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Sunday, 08 June 2014 22:00

Local firms expect to do better than national design, construction projections

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While the national outlooks for the architecture industry point to a slow or flat growth trajectory for the coming months, that’s not translated into a slowdown for West Michigan design firms and contractors.

A new report from the Associated General Contractors of America (AGC) based on U.S. Bureau of Labor Statistics data shows that all areas of West Michigan added construction jobs in April compared to a year ago.

Both the Grand Rapids-Wyoming and Battle Creek areas tied for a ranking of 17th out of 339 metros nationwide for the largest 12-month job gain in the construction sector, according to the AGC. Each region posted a 15-percent increase in construction jobs for the period, with firms in Grand Rapids adding 2,000 jobs since last April, bringing total construction employment to 15,400.

Meanwhile in Battle Creek, firms added 200 jobs for a total of 1,500 in April. That far outpaced hiring among firms statewide, which grew at 4 percent for the period from April 2013 to April 2014.

As business development director for Grand Rapids-based construction company Owen-Ames-Kimball Co., Josh Szymanski told MiBiz that his firm has seen steady work in the industrial, commercial and health care sectors. Where O-A-K is really experiencing growth, however, is in the education space, particularly K-12.

The uptick for O-A-K in K-12 construction can be attributed to the near across-the-board passage of school bond votes in early May, Szymanski said. As MiBiz previously reported, 81 percent of bond votes statewide to support school capital projects passed on May 6.

“The overall economy drives commercial and industrial real estate people’s attitudes,” Szymanski said. “As long as the economic climate looks good, we will continue to get deals done.”

The uptick in work for O-A-K has led the firm to do small amounts of hiring, Szymanski said. Specifically, the construction company has added an estimator, an assistant superintendent and a handful of interns.

“We continue to watch subcontractor staffing closely as many of these folks are also carrying healthy workloads and seek experienced staff,” he said. “We’re also encouraged that a number of the design firms in town are seeking experienced talent. (That is) a good sign of things to come.”

But while contractors have been hiring more workers lately, one outlook for future work is still stuck in negative territory.

The Architecture Billing Index for the Midwest has remained at contraction levels for the last six months, registering a level of 47.0 in the most recent report for April that was released late last month.

Architectural billings are an indicator for construction spending nine to 12 months out, according to the American Institute of Architects, which compiles the report. Any index level below 50 indicates respondents projected a decrease in billings.

At least one West Michigan design firm says the trends reported by the AIA are not aligned with current business conditions in the region.

“The decrease (in billings) reported by the AIA is not our experience,” said Arnie Mikon, CEO of Grand Rapids and Kalamazoo-based architecture firm TowerPinkster. “We expect our billings to be up about 10 percent this year … and we are doing a little bit of hiring.”

Like O-A-K, TowerPinkster’s growth at present is in the education sector, with a combination of higher education and K-12 projects.

Nationwide, inquiries for architectural services were up for the third month in a row and design contracts turned positive, according to the AIA. But billings remained in negative territory for the second consecutive month, the longest slide in the past year. Residential and commercial/industrial work remained mostly steady across the country, but institutional projects dipped.

The index for new design contracts in April was a “healthy” 54.6, which AIA Chief Economist Kermit Baker said “should translate into improved billings in the near future.”

“Despite an easing in demand for architecture services over the last couple of months, there is a pervading sense of optimism that business conditions are poised to improve as the year moves on,” Baker said in a statement.  

MiBiz Managing Editor Joe Boomgaard contributed to this report.

Read 3865 times Last modified on Sunday, 08 June 2014 22:00

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