Building trades brace for bleak year

Carpenter Vince Scurti of Washington Township has been lucky these last two years. With construction trades among the hardest hit by unemployment, Scurti, 27, has had steady work on the $463 million hospital that Virtua is building in Voorhees.

The building is nearly complete, and Scurti's union job ended two months ago. He was hired back Dec. 15 for a two-week gig, but when that ends he knows he could be out of work for a while.

Thousands of construction-industry workers in South Jersey and Pennsylvania will be laid off in the months ahead as major development projects planned or even financed before the recession end. Few projects of the same scale are breaking ground, leaving experts worried about the year ahead.

"We're in some dark times," said Walter P. Palmer 3d, chief operating officer of the General Building Contractors Association of Philadelphia. "It's really challenging."

The expansion of the Convention Center in Philadelphia, a mammoth $768 million project financed in 2007, is nearly done.

June's celebrated opening of PPL Park, the $115 million pro soccer stadium in Chester, was the finale of a project that broke ground in December 2008, offering jobs just as the economy tanked.

Though Virtua continues construction on smaller pieces of its expansion in suburban South Jersey - including an ambulatory-care center in Voorhees - it expects to open its new hospital in the spring. The planning stage for the 680,000-square-foot facility began in 2002.

All 30 Southeastern Pennsylvania transportation projects funded with $257 million in stimulus money are expected to be completed before the end of 2011, state officials said.

There are bright spots. A medical school is under way in Camden. Construction is beginning on Philadelphia's first new hotel in a year. Rehab efforts on bridges over the Delaware River will provide jobs for union iron workers. And Temple University has begun excavation for a $148 million residential-and-retail complex on North Broad Street, set for completion in fall 2012.

But the construction industry cannot rely on a smattering of institutional projects, Palmer said.

It needs a diversity of development, including private projects, and a long-term plan that involves major infrastructure investment and a drive to attract businesses to the region, he said.

"We can't be stumbling around, hoping that [the University of Pennsylvania] is going to build a dormitory or hoping that someone's going to build a 12-story hotel," Palmer said. "That's not very visionary."

Employment hours among his group's members have declined 40 percent since 2008, he said.

With two mortgages, a 1-year-old daughter, and a pharmacist-wife who works part time, Scurti is anxious about finding his next job. About 30 percent of the 390 members of Carpenters Local 393 in Gloucester City are unemployed, said representative Dennis Garbowski.

"You just hope when that phone rings, it's the hall calling you to send you out," said Scurti, who is optimistic his union will find more jobs.

Patrick Gillespie, business manager of the Philadelphia Building and Construction Trades Council, said he hoped investors in 2011 would pull out the trillions they had tucked in their mattresses over the last three years.

"There's an awful lot of money on the sidelines," Gillespie said. "We're waiting for that to break loose."

Many who are looking for investors share that hope. Several have construction projects that face political and economic quandaries.

LS Power wants to build a natural-gas power plant in West Deptford and generate power by 2014, but that requires it to find financing in the first half of 2011. None of the up to $1 billion has been secured, said Tom Hoatson, the company's director of Northeast development.

James Kehoe, president of the Southern New Jersey Building and Construction Trades Council, is pushing for legislation in the Assembly that would allow the plant to enter into long-term contracts with utilities and give it guaranteed revenue. The plant is essential to putting his members back to work, he said.

Completion of the $2 billion Revel Casino in Atlantic City also hinges of financing. Kehoe said the job would be a "game-changer" in the region, employing thousands of construction workers in one of the hardest-hit areas of New Jersey.

The project stalled in January 2009 when money ran out. Revel Entertainment Group L.L.C. needs about $1.3 billion in financing to finish the casino.

JPMorgan Chase & Co. began marketing the project to Wall Street banks last month, but a deal to secure the needed money appeared to have hit a snag. Revel chief executive Kevin DeSanctis said this month that he expected to know more early in the new year.

Without Revel or the West Deptford plant, Kehoe said, "we don't have anything on our books and will continue to have the numbers that we have unemployed."

Construction on a 14-story Family Court building in Philadelphia was to have begun in July. But the $200 million project has been plagued by allegations of corruption, an FBI investigation, and a dispute over development rights of the site at 15th and Arch Streets.

The public works project, which would be the largest in the city after the Convention Center is completed, is apparently moving forward. The state Department of General Services put out a request for proposals from contractors Nov. 15.

Spokesman Troy Thompson said there was no firm date for a groundbreaking.

State officials had hoped to start construction in late 2009 on two facilities at Graterford Prison that would accommodate about 4,100 inmates. A dispute over the bidding process and budget delayed the start until fall 2010. It was pushed off again midyear by a court ruling that said the state had failed to follow bidding laws.

Now, with contractors selected - it will be a joint venture with Walsh Construction and Heery International - the $322 million undertaking could begin in the spring, though the contract has not been signed, Thompson said.

Philip Kirschner, president of the New Jersey Business and Industry Association, said the region could not fully recover economically without a rebound in construction.

His group polled members in various sectors about their expectations for 2011. Few anticipated much improvement, but participants from commercial and industrial construction were by far the most pessimistic. Eighty percent said they expected no change or a decline in economic conditions in the next six months.

Not enough companies are investing in new warehouses and office space to pick up the slack for contractors whose long-running jobs are ending, Kirschner said.

Far from expanding, "a lot of companies I talk to are looking at giving up their space, or cutting their space, or subletting their space to other people," he said.

NAIOP New Jersey, an association that represents commercial and industrial real estate developers, takes the pulse of its members each November. Last year, it expected construction of about two million square feet in 2010.

The outlook for 2011, according to last month's survey, was for 1.2 million square feet, said Michael G. McGuinness, the group's chief executive officer. That compared with about 20 million in 2006. (His group does not collect data on actual footage built.)

Many companies are favoring upgrades to existing office space, he said.

Construction firms' margins have shrunk a little each year since the recession began as they have lowered their bids to stay competitive. That prompted a few members to close this year, said Geoffrey N. Zeh, president and CEO of the Southeast Pennsylvania Chapter of Associated Builders and Contractors.

"We're looking at next year kind of as a repeat of this year," Zeh said. "The most optimistic outlook is that things will start to gradually pick up at the end of next year."