, he said, the Claycomo project would require crane operators, laborers, pipe fitters, sheet-metal workers, roofers and more.“For the construction industry, that’s more than 1 million man-hours before they start turning trucks out on the new lines,” Kendrick said. “And a million man hours at current wage rates is a chunk of change for this economy.”

Such are the silver linings among the clouds in that sector’s downturn. While that work will go a long way toward keeping employment higher than it might have been, plenty of damage has been done.

Dirk Schafer, chief operations officer for J.E. Dunn Construction, said the region’s largest contractor had seen a 40 percent reduction in its field labor work force at the bottom of the downturn; an uptick in activity has brought that figure closer to 30 percent. The professional staff, as well, is a good 20–25 percent below pre-recession peaks.

The only reason those numbers aren’t even more dire, Schafer said, was the NNSA work at Missouri 150 and Botts Road, near the Cass County line.

“Those reductions would have been significantly higher,” without that project, Schafer said. “And not just to us. Over the past couple of weeks, about 700 people have been on site; when we get to our peak next year, over 1,000 men will be on site, so the impact on our company would have extended to the subcontractors that are part of that job.”

The company, he said, had made a commitment as general contractor to ensure that as much work as possible would go to local subs, as well as to minority- and women-owned businesses. Keeping those organizations viable is in Dunn’s interest because when the construction economy does turn, their contributions will be vital.

“The majority of subs on that site are local subcontractors,” he said. “Of the major scopes of work, the excavation was local, the majority of the concrete was with our own work force, the steel—a big component—came from a local fabricator, the pre-cast concrete walls came from central Missouri, and the really big trades, the mechanical and the electrical, are all KC-based firms.”

At this point, and with some measure of stability achieved—painful as it has been—area contractors are looking ahead not just to better times, but to positioning their companies for success with a work force that has been transformed. Kendrick noted that many older construction workers, off the job for extended periods, have opted for early retirement, figuring that even at the reduced levels of retirement pay, they’re better off than by being unemployed waiting for a callback that might never come.

The other end of the work force, says Paul Neidlein of Turner Construction Co., is seeing its ranks thinned as well because there isn’t enough hiring to sweep up those graduating from college with construction-related degrees. One positive effect of that is that those hiring have their choice of top-tier graduates.

“We haven’t laid off a single person,” since the downturn started said Paul Neidlein, general manager for Turner’s Kansas City operations. “In fact, we’ve hired six to eight this year, so we still continue to have a strong belief in maintaining a quality staff and recruiting at universities at the levels where we do. We recruit and staff for the long term; we don’t want to find out in five, eight or 15 years that we have a big gap in staffing because we didn’t hire for two years.”

That’s a lesson J.E. Dunn learned the hard way, Schafer said, after shutting off the hiring spigot when things turned south in the 1990s. “Five years later, when the market came back and we needed someone with 5 years experience, we didn’t have that person, and had to go outside to hire.”

That’s a gamble with poor odds, he notes: “Our batting average on those hires was about .500, so we’d have to hire two people to get the one we really want to keep.” This time around, Dunn is maintaining its intern and college-recruitment programs to keep the pipe-line at least flowing, if not full.

Looking ahead, these executives are hopeful that the big-ticket projects will see them through to more robust times

“If I were looking at this from where I thought we’d be in 2009, I’d have to think it’s at the bottom right now,” Neidlein said. “I would have expected things to get a little bit better by now. I don’t see a significant increase over the next 12 months; hopefully, it will turn sooner than that.”

The current situation is “the worst we’ve ever seen—no question,” said Kendrick. “We don’t call this a depression because there are reasons you don’t want to call it that. When you lose the housing industry to the level we are at now, that’s the financial generator.”

The problem with trying to anticipate a broader recovery, he said, is locked up in the existing housing inventory. “For every repossession of a home, you have two problems: First, somebody who lost that home can’t buy another one for seven years, and second, you have a vacant house, so it’s a two-fold problem.”

Schafer says J.E. Dunn will record a modest increase in revenues, perhaps 2–3 percent, for 2011, but has budgeted for a 10 percent increase in 2012 in anticipation of gathering strength in the sector. But again, the gravitational pull from the NNSA project looms large.

“We think we might even be able to do a little better than projected in 2012,” he said, “but without the benefit of NNSA in 2013, the big challenge is trying to find work and fill up that year.”

 

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