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Ugly era for Michigan construction

Date Posted: January 22 2010

The odometer has flipped from 2009 to 2010, but no one associated with the construction industry will forget what may have been the worst year for the building trades in Michigan since the Great Depression.

“There were – and are – a lot of local unions with 50-, 60-, or 70-percent unemployment,” said Patrick Devlin, secretary-treasurer of the Michigan Building and Construction Trades Council. “I know a lot of building trades families are going through hell, losing cars, homes. Michigan has been in slumps before, but we’ve never seen it where our workers couldn’t find some work, somewhere in the country.

“The tough part is, everything that is happening is really out of our control.”

Apparently, much of that control rests in the hands of the people who control the money. Credit has grown increasingly difficult to get. Even state funding for road and bridge construction will be significantly down, as the State of Michigan budget faces consistent funding deficits.

Across Michigan, there are a few geographical pockets that are doing somewhat well, but for everywhere else, it isn’t pretty. Across the nation, the construction unemployment rate climbed in December to 22.7 percent.

Following is our annual informal and completely unscientific roundup of what is typically a dismal level of construction activity in various parts of the Great Lake State:

Ann Arbor/Washtenaw County – “If you want to talk about construction work around here, it won’t be a long conversation,” said IBEW Local 252 Business Manager Greg Stephens. “Last year was a tough year, and it followed three tough years.”

Public and higher education construction, once again primarily led by work sponsored by the University of Michigan, was the saving grace for building trades workers in the Washtenaw County area.

The massive $523 million C.S. Mott Women’s and Children’s Hospital – one of the top two or three largest ongoing construction project in the state – is in its third year of construction. The University of Michigan Stadium Renovation and Expansion Project will add multi-story masonry structures on the east and west ends of the stadium and include 83 suites and 3,000 club seats. Also ongoing on the U-M campus is the new $175 million North Quad Residential and Academic Complex.

There are other projects that will employ the trades in 2010, but the list isn’t nearly as long as it has been in years past. Much of the public school work has dried up. St. Joseph Mercy hospital is starting a new patient tower. The Jefferson Science Building is just coming out of the ground at Eastern Michigan University in Ypsilanti. A new dorm is slated to be built at Washtenaw Community College. Ann Arbor is building a new water treatment plant, as well as a new municipal building. Leoni Twp. is building a new sewer treatment facility.

“I believe we’re going to see better times in 2010,” Stephens said. “But just about all the work we have on the books is in the public sector. We have to see some of the money being loosened up in the credit markets so we can get some private work started.”

Bay City/Saginaw/Midland area – There have only been a handful of light commercial, light manufacturing or retail construction permits pulled in the Tri-County Bay Region since November 2008.

And that tells much of the story for the fortunes of construction for most trades in the region, said Tri-County Building Trades President Bill Borch, who is also upstate business agent for Iron Workers Local 25. “Other than a few shiny spots, we’re looking at a very slow employment picture for 2010,” he said.

That’s not to say there aren’t several big-ticket projects, and for the pipe trades at least, not a bad outlook. For other union trades, the jobs picture isn’t as good, as nonunion contractors have a foot in the door for much of the work.

Dow Chemical, in a joint venture with Kokam America Inc. are procuring the last of federal dollars needed to build a $665 million, 800,000 square-foot advanced lithium-polymer battery plant in Midland. Borch said he is “cautiously optimistic” that a significant number of union trades will get a piece of the action – Dow has been using nonunion labor for years.

Dow Chemical, Dow Corning and Dow’s Hemlock Semiconductor plants have been undergoing about $1.8 billion in construction over the last two years or so. They’re building capacity for polycrystalline silicon, a material needed to produce solar cells, as well as the production of gas used in solar cell manufacturing.  Scott Brink, BA with Plumbers and Steamfitters Local 85, said the “tail-end” of that work will be bid this month, and all the associated work will wind down in the spring of 2011.

