The Building Tradesman Newspaper

Friday, February 03, 2012

Michigan construction still seeking traction

By Marty Mulcahy, Editor

Michigan’s construction economy continues to meander along – picking up the pace here and there, falling back a bit elsewhere – as it continues to try and gain traction in an economy that’s not allowing much progress anywhere in the country.

In many areas of the state, the summer and fall of 2011 finally brought about solid construction employment. According to the Associated General Contractors, Michigan was comparatively one of the construction industry’s hotbeds last year, but that’s not saying much, and gains fell back in our state as fall turned to winter.

Levels of construction activity across the country continue to remain mired in low levels, set back by lack of public investment in infrastructure, the poisonous political atmosphere in Washington, the ongoing dearth of borrowing capital, and to some extent, worldwide debt worries.

Following is our annual informal, completely unscientific survey of construction activity in various regions of Michigan. It’s beginning to look like yet another one of those “turn the corner” years, where there’s speculation that we’re about ready to break out into economic prosperity, but the reality is that we’re not there yet. Unfortunately, it’s becoming a familiar refrain.

Ann Arbor/Washtenaw County – “The end of last year found us wrapping up the largest single project ever in Washtenaw County, the University of Michigan’s Mott Children’s Hospital,” said Greg Stephens, business manager of IBEW Local 252 and secretary-treasurer of the Washtenaw County Building Trades. “It was a great job for the building trades that has come to an end. That’s it in a nutshell.”

Indeed, that “nutshell,” the five-year, $523 million Mott hospital project, also signals the end of a remarkable era of construction prosperity for Washtenaw County. Actually, work opportunities have been declining over the past two or three years – but since the mid-1990s, no area in the state has consistently employed construction workers like Washtenaw County.

The most significant – but hardly the only – driver of that construction work has been the University of Michigan. A few years ago the university had years where they sponsored more than a billion dollars in construction activity. This year, that construction roster is much smaller – but it’s still significant, totaling more than $200 million.

Crisler Arena is undergoing a $52 million expansion and renovation. This summer a $56 million renovation project at Alice Crocker Lloyd residence hall will be complete.

A $46 million addition to the U-M George Granger Brown Memorial Laboratories Mechanical Engineering building is slated to start this winter. An Institute for Social Research addition with a $23 million price tag will be complete in spring 2012. And the $13.7 million renovation of the North Campus Research Complex will wrap up this spring.

There’s other work in the region. Hyundai in Superior Twp. is ready to undertake a 200,000 square-foot, $20 million expansion at its Technical Center.

Chelsea Community Hospital, which has been taken over by St. Joseph Mercy Health System, is building a $60 million renovation to build a new two-story wing, convert all its semiprivate rooms to private rooms and change the main entrance of the hospital that is licensed for 113 beds.

Bay City/Midland/Saginaw area – “A pretty decent year” was 2011 for construction activity, according to Tri-County Building Trades President Bill Borch, who is also upstate business agent for Iron Workers Local 25. “It started slow, but picked up. I think 2012 looks to be a similar year, with work slow until the end of March.”

Dow Corning, Dow Chemical and Hemlock Semi-Conductor in Midland will continue to employ significant numbers of building trades workers this year, especially in the pipe trades.

The $45 million Dow-Tata Center was completed last summer. Construction continues on a Dow joint venture in Midland, at the Dow-Kokum plant, a $322 million facility that will make lithium-ion batteries. A second phase to a Dow Solar Shingle plant will take place in 2012, after a substantial first phase.

The region saw some major windmill farm construction this year, with wind-powered rotors being planted in Tuscola County and in Sanilac and Gratiot counties. Even more will be installed at two additional wind farms, including one that stretches over multiple counties and include 150 windmills.

Pollution control work at the coal-burning Consumers Energy Karn-Weadock plant seems like it hasn’t stopped in recent years, and 2012 will also have its share. Baghouse and maintenance work were performed by the building trades in 2011, and this year, a new scrubber will be added.

One major disappointment announced in December 2011: Consumers Energy’s cancellation of a proposed $2 billion coal-burning power plant on the grounds of the Karn-Weadock site.

 Three significant automotive-related projects will be on the agenda. The Saginaw Metal Casting Operation will see new lines installed. New lines will also be installed at GM Powertrain in Bay City. And Nexteer, operating out of the old GM Delphi plant at M-46 and I-75 in Saginaw, is expected to add equipment and more lines.

