Construction employment has yet to regain jobs lost to recessionBy DAVE SOLOMON
New Hampshire Union Leader
December 12. 2012 11:04PM
In the middle of the last decade, builder Robert Laplante and his Bedford-based RKM Construction had nine full-time employees and a thriving business building new homes and additions. Lately, he's been a one-man operation relying on small jobs like bathroom remodeling.
"That's been my bread and butter," he said. "I'm doing about 15 a year right now."
The state lost nearly one-third of its construction jobs during the recession, and they have not come back. Construction employment peaked at about 31,000 in May 2006, went down to around 21,000 in 2009, and has stayed there, except for a brief spike in 2010 when a tax credit for new home buyers was in place.
Laplant's experience is all too common, particularly for home builders. As other sectors of the economy rebounded, construction lagged behind. But that may finally be changing.
"It's been a very long four or five years of struggle for the construction industry nationwide as well as here in New Hampshire," said Kendall Buck, executive vice president of the Home Builders and Remodelers Association of New Hampshire. "I'm pleased, however, that in 2012 we seem to have bottomed out and we are beginning to see some slight increases in activity."
Buck bases his optimism on two trends - increasing membership in the HBRA-NH, and an uptick in residential building permits.
The association lost 35 percent of its members during the recession, but is recovering. Membership was in steady decline for four years, bottomed out around 610 at the low point, and is now back up to 638, from a high of around 1,000. Building permits for the nine months ending in September 2012 topped the 2011 number by 6 percent for all structures.
Buck said the trend for single-family homes is even stronger. The number of permits issued for single-family homes was up 18 percent for the 10 months ending Oct. 31, compared to the same period last year. By the end of October 2011, builders had been issued 1,384 permits for single-family homes, compared to 1,637 issued by the end of October this year.
"I think the single-family permits are the best indicator for the industry in a small market like we have here in New Hampshire," Buck said. "We've been going down steadily since 2004, with the exception of 2010 (because of the temporary first-time home-buyer tax credit), but we are now starting to turn the corner a little bit."
The improvement in New Hampshire is part of a national trend, with the National Association of Home Builders reporting that residential construction spending hit a four-year high in October.
"Private residential construction spending surged 3 percent on a month-to-month basis in October 2012," according to the NAHB "Eye on Housing Newsletter" for Dec. 11. "Following increases in 14 of the last 15 months, total spending on private residential construction activity is at its highest dollar value since late 2008. In addition, spending has risen 32 percent above the trough registered during the third quarter of 2010."
Laplante agrees the home-building industry is at least stabilizing, compared to the depths of the recession when at one point he had three deals for home additions fall through because the customers were laid-off.
"I see that people are at least maintaining now," he said. "My own belief is that the big companies in this area have stopped doing the big layoffs, so people are starting to feel more sure about the money they have for repairs."
Fiscal cliff shadow
The National Association of General Contractors sounded a more sour note in its Dec. 7 report, citing a continued decline in construction employment nationwide and a 12.2 unemployment rate in the industry.
"It's discouraging that construction employment is still struggling after more than three years of expansion in the overall economy," said Ken Simonson, the association's chief economist, calling for a deficit reduction deal in Congress to avoid the fiscal cliff. "As disappointing as these numbers are, they will only get worse if Congress and the White House allow huge tax increases and spending cuts to occur on Jan. 1."
Tim Gillespie of Derry, who works for an industrial and commercial contractor, said the commercial sector is perhaps most affected by the uncertainty.
"We're not doing homes," he said. "We do work for large corporations, as far as office remodeling and that type of thing. We're in a niche that's hurting now because of the fiscal cliff. Companies are worried and not making plans."
But commercial building is also showing signs of life. After years of little to no activity, three new office buildings are scheduled for construction at the Pease International Tradeport in Portsmouth in 2013.
"There are some bright lights of hope here in Hooksett," said Matt Labonte, the town's building inspector and code enforcement officer. "Southern New Hampshire University is not slowing down their growth. They are well under way with a 305-bed dormitory, and we just met with them about their new library."
A 204-unit apartment complex that was shelved for five years is now under construction in the University Heights area, he said, with first occupancy scheduled for January.
"The rental market is doing well," Buck said. "Vacancies are very low, and therefore driving up rental prices." Permitting for two-unit buildings is way up, he said, from 32 permits in the first nine months of 2011 compared to 140 permits in the same period this year.
Duplexes and apartment buildings seem likely to lead the recovery in housing.
"What banks are willing to lend for right now is apartments," Labonte said. "Other than that, it's all one house at a time in pre-approved subdivisions that have been muddling along for five or six years. Now builders are coming back, and they'll build one when they have a buyer with a purchase-and-sales agreement."
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Dave Solomon may be reached at email@example.com.