Other ongoing work includes a new $20 million tower at Midland Hospital, and a $28 million College of Health & Human Services Building for Saginaw Valley State University that will be complete this year.

GM is investing $37 million in its Bay City Powertrain plant to produce engine parts for the 2011 Chevrolet Volt and Cruze electric cars.

Suniva, a Georgia-based maker of high-efficiency, low-cost solar panels, is planning to invest $250 million in a new plant in Saginaw County.

GlobalWatt will gut an existing building in Saginaw and invest $177 million in a  solar parts facility.

Construction of the $2 billion Karn Weadock clean-coal plant took a step closer to a start last month, when it received a state air quality permit. But with legal action coming from environmental groups, substantial construction is likely about two years away. However, the Units 1 & 2 at the plant will get baghouse upgrades in the spring.

The proposed $1 billion Wolverine Power House in Rogers City could be considered “dead in the water,” Borch said, awaiting state air quality permits that likely won’t be approved under the Granholm Administration.

At Central Michigan University’s Rose Arena, work is ongoing on a $21.5 million renovation that will include an events center, adding a main entrance to the arena and a practice gym and revamping seating.

While Brink of the Plumbers and Steamfitters said the region would probably be taking on pipe trades travelers by springtime, Borch said the outlook is a “lean year” for the rest of the trades.

Detroit/Southeast Michigan – Good riddance to 2009 – perhaps the worst year on record in the area for construction employment since the Great Depression. Hello 2010: will you be an improvement?

“It’s all about whether the money starts moving again,” said Ed Coffey, newly retired business representative for the Detroit office Michigan Building and Construction Trades Council. “If the car companies start making a comeback and spend money again on their plants, I’m optimistic. Things haven’t changed much around here – so much is tied into the auto industry.”

And the auto companies are starting to loosen their purse strings on plant work – at least a little.

At the Detroit auto show last week, Ford announced it would invest an additional $450 million in electrification initiatives in Michigan, including moving future battery pack assembly or hybrid vehicles from Mexico to Michigan.

The investment will impact several Michigan Ford facilities, including Michigan Assembly, Wayne Stamping, Van Dyke Transmission in Sterling Heights and the Product Development Center in Dearborn. The plants will need to be renovated to allow the assembly of components for the next-generation hybrid electric vehicle, a plug-in hybrid with lithium-ion batteries.

GM is investing $336 million in the Detroit-Hamtramck assembly plant where the Chevrolet Volt will be produced, complete with lithium-ion batteries made at a GM facility in Brownstown Twp.

GM is also renovating its Orion Twp. plant to accommodate production of its next generation small car.

Idled in 2007, the Ford Wixom plant will be undergoing a $725 million rehabilitation project, which will create what’s being call the nation’s largest renewable energy park. Xtreme Power and Clairvoyant Energy plan to retool the plant to build solar panels and utility scale batteries for generating renewable power. Work is expected to commence after the real estate deal closes, which is not expected until springtime.

Among the civic projects undertaken by the building trades, few are as large as the $57 million renovation of the Guardian Building in Detroit. The renovation work on the upper floors has allowed Wayne County to move their offices from the Wayne County building a few blocks away. That first phase is complete, a second phase this year will transform space in the building for tenant use.

A major push will reinvigorate construction at the Marathon refinery in Southwest Detroit, beginning in March. Last February, Marathon announced that in order to better align the completion of the Detroit Heavy Oil Upgrade (DHOUP) project with changes in Canadian oil sands production projections and to optimize the completion of this project, the scheduled start-up date for the refinery has been deferred until mid-2012. The cost of the project has increased approximately 15 percent to $2.2 billion due to additional costs associated with the project deferral as well as a scope change that will allow the Detroit refinery to process heavier and higher acidic crudes.

BAE Land and Armament Systems plans to tear down all of the obsolete manufacturing and office areas at the old TRW site in Sterling Heights, renovating it into a two-story office area and building a new office building and engineering area. There also will be a track in the back of the facility to test combat vehicles for the U.S. Army Heavy Brigades. Projected investment: $31.8 million.

