Project diversity can pay off How construction industry faring with economic tightening

By Sam Easter

Justin Schoenberg heads up the commercial team at Sandman

Structural Engineers, the Moorhead, Minnesota-based firm that has him juggling designs on everything from big agricultural facilities to schools.

It’s been a wild ride for the past few years, and the industry is trying to find its way back to normal. Construction is slowing — not crashing — as markets for materials like wood and steel find a new normal. Mechanical and electrical components are still pinched, Schoenberg said, partly an echo of the logistical tug-of-war that the pandemic forced on the industry.

But one of the biggest challenges the industry faces right now is rising interest rates.

“I actually go sit down and try to have lunch with a business banker every few months to see what they’re seeing,” Schoenberg said, “because sometimes they see these projects maybe die before I even know there are projects that are out there.”

That steady tightening – engineered by the Federal Reserve over the past year — has helped slow inflation, which ballooned during the pandemic. But the growing cost of financing new construction is keeping some projects from moving forward at all.

For many firms, the ship is still alright for now. Rich Jacobson, executive vice president and COO at Minneapolis-based Kraus Anderson Construction, said that there’s still steady work for the near future.

“But we are concerned of what it looks like for late ‘24 and ‘25,” he said. “We feel that we’re about a 16- to 24-months company, where we kind of know what kind of work we have coming up in the next 16 to 24 months. And we feel okay about that. But after that, with these interest rates and rising material costs, where are we going to be in late ‘24 and ‘25?” continued on page 14

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