Things are somewhat slow in the construction industry right now. It's a fact readily admitted by those in the field, though nobody's panicking. In fact, most experts agree that there is no reason to panic because the slowness is seen as only a temporary phase brought about by fears of recession, a new administration, and inclement weather. Still, when times have been as good as they had been in Mississippi for the past several yearsÑ-a period of record growth and build-upsÑ-any slowing down can have a detrimental effect. Those surveyed in this, the Delta Business Journal's second annual focus on the Construction industry "Building the Delta", have seen all of this before, however. They realize that theirs is a cyclical business and that, while times are good, preparations must be made for leaner times, such as the industry is experiencing now. Moreover, these professionals are savvy enough, and industrious enough, to know where and how to find new work when the well runs dry. It's a resilience these Delta contractors, engineers, and architects are known for. "Overall, the industry in the last quarter was slow in new projects coming out," says Mike Upchurch, of Upchurch Plumbing. "We're now seeing it pick up somewhat on the bid market, though." Upchurch says that, like every other firm in the Delta and Central Mississippi, Upchurch Plumbing is excited in seeing the arrival of Nissan to the area. "Actually, it's not so much the Nissan facility and their people coming in," Upchurch observes. "It's the facilities that will be coming in trailing Nissan to offer support services. That is the main excitement for most of us in the industry, all of the support and manufacturing facilities that will be coming in along with Nissan. Here in Greenwood, for example, we have a lot of empty buildings and we're getting some interest on the part of some of the smaller manufacturers in occupying them." So does Upchurch think that Nissan's arrival will be Mississippi's saving grace? "Well, the question is do we want more industry coming in or not?" he answers rhetorically. "The answer has got to be yes, especially with the casino construction slowing down as it has. We need this shot in the arm, I believe. Other than Nissan coming in, we really have not had much industry activity to report, certainly nothing of this magnitude. I think now with Alan Greenspan lowering the interest rate, we'll see more activity come around eventually, but it's going to take some time for all of this to take effect. My prediction is that we'll see a slight increase in work in the rest of the first quarter, and definitely more work in the second quarter." Several factors had detrimental effects on the construction industry over the past few months, Upchurch notes, most notably the state's financial woes. "The shortfall in the state budget that Musgrove announced in the State of the State address hurt, no doubt," he says. "Construction dollars are down subsequently whereas they had been very strong before. So public works and buildings, particularly school projects, are going to be way below average." In down times, Upchurch says his company has to look outside its immediate geographical area for additional work to sustain business. "As a matter of fact, in the last two months we've bid more work in the Jackson market than we did all of last year," he says. "We've also done work in Alabama, Vicksburg, and Natchez." Not that Upchurch forgets his roots. "We do most of work in the Delta, of course," Upchurch notes, mentioning several projects his company has been involved in: the new emergency room addition at King's Daughter's Hospital in Greenville, the new medical facility/doctor's offices in Grenada ("a major undertaking" Upchurch says), the new middle school in Greenwood, a new school in Robinsonville, two school renovation projects in Cleveland, the new Indywood retirement home in Cleveland, and the United Methodist Church in Cleveland as well. Upchurch, who was recently elected as the new president of the Mississippi ABC (Association of Builders and Contractors), credits his outstanding staff for his company's reputation as top notch firm. "We have a great bunch of people here," he says. "There is little or no turnover, and many of our employees are family members and folks who have been here since my father started Upchurch Plumbing in 1970." Sid McMillan, manager of business development for JESCO, Inc. says his company, a multi-faceted concern based out of Tupelo, has experienced a good year, in spite of the dragging economy. "Of course, like so many other things, it depends on what part of the market you're in," McMillan says. "For example, there's still a strong market in the condominium and gaming industry, which our parent company, W.G. Yates Construction, is heavily involved in. The industrial sector is down, of course, which you would know by just a casual glance at the paper. Manufacturers are increasingly conservative today, and are being very cautious and wary. The upside for Mississippi, however," McMillan continues, "is that activity is up due to the Nissan announcement. There's been a tremendous amount of interest from parts suppliers in locating here, so we're all busy chasing them and doing preliminary groundwork in anticipation of their arrival. Within the year, we'll hopefully see some of these companies turning dirt. JESCO's bread and butter is the 100,000 sq. ft., plus or minus, manufacturing facility, so that's where we are looking for future work. I believe we'll eventually see 15 to 30 of these companies locate to Mississippi, possibly more. If it weren't for Nissan, my activity would be slow." George Malouf, of Malouf Construction, is also very optimistic about the arrival of Nissan to Madison County. In fact, his firm has already gotten some work from the company. "We are the design build contractor for the new Nissan training facility, and it's going in the Canton industrial park," Malouf says. "The facility will be what Nissan will utilize between now and when they build a permanent training site. We're set to finish the first stage of the project the first of June, and the second phase in July. More than likely, Nissan will hire a large general contractor with experience in automotive work for their major plant construction, but we are obviously excited about working with them and showing our capabilities. They are