Coffey said Severstal is expected to go forward with its plans for a new coal mill on its grounds at the former Ford Rouge plant. He said there is some projected work at the McNamara Terminal at Metro Airport, and the Smith Terminal will be demolished at some point. A good-size U.S. Army tower is going up in Warren.

A number of major health care projects were completed and taken off the construction books last year, including the McLaren Health Village in Independence Twp., two major Henry Ford projects, at West Bloomfield and a Detroit expansion, and the Troy Beaumont Emergency expansion. Health care work in the area will be thin in 2010.

Proposed movie studio work in Allen Park and Pontiac haven’t really gotten moving. School work is scarce, although the 238,000 square-foot Marysville High School project is proceeding nicely.

“We were actually projecting a pretty decent year in early 2009,” Coffey said. “Then the money dried up and everything was mothballed. I think in 2010, we’re going to be on the mend a little bit.”

Flint area – “Last year was very slow,” said Flint Area Building Trades President Zane Walker, also a business agent with Iron Workers Local 25. “Very little work was coming out of the halls, and most people traveled out of the area to find work. This year doesn’t look like it’s going to be a stellar year either, but there will be some work here and there.”

At the top of the list is the $250 million renovation of the Flint Engine South plant. The trades are prepping the plant to make the 1.4-liter 4-cylinder Chevrolet Volt engine. There are also rumors of a new production line at the old Flint Truck and Bus building.

Next door on Bristol Road at Flint Metal Fab, a $40 million project will involve tearing old metal presses and installing new ones.

Renovations costing $60 million at McLaren Health Care in Flint will yield a new Cancer Center.

A $30 million to $40 million Swedish BioDiesel plant will be located at the old Buick City plant in Flint.

Mott Community College is building a $9 million library.

Work continues, albeit slowly, on the $30 million renovation of the historic Durant Hotel. And the old Flint Hyatt hotel is looking like it might spend $23 million on upgrades, for student housing at nearby U-M Flint.

At the old Suncrest building, Lapeer County Medical Facility will build a $12 million addition.

Between Lapeer and Genessee Counties, four water treatment facilities will be built, costing millions of dollars. A number of schools will also be built in both counties.

“The guys who get work these days are guys who hustle,” Walker said. “When you hear of work out of town, you can’t wait two or three days to decide whether you’re going to take it. You have to snap it up.”

Grand Rapids/Muskegon – At the beginning of 2009, the state’s recession hadn’t quite caught up with the construction industry in West Michigan, although a few trades were hurting.

Fast forward to January 2010, and  “it has just been a steady decline all year,” said Mark Mangione, president of the West Michigan Building Trades Council and Business Manager of Plumbers, Pipe Fitters and Service Trades Local 174. “They say construction is a lagging economic indicator, and that was the case around here. Work has steadily dropped off.”

Work on the “Hospital Hill” in Grand Rapids is winding down, with the $250 million Helen Devos Children’s Hospital the only substantial project remaining to be finished after more than a $1 billion in construction work along Michigan Street over the past few years.

There are a few potential bright spots, but they aren’t necessarily projects that will go union, and they might not get off the ground at all.  Three battery manufacturing facilities are being proposed, two in Holland and one in Muskegon. A casino is being proposed for Muskegon. A new $103.2 million powdered milk plant is being proposed by Continental Dairy Products for a vacant Delphi facility in Coopersville.

Grand Valley State is adding more dining and residence areas to its Allendale campus to the tune of $52 million.

Under a Dec. 23 West Michigan Business Review article titled “West Michigan construction on hold,” a number of local money handlers said that in many cases, money to build is available. The problem is, few are asking for it.