Detroit/Southeast Michigan – The construction economy had a few spikes of very good activity in 2011, enough to temporarily clear the benches of jobless workers in many local unions. But while the good times will carry on for some trades into this year, 2012 is looking like another year where most of the construction industry will continue to look for some traction.

“I’m cautiously optimistic about construction prospects for 2012 in Southeast Michigan,” said Rick Haller, president and COO of Detroit-based Walbridge, one of the state’s largest general contractors. “I see upticks in the manufacturing, industrial and chemical sectors, but I can’t say the same about commercial and retail.

“But one thing we learned from what happened economically in 2008 and 2009, is that we’re not a little economic island. What happens elsewhere around the country and around the world affects us. I can’t say how the Greek debt crisis or the oil flowing through the Strait of Hormuz is going to affect us. But the way things look now, 2012 looks to be a solid year for work opportunities, more so than 2011.”

For some trades over the last several years, the local construction economy has been singularly bolstered by the jobs boom provided by the ongoing $2.2 billion Heavy Oil Upgrade Project at the Marathon Oil refinery in Southwest Detroit. Work at the plant will continue into 2012.

Last year, and moving into 2012, the improving automotive industry has also helped pull the building trades up by the bootstraps. Detroit’s Poletown Plant saw a $336 million retooling project.

Chrysler has been building an $850 million paint plant at its Sterling Heights Assembly Plant, and work on a $165 million body shop next door will commence in the coming weeks. 

In 2012, the medical community will also inject some life into the building trades. Some good news: In the past nine months, according to Medical Construction and Design, Southeast Michigan's seven major health care systems have announced or have begun about $2.4 billion in hospital construction projects.

The Detroit Medical Center, now owned by Vanguard, is undertaking a $500 million construction program in Detroit. Included is ongoing work at a $43 million outpatient pediatric specialty center at Children’s Hospital. And ground was broken Jan. 17 on a new $78 million DMC Heart Hospital.

St. Mary Mercy Hospital in Livonia is undergoing an $89 million, 154,000- square-foot South Pavilion addition.  St. Joseph Mercy in Pontiac will start an eight-story tower this summer.

Crittenden Hospital Medical Center in Rochester is undertaking a $68 million addition. Providence Medical Center, Novi, is adding two operating rooms, ($5.9 million). William Beaumont Hospital, Troy, is adding 24 beds and renovating the seventh floor West Bed Tower ($5.8 million).

Public construction is suffering from a lack of funding, but there are bright spots. Construction is starting on a new $220 million Wayne County Consolidated Jail Facility near Greektown in Detroit.

A Walbridge Joint Venture is managing construction stemming from a $505 million capital improvement bond issue sponsored by Detroit Public Schools. A total of 18 projects are being performed under the Proposal S Bond Referendum, including seven new schools and 11 renovations.

The ongoing massive expansion and renovation at Cobo Center in Detroit, to the tune of $279 million, will transform Cobo Arena into a banquet/meeting area and make the exhibition area brighter, wide-open and more user-friendly.

 Defense contractor BAE Systems Inc. has been keeping the trades busy, and is wrapping up a $58.4 million building in Sterling Heights. The trades are currently renovating the interior of the 505,000-square-foot Chase Tower in downtown Detroit for the use of Quicken Loans. 

In the category of stalled projects, the U.S. Department of Energy in December denied a previously approved $730 million loan to Dearborn steelmaker Severstal, halting work on new equipment that would make advanced high-strength steel for the auto industry.

And, a new bridge over the Detroit River remains elusive, with the state Legislature last year unable to come up with a compromise that would allow construction to start.

Flint area –  “Things came out a little better than we expected last year,” said Flint Area Building Trades President Mike Lynch, also a business representative with Bricklayers and Allied Craftworkers Local 9. “It wasn’t a great year – man-hours were still down, but some things came up that helped employment.

“From what I see and in talking to contractors, I think 2012 will be a little better year than 2011 – not a banner year, but a better year.”

What’s on the to-do list in 2012 Genessee County?

The Michigan School for the Deaf has started a major new construction and remodeling project, while renovations on the campus that include work at Powers Catholic High School are expected to start this year. Total price tag: $36 million.

Municipalities in Genesee County are undergoing water treatment plant work.

