Kentucky construction remains a bright sector in an economy where coronavirus pandemic-induced shutdowns have created sudden disruptions and sent the U.S. economy into its first recession in 11 years.
Most construction workers use personal protective equipment such as gloves and sometimes even respirators. Thus, as of press time, construction sites were continuing work after offices, factories, schools and businesses involving social interaction were closed to limit spread of a very contagious virus whose mortality rate is high for seniors and those with chronic health issues.
“Being safe and healthful on construction sites is nothing new,” said Richard Vincent, executive vice president of the 600-member Associated General Contractors Kentucky. “I don’t think we can realistically expect not to be negatively impacted (by COVID-19), but we can be an industry of stability in otherwise uncertain times.”
The construction sector is experiencing its best activity level since the Great Recession. Nonresidential starts in Kentucky totaled $6.4 billion in 2018 and $6.5 billion in 2019, according to ConstructConnect.
“Our industry is one of perseverance,” Vincent said. “This virus will pass and our members will remain ready to rebuild the state’s economy and support the needs of our local communities.”
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The explosion of hotel construction that helped Kentucky out of the economic crisis of 2009 is still contributing to the commonwealth’s economy. As 2020 began, the strength of the construction industry is sound, thanks to technology, creativity and values-driven contractors in the commonwealth.
“The industry is in fairly great shape right now,” said Bob Weiss, executive vice president of the Home Builders Association of Kentucky. “We probably could be building more, if we had more people to build.”
The Home Builders Association of Kentucky (HBAK) was founded in 1957 and currently has 5,000 member companies in 19 chapters from Pikeville to Paducah. Of those, 980 are builders and remodelers; the remainder are associate members made up of subcontractors, suppliers, banks, real estate attorneys and others related to the home-building industry.
Jon-Brent C. Bernard, owner and president of Somerset-based Secure Structure, said 2019 was the highest grossing year since the company’s inception in 2010. As of early March, the residential and commercial general contractor was booked through 2020 and part of 2021. He and his staff of eight carpenters constructed a new 21-home neighborhood for Stonebrook Development and remodeled the interior and exterior for the new Pulaski County Chamber of Commerce building and Jarfly Brewing Co.
“Our customers’ ability to see 3D renderings of their building plans has absolutely been one of the most helpful techniques we use,” Bernard said, adding that this technology greatly reduces costly change orders. “Once our customers can visually walk through their homes or buildings, they are more able to make changes that save time and we are able create the spaces they truly desire.”
To stem the shortage of skilled workers, he would like to see shop class brought back to high schools and trade schools being touted as a viable career option.
“While college is absolutely fine – I have a bachelor’s degree – some trades can earn higher wages in a shorter amount of time without all the debt of four years in college,” Bernard said.
“I truly feel blessed to be in the construction business,” he said. “I don’t believe there is any better feeling than seeing something you have built and the happiness in your customers’ eyes.”
Murphy Construction Group
“With the economy strong, 2019 was a similar banner year to that of 2018 for The Murphy Construction Group, with revenues in excess of $170 million,” said CEO G. Michael Murphy, citing that 60% of business comes from repeat customers. “By the same token, 60% of our workforce has been with the company from 15 to 35 years. This creates a professional and talented team of construction professionals that is desired by those ongoing customers.”
The Murphy Construction Group consists of Scott, Murphy & Daniel (design-build, construction management and general contractor), Scott & Murphy Inc. (concrete and civil construction), and Hartz Contracting/SMD of Owensboro (building and concrete). The companies employ over 250 people and work in a 100-mile radius of Bowling Green.
All divisions of The Murphy Construction Group – buildings, concrete, civil construction and bridge construction – have been strong over the past several years, with emphasis in the sectors of commercial building development, industry, medical and institutional. There has been a spike in the growth of bridge contracts as a result of the Kentucky Transportation Cabinet’s “Bridging Kentucky” program.
“As many baby boomers retire from a career of hard, hands-on work, there are less and less young people that want to get into the trades,” Murphy said. “The good news is, there are new tools and technology that make construction work easier, more interesting and challenging. The wages and benefits for such skilled jobs are top of the scale for those who can competitively perform and produce the work.”
Paul Hemmer Co.
With a history dating to 1921, Paul Hemmer Co. is a third-generation family business with 63 employees, including building management partners. Headquartered in Fort Mitchell, Ky., the company serves Northern Kentucky and Cincinnati, as well as Louisville, Indianapolis and Columbus. Recent projects include GE Aviation’s On Wing Support Center at the Cincinnati/Northern Kentucky International Airport and Springdale Commerce Center, a redevelopment of the GE Golf Course in Springdale, Ohio.
“Owners need to plan well in advance,” said Paul W. Hemmer Jr., president of the company. “Regulations continue to increase and prolong project preconstruction work.”
He notes that the competitive nature of projects is lowering margins of construction managers, while quality subcontractors and suppliers are experiencing higher margins. “Construction managers are getting squeezed between the subs and owner,” he said, with owners transferring as much of the risk as possible to the contractor.