good people to work for, without a doubt, and we've been very pleased with the relationship." Commenting on the industry as a whole, Malouf says, "The market is still solid, I think, and indicators are that non-residential construction looks good for the next five years. Now we are in a situation where capacity is outreaching demand and the bank market is real soft, so we have a lot of companies competing for the same projects. It's been very tight." As far as Malouf Construction goes, however, Malouf says that "we like what we see. We've had some great opportunities on the design build side and also on the state-bid side. We've been pretty well balanced on our project load." Malouf mentions several prominent Delta projects as evidence of these opportunities. "Well, Highway 82 has been really good to us this past year," Malouf laughs. "We've done the expansion work on 82, as well as work in my hometown of Greenwood at Viking's new distribution center. We have also done a major expansion on the Heartland Processing plant in Itta Bena, as well as work on the Delta Center in Indianola, several clinics in Greenville, and major work at the Greenville Iron and Metal facility there at the port. We're also engaged in several projects with the Corps of Engineers," Malouf says. Having just stepped down as chairman of the Mississippi Construction Education Foundation, Malouf is immensely proud of the progress that organization has made in construction workforce training. "Our curriculum is in 85 to 90 percent of the vocational schools in the state," he notes, "with over 5,000 high school, and 500 adult apprentices, involved, and the Delta is our major focal point. I can't say enough about Mississippi Delta Community College and how they have been a tremendous partner with us in helping to deliver our programs to these students." Based on this, and the workload his company is experiencing, Malouf is optimistic about the industry, in particular the future for the Delta. "We think the Delta's best times are still ahead," Malouf predicts. Mike Rozier, of Rozier Construction Company in Greenwood, says the past few months have indeed been slow ones for the industry. Echoing others, he says, "We've definitely seen a slowing-down process. The competition is much greater now for the jobs available and businesses are bidding the jobs extremely tight. There's about 12 to 20 bidders for every new job coming down the pike these days. It's a buyer's market without a doubt." Rozier comments that one of the reasons for the market slowdown is the drying up of state funded projects. "There was a good deal of work with school projects, especially over the past few years, but we're on the tail end of that now," he says. Regarding President Bush's proposed tax cut, Rozier says, "Anytime you give money back to people they're going to spend it, so obviously a cut would help us and everyone else. Based on the strong likelihood of that cut taking place, and the Fed cutting interest rates, we should see a turnaround in the industry by the end of the year. We've had it extremely good for the past five years, but it did slow down quickly. Still, I'm optimistic." Rozier says he, and his peers in the construction industry, are used to ups and downs. "This business runs in a cycle, without a doubt," he tells us. "Over 25 years of being in this field, I've seen this time and time again. You come to know that when times are good, they're going to taper off eventually. Fortunately, our company had enough of a backlog of projects and work, so we've been able to keep our people busy. Lately, though, we've gone from more negotiated work to predominantly bid work because the market is so crunched. There are much more contractors out there competing for the same jobs than there were five years ago, and it's even worse in South Mississippi, where we have an office in Hattiesburg." Employing 75 people, Rozier says that his firm is slated to finish up a major project, the new Greenwood Middle School, in July, a $7.8 million job "we're very proud of," he says. Such projects have kept Rozier Construction strong in the slow times the industry is currently witnessing. "If we can make it through the first half of this year, I think we'll all do okay. The field will soften up a little back, but we'll bounce back," Rozier says. As branch manager of Greenville's Burke Handling Systems, John Conrad serves the Delta's contractors and manufacturers by supplying trucks, handling products and machinery, forklifts, pallet jacks, racking, shelving, hard trucks, i.e. "anything to store or move a product," Conrad says. "From our construction end, our business has been extremely good," Conrad reports. "As far as manufacturing business, though, we've lost several industries here in the Greenville and Greenwood area, and that has had a significant impact, not only on us, but on the community." However, Conrad concurs with the general consensus that Nissan's plant might help fill some of the vacancies left by the closings he referred to. "The tiers of suppliers will be coming in, hopefully filling some of the spaces we have available," Conrad says. "Plus, I think that if the tax cut goes through, we should see a significant economic boost here in the Delta. The main thing to me is that our people are prepared and trained properly for what's ahead. This is critical." In Greenville since 1966, with Conrad having been manager since 1992, Burke Handling Systems has become known as the leading equipment provider for the region. With its main office in Jackson, Conrad says both locations have seen business pick up. "Traditionally, we are slow in the first quarter; but this year we've done very well, going over projections for our service area." That area includes the counties of Washington, LeFlore, Sunflower, Issaquena, Holmes and Sharkey. Kenneth Thompson, of Kenneth Thompson Builders, reports that while the industry cycle is currently on a downturn, there is still plenty of work to be had. "The buyer is getting a better deal at this point in the construction industry," Thompson says, "because you have so many more bidders and the prices are so much more competitive. For example, we just recently bid on a job in Sunflower County that went for $417,000 and had six bidders! That's unreal. It tells you that there a lot of folks out there out of work. But we've been fortunate in that we have