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Mark Van Sickle works on the new home of the Greene County Jail, a joint project between general contractors DeWitt & Associates Inc. and J.E. Dunn Construction Group Inc.
SBJ photo by McKenzie Robinson
Mark Van Sickle works on the new home of the Greene County Jail, a joint project between general contractors DeWitt & Associates Inc. and J.E. Dunn Construction Group Inc.

Building 2021: Strong backlog, labor shortage lead local contractors into new year

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Despite year-end national reports of average construction backlog plunging and project activity slowing, some local industry leaders have optimism for the new year.

Heading into 2021, the area’s 17 largest general contractors’ backlog was up 19% over the previous year to a cumulative $534 million, according to Springfield Business Journal list research. Meanwhile, national trade group Associated Builders and Contractors reported in December that its construction backlog indicator declined to 7.2 months in November, down 1.7 months year over year.

Springfield Contractors Association board member and Prestressed Casting Co. Vice President Dave Robertson isn’t surprised by the strong local numbers at the end of 2020. Given his three decades working in the industry, he said southwest Missouri often is insulated and behind the curve of national trends, noting local construction activity was strong through COVID-19 shutdowns.

“Here in Missouri, we had quite a bit more freedom to make decisions at the local level on what we could do during COVID,” Robertson said. “We’ve just had more opportunity to continue construction work and design work, which is really the key for 2021 so we can move forward with better continued backlog than what you see nationally.”

2020 impact
Like other construction leaders, Robertson said he anticipated a much larger drop in work and backlog than he experienced in 2020.

“The work was maybe a little bit of a different flavor work. There was some things that didn’t occur that we thought was going to, but there was other work that did,” he said.

GR Stovall, president of DeWitt & Associates Inc., said the firm’s $65 million backlog, up $5 million from the previous year, is within normal fluctuations. DeWitt & Associates specializes in public education and government projects.

“It’s hard to tell what could have happened if COVID didn’t visit us last year,” Stovall said. “I feel very fortunate to be where we’re at given the circumstances.”

Stovall said he wondered early in 2020 if the shift toward virtual learning amid the COVID-19 pandemic would “dampen campus expansion.”

“But we’ve got a higher-ed project on the books now that is slated to start this summer and a K-12 project slated to start in a few weeks,” he said of projects with College of the Ozarks and the Ozark School District.

Michael Nesbitt, president of Nesbitt Construction Inc., said a delay in two projects valued at roughly $500,000 each impacted his backlog at the end of 2020, which was $2.2 million, but it’s since rebounded with those projects moving forward in 2021.

“We’re sitting alright for the first quarter,” he said. “I know there is a lot of stuff out there that is coming up to bid. I’m pretty optimistic about what is coming.”

Nesbitt said the key indicator he watches is architects’ billings and design timelines. He said projects that were delayed in second quarter 2020 rallied at the end of the year. He expects bidding for new projects to pick back up in February and March.

He said one delayed project for Nesbitt that is now starting in first quarter is a shopping center renovation. He said he has three such projects on the books.

Rich Kramer, president of Rich Kramer Construction Inc., is more cautious on his outlook for 2021. The firm’s backlog at the end of last year was $14.9 million, down from $16.9 million the year before. He cited a decrease on project delays due to the pandemic. Looking into 2021, he said the presidential election of Joe Biden and the Georgia run-off election, which will determine the balance of power in the U.S. Senate, will impact construction activity as developers may be less likely to build under the new administration. As of Jan. 6, it appears both Democratic candidates won their bid in the race, creating a Democratic majority in both chambers of Congress.

“If the Republicans retain the Senate, I think projects will go forward because there’s some balance,” he said. “If they don’t, there is going to be unfortunately some serious brakes put on this economy.”

Robertson agreed that the construction economy will be impacted by the new administration’s policies, which will affect whether the industry experiences a recession in 2021. Some industry experts, including a chief economist with the ABC, said a surge of COVID-19 cases, a lack of stimulus from Congress, and supply chain difficulties and price increases would result in a W-shaped recovery.

“There is going to be some volatility in materials this year and labor is the biggest challenges, Robertson said. “We had the COVID recession, which was an unnatural recession.

“The growth that we’ve had has been very solid for quite a period of time. If you look at cycles, a recession is looming.”

Labor shortages
Despite a healthy year for many local general contractors, they agree labor shortages remain a pressing issue for the industry.

ABC said the industry would need to hire an additional 550,000 workers in 2020, but the COVID-19 pandemic halted those plans. In the latest figures from the trade association, Missouri had the second lowest construction unemployment rate among states, at 3%. Nationwide, construction lost 1.1 million jobs in March and April last year, according to ABC, and by the fall had added back nearly 700,000 jobs.

Kramer said the tight unemployment market makes it hard to find new employees, and there have been temporary shortages of workers due to COVID-19 exposures.

“With different subcontractors, we’ve lately been experiencing COVID infections and have been getting over it, thank God, but it’s been running rampant in the last 30 to 40 days,” he said. “The workforce challenge has been getting increasingly worse from the standpoint of getting younger folks to work with their hands, minds and working outdoors.”

Nesbitt said he’s had applicants out of high school or who are recently unemployed, but not enough applicants with experience.

“I don’t really see the market being flooded with skilled workers,” he said.

Robertson said the workforce has been declining for the past few years.

“We have to be more cautious of how we approach our backlog and make sure we can perform what we commit to. It’s just progressively getting more difficult,” he said. “We’ve had a labor shortage that’s really driven by the culture of where we were putting our students and what industries we were driving them into and the stigma of construction. That’s going to take a while to turn around.”

Stovall, who is active in representing the industry at the high school and college levels, said he continued to meet with students throughout 2020.

“I am convinced that our industry will always be needed, and we need those younger folks in our organization,” he said.

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