Mott Community College and Baker College are undertaking work this year.

A Swartz Creek Schools auditorium project will be re-bid this year, about a $13 million job.

The Flint Mass Transportation Authority is building alternative fuel stations for methane and LP-powered vehicles.

G.M. Flint Assembly Truck Plant (they build Silverado pickups) has $338 million allocated for retooling this year, plus a potential for $70 million or so additional to remodel the existing paint shop. The automaker is eyeing an April or May start for work.

GM is also sponsoring $100 million worth of work at its Flint South Engine Plant, where Volt and Cruze engines are made.

Construction on McLaren Regional Medical Center’s $65 million proton therapy center is continuing. Hurley Medical Center’s emergency department expansion and some related work will continue but wind down this year.

Locals have been talking about building a new water pipeline from Flint to Port Huron, with an intake going out two miles into Lake Huron. The price tag: $600 million, with the pipeline intended to lower costs long-term compared to water pumped north from the City of Detroit water. The City of Flint is still mulling the issue.

“We’re still running 35 percent unemployment with about 124 laid off,” said Plumbers and Pipe Fitters Local 370 Business Manager Harold Harrington. “Two years ago, we had about 180 laid off at this time, so things are picking up a bit but we’re not nearly where we should be.”

Grand Rapids/Muskegon – A disappointing year for construction employment in 2010 was followed up by a “kind of flat, but not horrible 2011,” said Mark Mangione, business manager of Plumbers, Pipe Fitters and Service Trades Local 174.

Food processing work “has remained strong” in western Michigan, he said, with Kelloggs (in Grand Rapids) Gerber (Fremont) and Mead Johnson (Zeeland) sponsoring significant renovation or maintenance work. Yoplait in Reed City is also undertaking a $20 million expansion. “That area of work has been relatively resilient to the economy,” Mangione said.

Heating, ventilation and air conditioning service has also been a “fairly steady” jobs producer, Mangione said.

There are some major ongoing projects. Construction of a new $303 million LG Chem battery plant in Holland is continuing, with the facility slated to open in January 2013.

On the flip side, a major hole in the construction landscape was created in January when Fortu PowerCell Inc. –which planned on building an advanced battery plant in Muskegon Twp. – announced that it was delaying the project for two years. The plant carried a $623 million price tag.

A three-year, $135 million program to enhance the environmental performance at Consumers Energy’s J.H. Campbell plant is past the halfway point

A 40,000-square-foot, $15.4 million renovation and addition project at Muskegon’s Mercy Health Partners hospital campus is expected to move this year.

Ludington Memorial Medical Center plans a major facility upgrade in 2012 that will expand the hospital’s emergency and surgery facilities, and create a new main patient entrance facing Ludington Avenue. The $14 million project will take more than a year to complete.

The Grand Rapids Veterans Affairs Outpatient Clinic will move a new building across from Metro Health Hospital in Wyoming. Plans call for building a two-story, 97,370-square-foot building with 550 parking spaces.

School work among upper educational facilities, Mangione said, “has been fair – down, but not completely gone.” Construction of the Mary Idema Pew Library at Grand Valley State University is ongoing, and the existing Zumberge Library will be repurposed. The projects carry a combined price tag of $70 million.

 Construction and renovation work at K-12 buildings in the region “has lots of small projects, but nothing like years past,” Mangione said. The lack of bond issues to pay for building upgrades is an impediment to construction throughout the state.

“I’m a little optimistic that with this being a political year both sides of the aisle will see some benefit to expansion of work in our industry,” Mangione said.

Lansing area – Michigan State University isn’t fretting the future of the FRIB – yet.

 MSU – and the building trades – got a bit of a scare last month when Secretary of Energy Steven Chu seemed to call into question the federal commitment to the $615 million Facility of Rare Isotope Beams project. Work has already begun on campus to make way for the FRIB, which will allow scientists to study rare and fleeting atomic nuclei and matter.

Chu told the Detroit Economic Club: “If you look at all the things we're doing ... and you look at what we think we can afford in a budget projection given our deficit, we are saying ‘Well, we have to be very careful, because we can't be starting six things and we can only afford four things.’ ”

 MSU President Lou Anna Simon said the next day she would have preferred a more “definitive answer” about the future of the FRIB. And on Jan. 25, the university’s point person for the FRIB talked to an audience and “did not sound overly discouraged” with Secretary Chu’s remarks,” according to a building trades representative in attendance. So, at this time, no news is good news on the FRIB’s future.

