Reversals of Fortune (1/15)
Jan 15, 2009 10:21 AM, By Elaine Misonzhnik
“We are making a concerted effort to grow our light industrial business because it’s a market that won’t be as deeply impacted” by the downturn, according to Wing.
Meanwhile, B.R. Fries will attempt to concentrate on education and hospital work, compared to its traditional focus on approximately 50 percent to 60 percent in retail projects, says Fries.
To deal with this new reality, many in the commercial construction sector have been forced to take a defensive stance. In December, for example, as a result of the drop in demand for new work B.R. Fries had to cut its workforce, letting go 20 percent of its office staff and 10 percent of its field staff. Graycor plans to lay off approximately 10 percent of its employee base in the near future, including site superintendents, project managers, project engineers and potentially, those who serve in administrative functions.
In December, the construction industry lost 101,000 jobs following a loss of 82,000 jobs in November, according to the U.S. Bureau of Labor Statistics. Overall, the sector has shed 899,000 jobs since its peak in September 2006. The unemployment rate in the construction sector hit 15.3 percent in December, more than double the national rate of 7.2 percent for all workers. Construction professionals who have not lost their jobs are also feeling a sting, however, since many are now working fewer than 40 hours a week, according to Haughey. With the downturn in new construction expected to last at least into 2010, many firms have no choice but to cut corners, says Wing.
Still, even with all the adjustments the contractors are making to survive in these harsh new conditions, a certain number of bankruptcies seems unavoidable, according to Simonson. Some firms may have borrowed too much during the boom years, while others have focused almost exclusively on residential or retail work, making it harder to keep going when no new residential or retail projects are coming out of the ground.
One aspect of this downturn that could be considered a silver lining is that this would be a good time to attract and train new talent, says Wing. While Graycor plans sizeable staff reductions, it’s still going to hire about six college graduates for its engineer training program in 2009. The program, which takes up to three years to complete and has a final exam requirement, will provide the firm with talented, highly trained professionals when demand for work should begin to climb up, around 2011.
“We need to be prepared to have our best teams moving forward when this is over,” Wing notes.
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