The Building Tradesman Newspaper

Friday, January 28, 2011

Maybe Michigan has bottomed out?

By Marty Mulcahy, Editor



Michigan’s battered and bruised construction industry may not be ready for a roaring comeback, but will this be the year that shows we’re finally on the road to recovery? The signs point to… maybe.

Here in our annual informal, anecdotal survey of the state of construction in various regions of Michigan, we found pretty much what we expected: an industry whose “new normal” is high unemployment, with general misery, and in some areas, a smidgen of hope for better times ahead.

“We’re going to see some bright spots in 2011, but 2012 seems to be the year everybody is talking about when it comes to a turnaround,” said Patrick Devlin, secretary-treasurer of the Michigan Building and Construction Trades Council. “But I know that’s not what our people want to hear, after all they’ve been through these last few brutal years.”

A few things would help – such as a state Legislature and governor who might be more amenable to the construction of no less than three billion-dollar power plants awaiting state approvals.

And could banks and lenders please lengthen their arms or shorten their pockets and start handing out more money for businesses to perform construction?

Gov. Rick Snyder has potentially made one wish come true: his signal in his State of the State speech that he wants to go forward with the new Detroit River International Crossing is a bit of great news.

Those wishes and others that would help lead to the turnaround of the frail construction industry in Michigan may or may not come true in 2011. In the meantime, at least moving through this year gets us closer to a stronger industry…doesn’t it?

Ann Arbor/Washtenaw County – “I think we finally hit the bottom in 2010,” said Greg Stephens, business manager of IBEW Local 252 and secretary-treasurer of the Washtenaw County Building Trades. “I think we’re going to start coming back this year.”

No surprise that the University of Michigan was the area’s major employer last year, and that will continue into 2011. Unfortunately, the list of projects on campus has many more projects that are complete than are ongoing. That list is led by the $523 million Mott Children’s Hospital Replacement Project, likely the largest project ongoing in the state.

Also ongoing at U-M are the $49 million Couzens Hall renovation and the $102 million Law School Academic Building and Hutchins Hall Law School Commons Addition, and Crisler Arena renovation ($20 million). A $46 million next-generation nano-mechanical engineering lab will start this year on the North campus.

There’s more work at Eastern Michigan University. The $90 million renovation to the Jefferson Science Complex continues into this year, as will the $28 million renovation of the Pray-Harrold building.

In downtown Ann Arbor, two towers with residential floors above ground-level commercial space above below-ground parking decks are both scheduled to start this year. One is called 601 Forest, the other, Zaragon II.

A $90 million transportation hub combining the resources of Ann Arbor and the U of M is planned on Fuller Road, to work in conjunction with a planned regional light rail system.

The addition to the Ann Arbor Municipal Building is winding down. And speaking of winding down, the trades are tearing out equipment and ending an historic era at the shuttered Willow Run Hydromatic plant.

Just announced earlier this month, Toyota said it would spend $50 million over five years to establish an auto safety research center at the its Technical Center in York Township and Ann Arbor Township.

Chelsea Community Hospital is beginning a $60 million renovation to build a new two-story wing. A new parking deck is going up on the campus of Washtenaw Community College.

The former ACH plant in Ypsilanti was sold to Angstrom USA, a global manufacturer of tubular parts supplied primarily to the auto industry. Angstrom will rehabilitate the plant.

“Our employment situation is different between this year and last year,” Stephens said. “Last year was brutal, there was no place anywhere in the country for our people to go to work. This year we have people in other states, and we have some projects coming up here at home.”

 

Bay City/Midland/Saginaw area – “You can’t sugar-coat it, it’s been a tough couple of years,” said Tri-County Building Trades President Bill Borch, who is also upstate business agent for Iron Workers Local 25. “I know things have been better for the plumbers and fitters and the boilermakers, but most trades you’re going to find are in the 30-60 percent unemployment range.”

Borch said since November 2009, only five or six commercial projects have gone out for bid in the region. And he said there is a glut of relatively new, and in some cases, never-occupied commercial and retail buildings that will likely push back demand for new buildings for years. “It’s pretty bleak around here,” Borch said.