There’s other work going on in the Lansing area, and the MSU campus has been hosting a construction boomlet over the past two years.

Wrapping up this spring will be the $40 million, 46,000-square-foot Eli and Edythe Broad Art Museum at Grand River Avenue and Farm Lane.

Also to be completed this year is the $43 million, four-story Plant Science expansion, which will connect the Plant Biology Laboratories and the Plant and Soil Science Building.

Wells Hall will have three stories added and about 88,000 square-feet of space above its B-wing, when a $38 million project is to be complete at the end of the year. The new office space will replace creaky old Morrill Hall.

Ongoing renovations to Bailey Hall and Rather Hall are the second and third of six residence halls to be renovated in the Brody Neighborhood. Improvements will be made to the buildings’ infrastructures, common spaces, amenities, resident rooms, and the surrounding site.

Also ongoing on campus is construction of a $17.6 million, 50,000 square-foot Bott Building addition to link with the Life Sciences Building. There’s also a planned chiller replacement in the Main Library.

Off campus, there’s other good news. Especially welcome is the new $182 million combined-cycle co-generation power plant by the Lansing Board of Water and Light, which signed a project labor agreement with the Lansing Area Building Trades.

The natural gas-fueled plant will produce 100 megawatts of electricity and create both steam and electricity. It will be located on the southern edge of the Reo Town business district. The plant is scheduled to become fully operational in early 2013.

A nice side feature: the nearby 1902-era Grand Trunk Western Railroad Depot, located nearby at the intersection of Washington Avenue and South Street, will be renovated as part of the project.

Lansing Community College is undergoing a $30 million renovation at its Gannon Vocation Technical Center and Arts and Sciences buildings.

A new Meijer store is going up in Bath. IBEW Local 665 President Ray Michaels said area Meijer and Target stores have a significant number of stores due for renovation, and they’re often using union crafts.

“I think 2012 should be better than it has been in recent years,” Michaels said. “In general there’s a better work outlook, but it’s a very competitive market with the nonunion.”

Monroe County – Construction work in 2010 and 2011 were consistently inconsistent.

“Nothing stellar the last couple of years,” said Plumbers and Pipe Fitters 671 Business Manager Ron Sweat. “But we’ve been moving in the right direction and 2012 should be a pretty good year for us.”

As DTE Energy’s Fermi II and Monroe Power plants go, so go the fortunes of Local 671 and other trades. Scrubber work started at the Monroe plant last spring, and gradually employed more trades people throughout the year. Small commercial projects and some school work kept a few trades busy. Milan schools built a new bus garage and a new high school concession area.

Mercy Memorial Hospital built a new cancer center and an addition was built at the Gerdau Special Steel plant. In addition, Ventower built structure at the Port of Monroe to assemble wind towers.

Chrysler will continue line modification work at its Global Engineering Manufacturing Alliance engine plant in Dundee. A major rebuilding of the Macomb Street bridge in Monroe is in the offing.

First in line for work in 2012: the Monroe Power Plant will undergo a major 72-day outage, which started Jan. 20. The plant will also see more scrubber work commencing in March. A Fermi II outage will start on March 26 – it’s a 35-day refueling outage.

“The outages and the scrubber work should make this a pretty good year for us,” Sweat said.

Southwest Michigan – The 242-room, eight-story hotel under construction next to the Firekeepers Casino along I-94 in Battle Creek will be a nice anchor for construction employment this year. There will be a fair amount of other work opportunities as well in and around Cereal City as well.

“The hotel construction is a wonderful thing,” said Steve Claywell, business manager of IBEW Local 445. “Overall, there are going to be opportunities to bid in 2012, more so than in 2011, but we’re not expecting a banner year.”

The new Veterans Administration boiler house (see the front page article) has been a boon, especially to the plumbers and fitters. Kalamazoo Community College is completing a new bookstore, and a new student center is expected to start this year.

In the Kalamazoo area, said IBEW Local 131 Business Manager Leroy Crabtree, a “bottom-dollar, ruthless market” for construction bidding is making it extremely difficult for union contractors to win projects. “We see a few projects in the works, but they don’t favor us in any fashion,” he said.

