Still not recovered from Great Recession, CT’s construction industry fears another slowdown

Photo | Contributed An employee at New Britain-based Downes Construction Co. works on a job renovating Higgins Hall on Western Connecticut State University's Danbury campus. The construction industry is worried about the potential impact of reduced state spending and borrowing.

Don Shubert, President, Connecticut Construction Industries Association

Nancy Greenwald, Executive Director, Construction Institute, University of Hartford

Write a Comment

By Shawn R. Beals Special to the Hartford Business Journal

Connecticut's construction industry, still recovering from the Great Recession, is preparing for another uneasy period while state budget debates and spending plans from both parties promise sharp decreases in public spending.

The industry, which has only regained 88 percent of the nearly 21,000 jobs lost from March 2008 to Feb. 2010, is off to a bumpy start in 2019, having shed 1,400 jobs since January, although employment levels are higher than a year ago this time, according to state data.

A likely decrease in legislative spending and Gov. Ned Lamont's “debt diet” are giving the state's commercial construction firms little reason to be optimistic about an influx of new work over the coming years, said Don Shubert, president of the Connecticut Construction Industries Association.

“We haven't recovered completely since the recession. We're still down 7 percent from the peak, and the outlook is still shaky,” Shubert said. “It's shakier than it's been in a long time. There's a lot of uncertainty right now in Connecticut as far as public construction.”

Construction jobs peaked in Connecticut at 69,100 in June 2007 before bottoming out at 47,900 in March 2010, at the end of the recession, according to state Department of Labor statistics. As of March 31, there were 60,700 construction jobs in the state.

The data show the decline in construction jobs was swift starting in early 2008 and the recovery was slow. After steady gains into 2016, the number of construction jobs in the state leveled off but began to climb again late in 2018 before the recent dip.

“Connecticut made pretty good strides in the last year and we'd hate to lose that,” Shubert said. “We're still hanging on by our fingernails.”

The construction industry was immediately affected by the economic slowdown 10 years ago as the state and towns cut back on spending. Transportation projects, schools, public-safety buildings and other infrastructure work creates much of the business for firms in Connecticut, said Joseph Desautel, CEO of Downes Construction Co. in New Britain.

“There will be a tighter market for the next couple of years until the state gets its budget straightened out,” Desautel said. “The state pumps a lot of money into the construction industry.”

Downes is celebrating its 85th anniversary this year, and was one of the few fortunate firms in Connecticut no to have seen much of a slowdown during the recession. The projects that got the company through 2010 had already been booked before the recession hit, said company President John Downes.

“We were certainly concerned about what was going to happen to the market during the recession,” he said. “The way we managed it was we were very aggressive with our marketing and business development to increase our market share.”

Lately, the good news in the state has been in Fairfield County, where it's cheaper to build than in New York City, and in Hartford where companies like Stanley Black & Decker have committed resources to the region and a wave of residential developments downtown are still underway.

“That's a very positive development and it means a lot of money coming in to revitalize Hartford, not just the commercial areas but also the residential areas,” said Nancy Greenwald, executive director of the Construction Institute at the University of Hartford. “The Connecticut recovery in general was slow, slower than the rest of the country, but construction is getting stronger in Connecticut. The question is where are things happening?”

Looking elsewhere

Greenwald agreed that budgetary shuffling will likely delay some projects, but said other trends in the industry might help companies bridge slower years more comfortably than they have in the past.

“Construction is one of the least digitized industries in the country, right behind agriculture,” Greenwald said. “There's been a tremendous surge in the industry in the last year, the investment in technology is just exploding.”

Better cost controls, project-management methods and business-development standards will lead to less waste and fewer delays, she said.

“Any efficiency you can capture with new technologies, whether it's with software or 3D printing or robotics, any productivity you can recapture, it's real money,” Greenwald said.

She said the slow economic recovery seems to have caused many of Connecticut's constructions firms to look elsewhere in the Northeast for work more frequently than they had in the past.

“A lot of them are looking to Rhode Island, New York and Massachusetts and expanding their reach to diversify geographically,” Greenwald said. “But we have great construction companies that are local to Connecticut or are local arms of national companies. The people I interact with take very seriously their role in supporting economic growth in the state.”

Kurt Montagno, president of Montagno Construction in Waterbury, said his company is still down about five of the 25 staff positions it had before the recession. He said the funding challenges in Connecticut give plenty of reason to look to neighboring states for more work.

“We haven't hit our stride, the work in the state has been somewhat spotty,” Montagno said. “The economic climate in the state has really put a damper on development work. There is a worry on our part about what's coming down the pike, because we're not seeing a lot of private construction either. It's worrisome, it really is.”

Montagno said his company built a lot of skilled-nursing facilities in the 2000s, but they weren't being funded during the recession.

“In 2011, when the recovery began, we saw a mix of public and private work that looked like it had been pent up during the recession,” he said. “It was the toughest period I've ever gone through. We had to cut staff, we had to cut salary, we went through every line item in our overhead and had to cut to the extreme, and we did come out of the recession.”