Said Mike Peters, senior vice president and principal at Fishbeck, Thompson, Carr & Huber in Grand Rapids: “Financing, I think, is much more available than some people might think – but it’s what you mean by the word ‘financing. Is there money out there? Yeah, I think there’s money out there. Are there people willing to invest and lend it? Well, that gets beyond just the fact that there’s a pool of money – now you’re getting into people questioning the viability of the venture.”

Mangione said although there is currently anywhere from 30 percent to 50 percent unemployment among union crafts in the regions, there’s “reason for optimism” in 2010 in West Michigan.

“It looks like there’s some work coming up, and we’re going to have to work to make sure it goes union,” he said.

Lansing area – While short- and long-term work prospects at Michigan State University are encouraging, the lousy economy is having an “unprecedented” negative impact on the area’s construction workforce, said Scott Clark, business manager of IBEW Local 665.

“We’re going to get some relief in 2010, but with the budget problems of state and local governments, we’re still trying to turn the corner,” Brink said.

The encouraging news coming out of the Michigan State campus is that the $49.8 million expansion of Brody Hall will continue into this year, and the planned renovation of other nearby residence halls, like Emmons, are expected to work under a project labor agreement.

The $550 million Facility for Rare Isotope Beams (FRIB) at MSU is still about three years away from starting construction.

Construction is continuing on the new $182 million Accident Fund Headquarters, which is transforming the Ottawa Street Power Station near downtown Lansing. Lansing Community College is sponsoring some moderate-sized projects, and some work has come from GM’s Delta Township plant

The $85 million expansion of the Delta Dental headquarters campus in Okemos will continue into a new phase this year, with the renovation of the existing headquarters building.

“Last year was probably our worst ever in terms of unemployment,” Clark said. “The electrical industry hasn’t seen any effect, good or bad, from the federal stimulus. We’re hearing that money might start moving into the private and public sectors and that good things might start happening by April. But even then, it’s going to take a while for things to start moving again.”

Monroe – Last year “we had a good run up until about June,” said Plumbers and Pipe Fitters Local 671 Business Manager Ron Sweat. “But the second half of the year kind of sucked.”

This year, he said, “shows some promise, but it’s going to be slow getting started.”

DTE Energy will continue with scrubber work at its Units 1 and 2 at the Monroe Power Plant. And a 12-week or so outage is expected to take place at the plant beginning March 12. Another outage will take place at the Fermi 2 Nuclear Power plant beginning in the fall, probably later September or early October, for a length of 25 days or so.

The Chrysler Engine Plant in Dundee is due for a $170 million remodel to made a new Fiat engine, but that’s not expected to start until later in the year.

School work is light in the Monroe County area, and “most everything else is dead in the water,” Sweat said. “This year won’t develop much until the third quarter, If we can just hang on until it comes.”

Southwest Michigan – “I would call 2009 flat, it wasn’t doom and gloom by any means, but we had to fight and scratch for everything we got,” said Hugh Coward, Business Manager of Iron Workers Local 340 and President of the Southwest Michigan Building Trades Council. “This year we’re looking at more of the same, but farther out, 2011 might be better.”

The area’s biggest project last year, the $300 million Firekeepers Casino in Battle Creek, opened in August. A phase II conference center and hotel at the site likely won’t get off the ground this year.

The Gun Lake Band of Pottawatomi have cleared most of the hurdles for a new $157 million casino in Wayland Twp. – except financing, which means construction may not start in earnest until 2011. The work will be performed under a project labor agreement.

Toda America Inc. plans to open a new $70.1 million plant at Fort Custer Industrial Park in Battle Creek to build lithium ion batteries in conjunction with a Johnson Controls plant in Holland.

Work continues on renovations and additions to Battle Creek Central High School, part of a $67 million bond issue that also included work on an elementary school.

Two major outages will commence at the D.C. Cook Nuclear Power plant (starting in the spring) and at the Palisades Nuclear Power Plant (starting in the fall).

There are a number of mid-size jobs in the region. Construction of a new airport terminal at the Battle Creek/Kalamazoo Airport is proceeding. The new terminal will be 33,000 square feet larger than the current facility and cost $40 million. The second phase will include a new control tower.

