Treasure Valley subcontractors still wait for good times

sberg@idahostatesman.comJune 18, 2013 

Three years ago, construction subcontractors would have eyed the looming completion of three huge projects with some apprehension, wondering whether enough new work would follow to sustain their businesses.

But here we are in 2013, a year or so from the projected finish dates of the 8th and Main tower, Jack's Urban Meeting Place and The Village at Meridian, and most "subs" around the Valley seem merely to be focused on the next project.

The projects have been a big lift. You don't put down $400 million of work in a community of 600,000 without raising the spirits of the people who earn a slice of that money. Even the subcontractors who haven't been hired to work on them benefited, because the developers' demand for workers thinned out construction crews' competition for other jobs.

With the end nearing, subcontractors don't seem worried. They've already survived one of the toughest periods their industry has ever faced. Hardship has tempered both hope and fear.

"We'd gone through this in the '80s, but that was nothing compared to this," says Mike Ramsay, owner of Reliable Electric, a small electrical contractor in Boise. "This time just really flipped us."

Business has picked up and subcontractors are finding work more easily, says Jamal Nelson, project superintendent for 8th and Main's general contractor, Engineered Structures Inc. In harder times, Nelson says, the end of a big project could bring a lot of layoffs to construction companies around the Valley. This time, "I don't think it's going to be injurious," he says.

But the tide isn't rising fast enough to lift all subcontractors' boats. And there's nothing on the commercial construction scene to suggest a return of the roaring 2000s anytime soon.

"It's not a little slow. It's a whole lot slow," says Nick Drake, commercial project manager for Drake Mechanical in Boise. "Construction's a joke."

Randell Hodgkinson, owner of Randell Concrete in Boise, has a different take: "In my opinion, the business is picking up, but the profits are too low."

Hodgkinson says profits have suffered since the housing market's collapse five years ago. Suddenly, concrete contractors who specialized in residential work couldn't find any. They turned to commercial and industrial work to survive. But many weren't prepared for the additional costs associated with the commercial-industrial sector's more robust bonding, insurance and licensing requirements, Hodgkinson says, and they underbid competitors who had more experience.

Maybe that trend will reverse now that housing construction has picked up, he says: "I'm hoping that they eventually move back into the residential and get away from the commercial-industrial,"

Drake says he can't afford to make bids as low as would be necessary to win some contracts. "I'm not going to buy work," he says.

The Great Recession and the slow years since have forced subcontractors to adapt. When the new construction market dried up, Drake shifted his focus to service on existing work, such as maintaining residential and commercial air-conditioning systems, water heaters, drains, water lines and toilets. He doesn't expect that to change soon.

A competitor, Buss Mechanical Services in Boise, looked out of state for work when the local market weakened. Co-owner John Buss says picking up jobs in North Dakota, Washington, California, Texas, Alaska and other states was critical to keeping the company going.

Over the past eight years, Buss Mechanical has helped build 200 grocery stores for customers such as Fred Meyer, Safeway, Wal-Mart and Albertsons. The company's local portfolio is growing again, Buss says, but he intends to keep pursuing out-of-state work.

Ramsay started shopping around for better prices on materials instead of buying from the same wholesalers. He says he didn't draw a salary from his business for four years and lived off his savings.

Ramsay was also better positioned to survive the lean years, because he'd avoided the temptations of the fat ones.

"We were able to hang on, I guess, basically because of one thing, and that was the old-time philosophy: You just save your money. Save things. Don't be buying a lot of stuff. And that's what I think got us through," he says. "When things were going so well, the young ones kind of had an itch to spend money. You know, new trucks and all that stuff. And so, there's the difference right there."

Hodgkinson, the Randell Concrete owner, diversified. He did any work he could get anywhere. He helped build a bridge over Johnson Creek near Yellow Pine. He did concrete work for a mine in the same area when the price of gold skyrocketed. He built a rappel tower in Texas for the Army and another at a Boy Scouts of America camp in West Virginia. He built the shell of a munitions building at Mountain Home Air Force Base for the Republic of Singapore Air Force.

"If you're selling ice cream and all you do is sell ice cream, and it's wintertime, nobody's buying your ice cream. So you've got to sell hot dogs too," Hodgkinson says. "If all I'm doing is sidewalks and curb and gutter, and that's all I know how to do, then I'm going to run out of work."

Many subcontractors' workforces shrank over the past five years. They laid off workers, or the workers quit or retired.

The hard years that began with the Great Recession left the Valley's survivors with a grim determination. They're leaner and more flexible than they've ever been. Slow is their new normal.

Nelson likens that trying process to culling a herd. He thinks the subcontractors left standing are better positioned to exploit the construction revival he believes is coming.

"The fit got lean," he says. "The fit survive."

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Sven Berg: 377-6275

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