There are some projects going on. Bids went out this month from Saginaw Valley State University to expand the Ryder Athletic Center (price tag: about $7 million). The Soaring Eagle Casino in Mt. Pleasant is expected to build a 45,000 square-foot water park this year.

Central Michigan University is expected to proceed with approval of construction ($20 million) of a Holiday Inn hotel just east of Kelly/Shorts Stadium.

General Motors is investing $12.7 million in revamping its Bay City plant to increase production of the Ecotec 1.4-liter engine used in the Chevrolet Cruze and a 1.4-liter powerplant used in the Chevrolet Volt.

Dow Corning, Dow Chemical and Henlock Semi-Conductor in Midland will continue to employ building trades workers this year – with many of them nonunion. Pipe trades union members are unique in that they have enjoyed thousands of man-hours in recent years from expansion projects at those plants, and those companies will sponsor more work this year.

“We have been given a shot with them and were able to meet and exceed their expectations,” said Plumbers and Steamfitters Local 85 Business Agent Scott Brink. “We should do fairly well once again with employment this year with those companies.”

Brink said Local 85 has enjoyed three years of good employment, in great part thanks to work at Dow and Hemlock. He said this year will get off to a slow start, then should ramp up after the first quarter.

Consumers Energy is spending $189 million on new pollution controls as part of its “Pulse Jet Fabric Filter Project,” a task that will result in the construction of two new pollution control systems at the plant’s coal-fired Karn Units 1 and 2. Construction is expected to wrap up in the first quarter of this year, although work will be available during an outage at the plant beginning in March.

 

Detroit/Southeast Michigan – The region enters the third year of continued employment trouble in the construction industry, and we wish we could say there’s a major turnaround in sight. There might be, but it’s not likely to be a seismic shift.

“I think 2011 is going to be a lot better than 2010, but that’s not saying much,” said retired Greater Detroit Building and Construction Trades Council Business Rep. Ed Coffey.

Rick Haller, president and COO of Detroit-based Walbridge, said 2011 “will be a year in which we start to see improvement.”

Haller said the automotive industry likely is moving toward the end of its recent building cycle, and “we’re really going to have to rely on the public sector” to sponsor construction projects in the near future. “I generally have a positive outlook on the economy in Michigan,” he said. “I think we’re going to be more active in 2011.”

At Severstal in Dearborn, work on a galvanizing line and coal mill will provide work this year. Extensive re-tooling to the tune of $336 million is taking place at Detroit’s GM Poletown plant. The trades are getting significant employment from a $500 million bond issue to renovate and remodel a number of Detroit Public Schools.

Raleigh Michigan Studios will complete a new 427,000-square-foot soundstage in Pontiac this spring. Also winding down is the $145 million re-tooling of the GM-Lake Orion plant to build a new Chevrolet and Buick subcompact.

The Detroit Medical Center, now owned by Vanguard, will commence a $500 million construction program this spring. A $43 million outpatient pediatric specialty center at Children’s Hospital and a $110 million cardiovascular building in Detroit’s Midtown are on the to-do list.

The four-year, $2.2 billion Heavy Oil Upgrade Project at the Marathon Oil refinery in Southwest Detroit is due to significantly ramp up employment this year, Coffey said.

Renovation work continues at Detroit’s Cobo Hall.

The Detroit River International Crossing – a proposed new span south of the Ambassador – could start this year if a new set of state Republican lawmakers approve the project.

In the health care area, St. Joseph Mercy Oakland in Pontiac received state approval in December to build a $126 million patient care tower. St. John Providence Health System received an OK from its corporate parent last month to spend $30 million in capital projects at three of its six hospitals in Southeast Michigan.

“We’ll see a better year, but clearly Michigan is going to be behind the curve of growth in construction compared to other states,” Haller said.

Flint area – “It’s not that jobs are going nonunion around here,” said Flint Area Building Trades President Mike Lynch. “That’s not the problem, we’ve got a pretty good handle on that. The problem is we’ve had high unemployment for the last four or five years, and the work just isn’t here. There’s not enough pie to go around for everybody.”

