Connecticut’s slow recovery from the economic recession is hampering the state’s construction industry as firms in other New England states and the nation begin to thrive.
As other state economies recover faster, its moving construction companies across the country ahead of their of Connecticut counterparts.
“Connecticut, as it turns out, has one of the weaker economies in the nation,” said Anirban Basu, chief construction economist for national accounting firm Marcum, with offices in Hartford and New Haven. “It is not a state for a sustained and profound construction recovery.”
The construction industry, particularly non-residential construction, lags 12 to 18 months behind the rest of the economy, Basu said. The national economy should recover sometime in late 2013, but Connecticut will be several months behind that, further pushing down the construction industry.
“The overall story is not particularly positive for Connecticut,” Basu said Marcum hired Basu in October to lead up a new national commercial construction index the firm will start putting out in November. The index is meant to help construction firms know what sectors will be busy in the coming months and policymakers know how to help the construction industry grow.
“You want to make sure you are planning appropriately,” said Joe Natarelli, Marcum’s national construction leader, based in the New Haven office.
Connecticut’s economy is hurting worse because Wall Street investment hasn’t played as big of a role in the state since the downturn started in 2007, Basu said. Coupled with a reputation for having an unfriendly business environment, Connecticut has lagged behind states such as Massachusetts, New Hampshire, and Vermont in obtaining the private investment needed to spur construction.
“There are other New England states considered to be more business friendly, and that attracts more private investment,” Basu said.
From July to August this year, Connecticut ranked 49th out of 50 states in construction job creation, according to the monthly report from the Associated General Contractors of America.
“In the middle of the construction season, we were one of the worst states in the country in job losses,” said Don Shubert, president of the Connecticut Construction Industries Association.
In September, Connecticut has 52,100 construction jobs, a loss of 1,100 jobs from September 2011, according to the AGC report that came out Oct. 30. The Hartford area fared even worse with 4 percent of its construction workforce lost in that time frame. The only area of the state that gained construction jobs was Fairfield County.
Construction, particularly commercial construction, takes private investment and confidence that the new project will serve its purpose once complete, Basu said. Connecticut needs the national economy to recover followed by its own economic recovery before that confidence can come back and create profound, sustained upward projection in the industry.
“Construction doesn’t just need confidence, it needs boldness,” Basu said. “Right now, we don’t even have half-confidence, much less boldness.”
Nationally, Marcum’s 500 construction contractors are seeing the slow rise of their profit margins, particularly in commercial and public work, Natarelli said. The public projects can help build the confidence needed for the commercial work.
“We are hoping to see more of that throughout the state of Connecticut,” Natarelli said.
Connecticut’s public sector construction could be a much bigger factor if the Connecticut Department of Transportation moved faster in getting projects started, Shubert said.
DOT has billions of dollars worth of work to award every year, Shubert said, but the agency’s project development process is very slow, particularly in getting the design work on a project finished and approved.
“Design has been stagnant there for years,” Shubert said. “We have been suffering a little more than we should have been for the last couple of years because of the lack of design work over at DOT.”
DOT has worked with the construction industry to streamline the design process and get projects working in the field faster, Shubert said.
“If they make that adjustment, it is a boom,” Shubert said. “They have more money over there than they know what to do with.”
Coupled with more DOT projects, work at other agencies such as the Metropolitan District Commission, the University of Connecticut, the Mattabassett District, the Department of Energy & Environmental Protection, and Jackson Lab in Farmington could burst the state’s construction industry out of its slump starting next year, Shubert said.
“All of that could add up to a spark for next year,” Shubert said.g