a good bit of work under contract, so we're staying busy. This is the first time in two winters that I've seen as much rain as we've gotten," Thompson continues, "and that forces us to spin our wheels, so to speak, not able to do any work." Still, Thompson, as do the other industry leaders, sees a quick turnaround forthcoming. "With the interest rates coming down, 2001 will remain a buyer's market. But, there is a great deal of work to be had, and you just have to put your best foot forward. The good firms will have jobs to do." All in all, Thompson sees a good, if not spectacular, year ahead. "Our company has a lot of work yet to do, and when the weather enters a clearer pattern we'll be fine. We're doing school work in Oxford, as well as work at Ole Miss; we're doing a park in Ridgeland; we just finished the new Valley Bank in Clarksdale; we're doing work for Viking Range here in Greenwood, and we'll still working on the entrance at Delta State University. So, we're keeping busy." Luckily, with the current slowness in the industry, there has not been too much adverse legislation for the industry to deal with, according to Perry Nations, president of the AGC (Associated General Contractors) of Mississippi. The organization, in existence since 1946, is the state's largest, and oldest, construction trade company in the state. "We've had to work on some clean-up language on a few existing bills, but that's been the extent of our legislative work this year, which is a good thing," Nations reports. The AGC represents contractors, subcontractors, material suppliers, banking and bonding institutions, and any other organization involved with construction throughout Mississippi. "We lobby the legislature for favorable laws concerning our industry, and, conversely, oppose any detrimental legislation," Nations says of the AGC's mission. "We also keep up with industry rules and regulations and supply a self-insured worker's compensation pool for members through the CompTrust AGC, which we started in 1991. Since 1995, we have returned over $8 million to our members through this fund. It's been an enormous success. The AGC also offers an intensive safety program for our members," Nations continues, "which includes OSHA certification, equipment training, first-aid training, anything legally required on the job sites in other words." Nations says that the AGC is also in the process of offering a health care plan under the same general idea as the workers comp fund for its members and that the program should be finalized before the end of the year. Nations notes that the state's cutting back on bond authorizations has hampered Mississippi's construction industry, but with interest rates coming down, things will recover nicely before the year ends. "I think we'll have to endure a few hard months, but, yes, construction should shoot back up in a relatively short time." Greg Heinsch, vice-president of Gephart Electrical Construction in Robinsonville, says his company had a terrifically strong third and fourth quarter of last year. "Most of this increase in work for us was due to casino renovation," Heinsch says, "since the casinos are battling each other to Ôkeep up with the Jones', so to speak. Most of our workload on the casinos deals especially with renovating the gaming floors and eating venues in particular," Heinsch adds. "They are all, to a number, trying to put on new looks up here." Major jobs for Gephart right now include the renovation of the Isle of Capri casino in Lula, as well as a major total renovation of Sam's Town casino. "We are also pleased to buy working on the Vaught-Hemmingway Stadium expansion on the Ole Miss campus," Heinsch adds. "We are doing the new performing arts center there at the University," Such work is residual from the last quartet, Heinsch says. In appraising the current state of the construction industry, Heinsch says that "We are certainly seeing a slowdown in the bid market, generally. It appears that now the only jobs being created from government funding are school projects, and they are slowing down as well. I think it's safe and accurate to say, though, that things are going to pick up in the latter part of the year." Heinsch says that Gephart specializes in "design building, or design assist fast-track construction, which means that we participate in the entire building process, from design to construction, either doing it all ourselves or lending a hand," Heinsch informs. One of the largest construction firms in the state, Roy Anderson Construction, with home offices located in Gulfport, have assisted Heinsch and Gephart with much of the casino work in Tunica. That's according to the firm's executive vice-president, Steve Brooks. "We have just completed the Isle of Capri casino in Tunica, which was a 227-room hotel with an adjoining entertainment theater complex," Brooks says. "We are also working with Greg on building the addition to the Vaught-Hemmingway Stadium at Ole Miss, adding 28 stadium suites, 10,000 bleacher seats, and much more. It's going to be a great addition for the alumni and the students." Brooks sites other major jobs as being the Lula Isle of Capri and the Tunica Grand Casino renovations, as well as a major job, the work on the new Federal Courthouse in Gulfport. These, and many other projects Roy Anderson are working on, are all in a day's work, Brooks says. "We are a total-job construction firm," he says. "We do all of our concrete work, be it foundation or high rise, and we do the rough carpentry, as well as many other aspects of the job." As for the rest of the year, Brooks is optimistic. "I think that 2001 will end up being a good year, though we're all going to have to be more aggressive in getting the jobs out there. There are a lot of private projects set to go, for example, with only the owners waiting for the financing to be finalized. I think that will be the key for this year: how much private sector work a firm can get." So, while all agree that the going is currently slow in the construction industry, all also agree that times will again be good. And when times are good for contractors, it is generally the case that times are good for all. The Delta is fortunate to have the firms that display the quality and professionalism that our contractors, suppliers, engineers, and architects have. Stay tuned for further reports on "Building The Delta." DBJ