POSTED: Sunday, Jan. 31, 2010

Bleak year expected in Whatcom County construction

If Whatcom County's economy is hoping for construction to turn things around, it may be waiting at least another year.

While there are pockets of activity, this year is shaping up to be a challenging one for general contractors, particularly when it comes to commercial projects.

"2010 is looking bleak, but there are some opportunities to make money," said Liz Evans, northern district manager of the Associated General Contractors of Washington. "Local contractors are still looking outside the area for work, but there are a few major projects around here later this year."

January and February is typically the time when spring and summer projects start going out for bid and contractors are deciding how many they'll tackle. For the big projects, it's been a relatively poor start, worse than last year, said Steve Isenhart, vice president of Tiger Construction. There are far fewer city, county and school projects to bid on, he said.

"It's pretty tough right now and it means some real belt-tightening is taking place," Isenhart said.

The belt-tightening is being seen in the employment numbers. In December there were an estimated 6,000 people in the construction industry, according to the Washington State Employment Security Department. That's the lowest total since April 2002, when there were 5,900 people employed in the industry. At its peak, in September 2006, there were 8,900 people employed in construction.

It's also led to a very competitive bidding process. Isenhart was monitoring the bidding process for the Bellingham Technical College's new 70,000-square-foot Campus Center building. Originally estimated at $29 million in December 2008 and most recently estimated at $21.5 million, he expects the winning low bid to be significantly lower, possibly slightly under $16 million. The official winning low bid is expected to be announced next week.

While it's been tough finding large projects, there appears to be an uptick in some of the smaller residential and public works projects. Kristen Hansen of HBHansen Construction said they've been getting more calls recently to build custom homes; last year more of the inquiries were for home remodels. The company usually peaks at 30 employees in the spring and summer, but may need to hire a few more this year. Many of their custom residential projects are in the Point Roberts area, where the company is also working on a planned residential community.

"I'm feeling more optimistic than I was last year," Hansen said. "Commercial is still very slow and financing is a much lengthier process, but we're getting phone calls every day."

Construction is expected to remain depressed across the U.S. Earlier this month the Associated General Contractors of America released a survey indicating nearly nine out of every 10 contractors believe there will be no recovery in 2010.

"As long as the construction industry remains mired in its own depression, broader economic and employment growth will continue to lag," said Stephen E. Sandherr, the association's CEO, in a press release accompanying the survey.

Other results from the national survey, which involved nearly 700 contractors:

• 10 percent of those surveyed admit they are submitting bids so low they will actually lose money on the projects.

• 73 percent of the firms laid off employees in 2009.

• 60 percent of the firms are unsure whether they will be adding new staff.

When looking for signs that construction activity will start picking up, Isenhart said he checks with architects to see what they are designing. Right now, architect firms are very slow in Whatcom County.

"This is going to be one of those years where we finish up what we got and lay low," Isenhart said. "It's something we've seen before."

CONSTRUCTION PROJECTS ON TAP

While 2010 is expected to be a slow year, there are significant projects in the works. Here are a few examples:

Road construction: The Washington State Department of Transportation has several projects in Whatcom County that are scheduled to go out for bid this year, including improvements to the Interstate 5 ramps in Bellingham and improving the interchange on I-5 in Blaine.

Port of Bellingham: The port has $33.8 million in its capital improvement projects budget scheduled to go out for bid later this year, with about $26 million slated for runway and terminal improvements at the Bellingham International Airport. There will also be some work done at the Squalicum Marina and the Bellingham Cruise Terminal.

BP Cherry Point: The refinery facility is still in the midst of a $50 million shop relocation project, with construction of a large warehouse expected to start in the middle of 2010, said Michael Abendhoff, a spokesman for BP Cherry Point. Dawson Construction of Bellingham is the general contractor on the project. There will also be regular turnaround/maintenance done work later this year.

Western Washington University: Renovation work of Miller Hall will continue throughout much of 2010.

Bellingham Technical College: Bidding was just completed on the new 70,000-square-foot Campus Center building.