Last year, the project to transform the Durant Hotel into student apartments was completed. New apartments were also created in the former Character Inn/Hyatt. Most work was also completed on the Chevy Volt plant.

In 2010 construction started on McClaren Hospital’s Proton Cancer Treatment Center, and work continues into this year. The same is true with Emergency Department work at Hurley Hospital. Work is winding down on the first phase of the Swedish Biogas Plant at the Flint Wastewater Treatment plant, but another phase is expected to start later this year.

This year the Michigan School for the Deaf is planning a major remodel and new construction in conjunction with Powers Catholic High School. There is expected to be significant firehouse work in Burton. Several new substations are planned for the Flint Mass Transportation Authority. Mott Community College is finishing a library. Sporadic small projects are ongoing in some auto plants, but nothing significant is ongoing.

“We’re having some success getting PLAs on a few projects, but what we really need are the banks to let some money loose to lend so we can get things moving again,” Lynch said.

IBEW Local 948 Business Manager Wayne Carlson said 2009 was “probably the worst year around here in the last 25 years, and last year was a little better, but not a lot better.”

Carlson said there’s potential good news for Flint and the region. He mentioned the growing acceptance of project labor agreements and chatter about construction work being sponsored by GM. “There’s a lot of money being talked about,” he said, but nothing has been announced by the automaker. He also cited the renewed focus on newly constructed housing for the University of Michigan-Flint and Kettering University, and the added people who will live downtown.

“We’re expecting over 1,000 college students to live downtown, and it’s really encouraging to see that happen,” he said. “I’m an optimist at heart.”

Grand Rapids/Muskegon – “We’re somewhat optimistic that we’ll return to some kind of normal in 2011, but it seems like everything out there, whether it’s because of lenders or government involvement, is moving at a snail’s pace,” said Mark Mangione, president of the West Michigan Building Trades Council and Business Manager of Plumbers, Pipe Fitters and Service Trades Local 174.

Last year, he said, was “a really disappointing year.” Years of work on “Hospital Hill” in Grand Rapids wrapped up. School work in the K-12 sector has been spotty, with union and nonunion firms getting parts of projects. A new high school in Fremont has gone out for bid.

Higher education work has been scant, with a new residence hall at Grand Valley State University just about complete, and a library project set to begin in the spring. A $103 million powdered milk plant being built in Coopersville has gone nonunion.

A $60 million renovation and expansion project of a jail in the village of Baldwin is expected to go this year. It will take in out-of-state prisoners. The Unit 2 SCR work at Consumers Energy’s Campbell plant is wrapping up, and an 88-day outage for work on Unit 1 began earlier this month.

There has been some work tearing out old presses and other machinery and equipment from abandoned GM property and from Sappi Paper in Muskegon, on their way to installation in plants in other parts of the world.

Fortu Powercell Inc., a German-Swiss-based advanced battery manufacturer, will invest $623 million in a plant that will build lithiom ion battery cells for vehicles. It is expected to become Muskegon’s second largest industrial employer.

“It used to be that we’d have people steadily building strip malls and shopping centers and other commercial work, but that’s pretty much stopped,” Mangione said. “Last year was just uneventful, and there’s not a lot of light at the end of the tunnel. It’s been tough for everybody.”

 

Lansing area – “We had a couple of disappointing years, with 2010 pretty much a continuation of 2009,” said Scott Clark, business manager of IBEW Local 665. “But I’d have to say that I’m cautiously optimistic going into this year.”

Optimism is hard to suppress, given the pending construction of a $182 million natural-gas fired co-generation plant this year in Lansing’s Reo Town. The 176-megawatt plant will create both electricity and steam for the Lansing Board of Water and Light. Ground is expected to break in June.

In addition, Michigan State University is expected to undergo a construction boomlet this year, primarily targeting upgrades to several of the school’s residence halls.

A $50 million renovation project at Brody Hall is just about complete. But other halls that are set for significant renovation work this year include Emmons Hall, Rather Hall, Bailey Hall and Wells Hall.

