Buildup to recovery
Thursday, April 29, 2004
Forget the darling buds of April. The blossoming of orange pylons and yellow warning tape in Cape Girardeau and Jackson signals construction's growing season, and local contractors agree that early signs point to a productive year.
In the first three months of 2004, the city of Cape Girardeau has issued permits for building and remodeling projects worth $22.9 million in total declared construction cost. At the same point last year -- which contractors agreed was a break-out year for construction -- that total was only $6.9 million.
In Jackson, the year-to-date numbers are also up. As of Wednesday, the city had issued permits for $6.7 million worth of construction. In 2003, that number was $4.1 million. This includes an explosion of commercial permits, which are up to $2.9 million from just $750,000 a year ago.
"We're definitely off to a fast start," said Mike Conrad, code inspector with the Cape Girardeau Division of Inspection Services. "Our numbers keep going up from the last two years. It seems to be steady."
Glen Hinkebein, director of business development for Penzel Construction Co. of Jackson, said he's noticed business picking up a bit, and he said it could indicate a slight upturn in a sluggish economy that had produced a handful of slow years before 2003. As far as he's concerned, more work is not a strain on his company's resources.
"I can't recall a time of saturation," he said. "We've always had plenty of work and we could always handle some more."
Hinkebein indicated that although the area landscape is dotted with construction sites this spring, it doesn't necessarily mean that the local economy is primed for recovery. He said it's necessary to look at the kind of construction going on.
The most visible building sites in town are the big ones: the new federal courthouse, the hospitals' additions, the Marquette Hotel remodeling. But Hinkebein said they are all long-term projects that would probably be going on this summer regardless of the economic climate. He said the real economic indicator is the number of residential and short-term commercial projects, like his company's erection of the Alliance Bank headquarters on Kingshighway.
HInkebein said low interest rates have these short-term commercial projects on the rise. Steve Berry agrees.
Berry is project coordinator for Contrend Inc., which is handling the Capaha Center bank and office space renovation at Kingshighway and Broadway, and also does commercial and industrial construction in the area. He said that the low interest rates have combined with the rising price of steel to pull would-be, mid-level business owners off the fence to start their projects before the interest rate and steel prices go higher.
Berry also agreed that a construction boom hasn't really created a resource problem for his company. Finding qualified and experienced labor that will stick around is always a problem. But he did indicate that with a growing number of contractors regularly using the same subcontractors for jobs, quality, experienced subcontractors can be spread a bit thin in times of heavy construction.
Jerry Clubb of Service Electric is already feeling that stretch. As owner of the Cape Girardeau electrical service contractor, Clubb said he's already loaded down with jobs. Not that he's complaining.
"It's going to be a busy, busy summer," Clubb said. He added that, like Berry, he thinks the recent bulge in construction is due to the initiation of projects that had been delayed by people trying to wait out the struggling economy.
On the residential side of building, company president Jim Roussel of Anchor Construction said this year is looking like it will join 2003 as one of the best years for housing in recent times. He said the amount of work is not a problem because construction workers come to the work. He said he's seen crews from Perryville building in Cape Girardeau and Jackson, and he's gotten calls about jobs in Ste. Genevieve.
Chris Bowen of Bowen Engineering and Surveying said his business has picked up to a maddening pace with the big increase in the amount of commercial development and the number of homes being built. However, Bowen is concerned with the absence of significant industrial construction from the current equation. He said he'd like to see more industry in the area that would bring more people to Cape Girardeau.
Berry also sees this as a problem, not only with the lack of new industry, but with the inability for existing industry to expand. This difficulty stems from the rising cost of steel, which is more heavily used in industrial construction and would offset the appeal of lower interest rates.
Although encouraged by the increase in commercial and residential construction in Jackson and Cape Girardeau over the last two years, most contractors are reluctant to raise the flag of an economic recovery. Though the numbers are up, contractors are still unsure about job and permit growth indicating a resuscitated economy. The shadow cast by recent years of slower business, along with the inevitability of rising interest rates, leads many builders to doubt the current level of construction and development can be sustained.
"It's still too early to tell," said Hinkebein. "There are slight signs of an upturn, but I haven't seen a major jump just yet."
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