The $56 million Sangren Hall replacement project on the Western Michigan University is ongoing this year. Union electricians for example, are on the project, but WMU is notoriously nonunion.

That segues into the anticipated construction of a new charter school that will be partially sponsored by Western Michigan. It’s expected to be built in downtown Kalamazoo – but prevailing wage language is not expected to be part of the package, and union participation is likely to be spotty.

The Exchange Project is also expected to start this year on Michigan Ave. in downtown Kalamazoo. The multi-use project is expected to include a bank, retail and apartments. But a developer that typically uses nonunion trades has the project. The trades are trying to work with the builder to hire union crafts.

There will be some shutdown work available starting April 4 for 24-28 days at the Palisades Nuclear Power Plant in Covert Twp.

“It was friggin’ awful in the Kalamazoo area in ’09 and ’10, but things started picking up and 2011 was a better year,” Crabtree said. “I’ll stop short of calling it a good year. Our contractors’ traditional customer base did a lot of minor upgrading and service work they had been putting off. In 2012 I anticipate more of the same. I don’t anticipate any big projects.”

Traverse City/N.W. Michigan – “Last year really wasn’t a whole lot better than 2010,” said IBEW Local 498 Business Manager Jeff Bush. “And aside from putting a few more people to work in the oil fields, it doesn’t look like employment will change much this year, either.”

Small jobs and service work continue to be the main sources of employment, Bush said. Some work came from the remodel of a state hospital behind the Munson Medical Center last year. This year, a Target store will provide some employment, as will the construction of housing units at Camp Grayling. There is also some work at the Cherry Capital Airport in the form of a new control tower and service building, and possible installation of new runway lights.

Bush said about a dozen of his members are working in Afghanistan, which not is uncommon among building trades unions in Michigan. Others, he said, have traveled to work in other states. “We’ve not really looking at any sizable jobs this year,” he said.

Upper Peninsula – It was a good year for construction in 2011.

Wisconsin Energies’ Presque Isle Power Plant in Marquette was the recipient of upgrades involving coal dust collection. A new $5 million Oldenburg office building was erected in Kingsford.

At Verso Paper Corp. in Quinnesic, a $43 million project will allow the plant to burn formerly discarded wood to create energy.

Several projects will continue into 2012. Construction of the $25.3 million Great Lakes Research Center in Houghton at Michigan Technological University is creating numerous jobs for Hardhats in the Keweenaw Peninsula. On the shores of Lake Superior in Marquette, a new $7 million Hampton Inn is being erected.

And the big prize that will continue to create construction jobs in 2012: the $469 million Kennecott Eagle Mine on a site 26 miles northwest of Marquette. The mine is expected to yield some 300 million pounds of nickel and 250 million pounds of copper by the time the site is turned back over to Mother Nature in seven or eight years.

“Last year was certainly better than 2010 or 2009, some trades were even fortunate enough to have travelers in their area,” said Tony Retaski, executive director of the U.P. Construction Council. “As for 2012, it looks pretty good. I’m optimistic for a good year.”

Some projects that will keep the U.P. trades working in 2011 include the $100 million renovation and refurbishment of the old Humboldt Mill, which will process ore extracted from the Kennecott Mine.

Building trades workers continue to be employed at the Empire and Tilden iron ore mines performing repair and rebuilding tasks. Retaski said the Empire Mine may go forward this year, or likely in 2013, with building a nugget processing system that utilizes iron ore nuggets that were rejected in their pellet size.

Northern Michigan has one and possibly two projects set to go this year. The long-awaited Ripley Combined Heat and Power Renewable Energy Project is set to start in April. To be built is a new $16.4 million biomass fueled co-generation combined heat and power plant will be constructed as an addition to the existing plant. The new plant addition will be capable of burning wood chips with natural gas as a backup fuel.

A $33 million project to demolish and replace Jamrich Hall (which is primarily classrooms), with a replacement building is awaiting inclusion in the state budget.

Mascoma Corp. announced on Dec. 14 that it signed an agreement with the U.S. Department of Energy to build a commercial-scale hardwood cellulosic ethanol plant in Kinross, south of Sault Ste. Marie. The bid process has begun on the $80 million plant would manufacture ethanol at a rate of 20 million gallons per year by converting pulpwood into ethanol.

Retaskie said the U.P. as a whole “continues to struggle with commercial and residential work. There are just not a lot of projects to bid.”