Work will also proceed this year on a $5.4 million high-bay addition to the MSU Cyclotron, Eli Broad Museum ($40 million fundraising goal), Plant and Soil Science addition ($40 million, with an additional $49 million potential to perform renovations), the new $17.6 million Bott Building for Nursing Education and Research, and two greenhouses ($8 million total).

A pro-Project Labor Agreement policy adopted by MSU is expected to lead to the exclusive use of union labor on some of those construction projects, or at least result in enhanced opportunities for union employers at MSU.

In other news in the area, voters in the St. Johns School District approved $60 million in bond money for remodel and renovation work in the district, and the building trades unions are attempting to get a PLA approved for that work.

Construction on a three-story Ingham County 911 call center is expected to start in the spring in Lansing. A $20 million Art and Science Building renovation at Lansing Community College is expected to start mid-summer. GM is expected to spend $37 million on remodeling its Delta Twp. plant. GM’s Lansing Grand River Assembly is expected to see a $190 million equipment installation package this year for a new Cadillac platform. The plant’s shutdown will be in June or July.

Addition retail – yes, retail – is due to be constructed at Eastwood Town Center. The Phase II project is expected to result in the construction of buildings for 60 retailers. A parking deck is also to be constructed.

The massive refurbishment of the former Lansing Board of Water and Light Building into the headquarters building for the Accident Fund will come to an end about March.

“I feel a lot better about the work situation, especially toward the fall and winter of 2011,” Clark said. “The Lansing Building Trades have worked really hard on getting owners, school boards and council members educated about PLAs, and I think that will really help us in the future.”

Monroe – Usually, as work at DTE Energy’s Monroe Power Plant and Fermi II plant goes, so goes prospects for work for area building trades.

“It was a slow year for the fitters in 2010,” said Plumbers and Pipe Fitters Local 671 Business Manager Ron Sweat. “The boilermakers and maybe some other trades had some work, but not us.”

At the Monroe Power Plant, work on scrubbers and a new stack were completed last fall. At Fermi II, a 25-day refueling outage in October and November of last year helped put the trades to work. Sweat said Fermi II, with its refueling outages scheduled every 18 months, won’t be much of a factor in providing employment in 2011,

But at the Monroe powerhouse, a significant Fluid Gas Desulfurization absorber tower project is expected to start in late February or early March. Sweat said work should then pick up in May, “and we should be in pretty good shape after that.”

Elsewhere in the region, work continues into the first half of this year at Chrysler’s Global Engine Manufacturing Alliance plant in Dundee. A 115,000 square-foot Ventower manufacturing facility – which will build shafts for windmills – is under construction near the Port of Monroe.

Gerdau Macsteel is talking about plans to implement a $30 million expansion, although there are no firms plans as of this writing, and no guarantee it will go union, Sweat said.

“Overall I’d say 2011 won’t be as bad as last year, but our hours won’t be close to being back to normal,” Sweat said.

Southwest Michigan – “Last year was pretty flat,” said Hugh Coward, Business Manager of Iron Workers Local 340 and President of the Southwest Michigan Building Trades Council. “We would have been in pretty bad shape if it weren’t for the powerhouse and nuclear industry.”

He said outages last year at the D.C. Cook and Palisades nuclear power plants, plus federal stimulus money to pay for road and bridge work, created steady employment for some of the building trades.

Elsewhere, there have been a number of projects employing workers, but many of them employ what Coward called a “mixed bag” of union and nonunion contractors.

The new Toda Battery Plant in Battle Creek, a good construction employer last year, is about ready to start production. A similar size Phase II project should follow. Inside the same industrial park, ClydeUnion Pump is undertaking a $15 million addition. Also in Battle Creek, Rosler Manufacturing is undergoing a $15 million addition.

Maintenance work is ongoing at the Kellogg’s and Post plants. “I’m hearing a lot about pent-up demand for maintenance work, especially in Battle Creek,” Coward said. “Hopefully, these people are finally going to spend some money.”