Western Michigan University in Kalamazoo is expected to sponsor two projects. But the Sangren Hall renovation, with a price tag of $60 million, is awaiting state funding. And an apartment/dorm complex is a go, but will likely have little union participation.

Covance Inc. said it plans to open a $14 million nutritional chemistry and food safety laboratory in Battle Creek, working in conjunction with Kellogg’s.

The VA Hospital in Battle Creek will be sponsoring a good-sized boiler project. The Army reserve is funding a $10 million new building in Battle Creek. American Axle in Three Rivers is expected to have some line work.

The old Kellegg’s Cereal City USA Museum will be renovated and expanded to the tune of $18.8 million into a building that will house Battle Creek Area School District’s Area Math and Science Center.

“It’s looking like another flat and stagnant year, with a lot of smaller projects,” Coward said. “In talking to the other building trades, and looking forward, there’s not a lot of optimism.”

Traverse City/N.W. Michigan – With 106 journeymen laid off at IBEW Local 498, amounting to 60 percent unemployment – “it’s not good around here,” said Business Manager Jeff Bush.

There are 13 Local 498 members working in Afghanistan and Iraq. A few electricians are working in area oil fields applying heat tape to fittings, and a few are working service calls. Any medium or large jobs that went union are complete, and any projects in the region that have been available have been won by nonunion firms.

“Basically guys are picking up anything they can right now,” Bush said. “The competition is working so cheap that we can’t even use targeting money against them.”

Upper Peninsula – “It was a very, very slow year in the U.P. in 2009,” said Tony Retaski, executive director of the U.P. Construction Council. “We had a few projects that just never came to life. We have a lot of workers traveling throughout the U.S. We look forward to 2010 being a better year.”

There are several large-scale projects that look to provide significant employment in 2010. A new $16.5 million residence hall at Michigan Tech University in Houghton is ongoing. There are significant K-12 school projects in Houghton and Hancock, including a new school and renovation work.

Retaskie said state permits were issued last month for the $55 million upgrade of the Ripley Heating Plant at Northern Michigan University, and now arranging funding is the next step. The plant would burn wood chips for fuel.

Only a federal groundwater injection permit is needed for final approval of the Kennecott Eagle Mine, a $100 million investment in an underground nickel mine on land located 20 miles north of Marquette.

The proposed mine has a high concentration of nickel and would be the only primary nickel mine in the world. The project would also consist of the $80 million refurbishment of the 1960s-era Humboldt Mill, which has sat unused since the 1990s.

The NewPage Paper plant near Escanaba is expected to sponsor a large-scale boiler project, but not until the fourth quarter of the year.

Renewafuel has won state grants and is planning on remodeling two hangars at the old K.I. Sawyer air base near Marquette to build a new biofuels plant. The company, owned by Cliffs Natural Resources, would make 150,000 tons of biofuel cubes that can be burned in place of coal by power plants, and burn cleaner. The cubes are a composite of collected wood and agricultural feedstocks, which will be supplied by local farmers and loggers.

Construction is continuing on the new Mackinac Straits Hospital in St. Ignace, a new $37.2 facility. Skanska USA Building is managing construction of the project, a two-story hospital that’s being erected on the north side of the city along the I-75 Business Loop on the north side of town. Work is scheduled to wrap up this spring.

A $300 cellulosic ethanol plant is also still in the works, but probably won’t start until 2012. Such a plant would create ethanol through a process that utilizes enzyme-secreting micro-organisms to convert hardwood pulp material into ethanol. Mascoma and J.M. Longyear LLC are proposing to build the plant on an old airbase in the Upper Peninsula’s Kinross Twp., about 15 miles from the Soo.

“We’re looking for 2010 to be a better year,” Retaski said. “There are some fairly significant projects in the industrial sector that have some real potential to help us thrive,” he said.