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DECEMBER 5 - 11, 2011
CRAIN’S CLEVELAND BUSINESS
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Construction: Contractors find specializing helps draw business continued from PAGE 1
in the construction, mining and logging category; it was down nearly 7% in the Cleveland-Elyria-Mentor Metropolitan Statistical Area, to 31,100 workers this October from 33,300 in October 2010. However, employment in that category in the Akron MSA nudged into positive territory with a 14% increase to 13,600 jobs from 11,900 in October 2010. Cleveland economist George Zeller and others find it easy to cite the biggest cause of the construction market’s struggles. “We were in this huge recession because of the housing bubble bursting,” Mr. Zeller said. “Residential construction remains miserable.” Construction of single-family homes requires more workers, often nonunion, for fewer dollars than big commercial projects.
Construction Co. unit of Streetsboro-based Geis Cos., said his company’s focus on heavy-duty industrial real estate projects is bearing fresh fruit as resurgent manufacturers buy empty industrial buildings at bargain prices and retrofit them for their use. “A lot of people are knocking on our door again, although the market is tough for contractors in general,” Mr. Martin said. Mr. Martin said Geis did as many retrofit projects for clients as it did higher-profile new construction projects, including work for sister company Geis Development, which accounts for about 35% of his unit’s workload. It also is following clients out of town; 60% of its work was
“Optimism hit bottom in 2010 and has started to come back. There is some optimism, though not strong optimism.” – Roger Gingerich, partner-in-charge of the real estate and construction group, Skoda Minotti outside Ohio this year. Likewise, Adelbert “Chip” Marous, CEO of Marous Brothers Construction Co. in Willoughby, said the company added a dozen employees to its 124-person core payroll and kept busy by following clients to cities such as Washington, D.C. Marous also pursued a diverse workload that ranges from installing drywall at the Horseshoe Casino Cleveland to building
government-subsidized affordable housing for low-income residents. However, Mr. Marous said, the devastation in the construction business means his company does business differently, such as cutting checks directly to suppliers to protect itself for material costs in case subcontractors fail. Union leaders are more optimistic than business types. Terry Joyce, president of the
Cleveland Building Trades Council, said his membership will have a better holiday this year thanks to the current work. He’s confident more work is ahead, such as the planned American Greetings Corp. headquarters in Westlake, and other projects in downtown Cleveland spawned by the under-construction convention center and casino. Marous already has one of the first of the latter project: the $64 million renovation of the former Crowne Plaza hotel across East Sixth Street from the convention center. The hotel will become a Westin under its new owners, a joint venture of Sage Hospitality and Optima Management Co. ■
‘Back to where we started’ Both sides of the picture are clear for Mr. Leohr of Pride One. When the housing downturn hit in 2005, Pride One was building and selling about 80 homes a year. Now Pride One no longer builds singlefamily homes, leaving that business to national home builders. Instead, Pride One pursues small commercial construction work to sustain a staff that numbers 13 now compared with 30 in 2005. Though business for many still isn’t robust, the uptick in construction has produced some improvement in the region’s building business. The word “optimistic” is back in use, though universally prefaced by “guardedly.” Roger Gingerich, partner-in-charge of the real estate and construction group at Skoda Minotti CPAs, Business & Financial Advisors in Mayfield Village, said optimism levels among the region’s construction contractors are back to where they were in 2008, before the devastating downturn struck. “Optimism hit bottom in 2010 and has started to come back,” Mr. Gingerich said. “There is some optimism, though not strong optimism.” Mr. Gingerich’s pulse-taking is in the form of Skoda Minotti’s 4-yearold survey of trends in the construction industry. “The bleak outlook is gone and we’re back to where we started,” Mr. Gingerich said. This year, 38% of the more than 100 contractors returning Skoda Minotti’s survey said they believe there will be more opportunities in the future; that’s the same percentage as in 2008, and it’s up from 27% and 23% in 2009 and 2010, respectively. However, the No. 1 concern is unchanged: a lack of work going forward. “Several contractors are busy, but many worry about their lack of backlog for the future,” Mr. Gingerich said. Jeffrey Gliebe, CEO of Krill Construction Co. in Cleveland, illustrates the point. Mr. Gliebe said he is guardedly optimistic because, after years of discussion, many of the big local projects such as the convention center are under way, although it’s hard to see what sector will fuel broad future growth.
Who’s knocking at the door? Big local contractors say two ways they are finding business is by looking for it out of town or by pursuing specialties. Jeff Martin, president of the Geis
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