Also in Battle Creek, the newly built Firekeepers Casino has put out for bid a seven-story hotel and convention center on their campus.  Kelloggs Community College is sponsoring a small remodeling project.

In Marshall, Oaklawn Hospital is sponsoring a $20 million to $30 million surgical addition. At Western Michigan University, construction of a new $69 million Sangren Hall dormitory replacement is just starting, and a new $12.5 million apartment complex on campus will move forward this year.

The new Gun Lake Casino finishes up next month. That’s the first of three phases; there’s no work yet on the planned construction of a parking deck and expansion of the casino, which is not comparably large.

In Hartford (west of Kalamazoo) a satellite of the Four Winds Casino in New Buffalo just started construction on Phase I –  building the casino itself. Long-term, a hotel and convention center are also planned.

In Holland, construction continues on the $100 million LG Chem Battery Plant, which will be capable of producing enough battery cells for 200,000 hybrids and electric cars, and will be making the cells both for the Chevrolet Volt and the upcoming Ford Focus Electric.

Decent-size outages in the fall are planned for the Palisades and D.C. Cook plants.

“I’m personally optimistic about 2011, but at the same time, you can’t hold your breath waiting for these projects to be announced,” Coward said.

Traverse City/N.W. Michigan – “There’s just not a lot of work out there,” said IBEW Local 498 Business Manager Jeff Bush. “This year probably won’t be as good as last year, but things could be worse.”

In 2010, a three-story building at 101 Park Street in Traverse City was a good employer, putting to work about eight electricians for most of last summer.  Other employers were a Benzie Transit Authority Building, some oil field work, and various service projects.

This year the trades may get employment from a new $40 million to $50 million cancer center at Munson Medical Center in Traverse City, addition/renovation work at Cadillac Hospital and a new public safety center in Petoskey.

The list of potential projects is short, and there’s no guarantee they will go union. Bush reports 14 of his members are working in Afghanistan.

“We may have a few more people working at this time than we did last year, but they’re working at a lower scale,” Bush said. “There’s a lot of competition, everybody and their brother bids on projects these days.”

Upper Peninsula – An uptick in work opportunities in the second half of 2010 has lifted hope for work prospects, said Tony Retaski, executive director of the U.P. Construction Council.

“I think we have a positive outlook to report for 2011,” Retaski said. “A lot of economists said we hit bottom in 2010, and we saw some improvement in man-hours toward the end of last year. It’s slowed through the winter since then, but I’m optimistic for this year.”

One major reason for optimism: From summer to fall last year, about 100 construction workers were employed at the Kennecott Eagle Mine. Work has proceeded at a lower level during the winter, but the warmer months this year should see greater employment.

The proposed underground mine, about 20 miles from Marquette, has a high concentration of nickel; and would be the only primary nickel mine in the world. The project will also include the $80 million refurbishment and/or replacement of the nearby 1960s-era Humboldt Mill, which has sat unused since the 1990s.

There’s other mining work ongoing as well: renovation work at the Empire and Tilden iron ore mines. A new nugget processing system could bring $250 million in new equipment to the Empire Mine.

At the former K.I. Sawyer Air Base between Marquette and Gwinn, Renewafuels last year completed construction on a plant to biofuel cube pellets. The cubes are made of sustainably collected wood and agricultural feedstocks.

Also built last year was the first Best Buy store in Marquette – and the nearest Best Buy is in Green Bay, Wisconsin. “They came in looking for union contractors,” Retaskie said. “That was a help.”

Projects expected to go this year include $35 million in renovations to Jamrich Hall at Northern Michigan University in Marquette. Also at NMU, there are plans for the construction of a scaled-down modification to the Ripley Heating Plant, which would include using biomass and natural gas to create energy.

The Michigan Tech University Great Lakes Research Center, currently under construction, will house laboratories and classrooms supporting researchers and students working with Great Lakes biological, chemical and physical studies. Cost: $6.8 million.

“Some of the guys I talked to at the Kennecott Mine said they hadn’t had jobs in a year and a half,” Retaskie said. “It’s nice to see people back to work.”