Communication processes and technology are making it easier to solicit bids from subcontractors, who are utilizing email and other cloud-based programs to provide bids. “The day of the fax is over,” Hemmer said. Cloud-based management tools are also providing real-time information to construction teams and owners.
Because a lot of experienced construction managers are nearing retirement age, Paul Hemmer Co. is focusing on “building its team from within and has had good success with hiring young professionals and having them mentored by our more experienced leaders,” Hemmer said.
“We had our best year in 2019 and closed the year very strong,” said Tiffany Kelley Jenkins, president of the general construction and construction management (GCCM) division of Louisville-based Kelley Construction, a third-generation company started by her grandfather in 1978. Kelley Construction employs 213 people at the Louisville headquarters and the Gulf Coast office that serves the energy corridor of Houston and Louisiana. GCCM projects represented $160 million of the company’s volume last year.
“Cloud-based, real-time project management systems allow us to operate very quickly,” Jenkins said, calling it a game changer for collaborating with subcontractors. “Over the last five years, technology in construction has changed more, and given us more opportunities to enhance what we do, than in the 15 years prior to that.”
While you will find a single set of drawings on Kelley Construction projects, there aren’t multiple copies rolled up on every floor. “Everything is electronic,” she said.
She has seen recent growth and development in the industries of hospitality and senior living, in particular. In the classification of independent living, Jenkins said the restaurants, salons, exercise and game rooms make these facilities almost look like resorts.
“It’s very much an elevated social experience, which I think is fantastic for folks that need little more oversight and hands on if they can’t stay in their own homes” Kelly said.
Headquartered in Cincinnati, Messer Construction was founded in 1932. Now an employee-owned construction management and general contractor company, Messer has 1,200 employees in five different states throughout 10 offices, including Louisville and Lexington, and did $1.2 billion in construction work last year in such areas as higher ed, health care, industrial, aviation, bourbon and soccer stadiums.
In Lexington, Messer is the general contractor for the $241 million Central Bank Center, the replacement of the Lexington Center. The project includes modifications to Rupp Arena and is on track to be completed in the spring of 2022.
“Technology keeps becoming a higher and higher priority for folks to use,” said Mark Hill, vice president and Lexington region leader. “It is a tool that makes a big advantage for us on projects.”
The software known as building information modeling, or BIM, isn’t that old. A decade ago it was utilized for coordinating mechanical and electrical. “We use BIM for almost every step of the project,” Hill said, listing examples such as designing, site logistics, scheduling and putting together plans for owners.
Hill credits University of Kentucky President Eli Capilouto for innovative ways of using public-private partnerships, or P3, to continue building on campus. “With the challenges of funding, P3 is something we’ll be seeing more and more,” he said.
Messer Construction is involved with several universities in each region, especially the engineering departments. The company hires almost 90% of its employees through college internships or co-op programs. “That’s how our company has been built: growth from within,” Hill said.
One reason for so many regional Messer Construction offices is so employees don’t have to travel. “They can go home to their families every night and participate in the community,” Hill said. “We gave a little over $2.2 million to organizations in our communities this past year.”
Bristol Group is a Lexington-based design, engineering and construction firm, and a manufacturer of precast concrete structures. Founded in 1997, the company has 135 employees: 75 at the corporate headquarters and another 60 at its precast concrete manufacturing plant in Charlestown, Ind.
“I think the state of the construction industry is going to be revolutionized in the next five years,” said Todd Ball, founder and president. “Data is going to drive construction.”
CAD drawings, from computer-aided design, have been used for several decades to tell construction workers what to do in the field.
“That’s all changing,” Ball said. “We’re actually doing a 3D model of every little piece of these construction projects. That technique came to the fore 10 years ago and has been embraced for the last five years.”
Bristol Group is manufacturing those pieces directly from the data, off site, so that there’s no cutting or fitting necessary on a job site. “That’s how you speed up construction and reduce the amount of labor it takes to build projects now,” Ball said.
Reducing labor has become a necessity because it’s hard to find new people to work in the construction trade. “We have to make the ones we have really efficient and productive,” he said.
Ball thinks one of the reasons for the labor shortage is that young people today are used to a certain level of predictability, as evidenced by games on their phones that have a defined beginning, middle and end, unlike the weather delays and other variables on a construction site.
“We, as the construction industry, need to go to high schools and middle schools to tell them there’s technology involved, not dirty grimy construction work,” Ball said. “It’s a cool thing to watch a building come together. At the end of day, you can turn around and look at it. It is a source of pride.”
Louisville-based Miranda Construction, established in 2016, has had an annual growth rate of 43.7% and is projecting to do $30 million in work by the end of 2020. The company has 26 active projects in the Kentuckiana area, including banks, educational centers and medical offices, and a backlog of over $8 million in future work.
Of the 42 employees, 15 are in the office and 27 in the field.
“We can work in 16 states and are looking to grow into more as we build our team,” said COO Ricky Browning. “One way we have been actively reaching out to the younger generation is by contacting a few Kentuckiana schools and programs, looking for students with an interest in a construction internship, whether it be with our design department, finance, marketing or construction.”
Miranda is active in area charitable programs, in keeping with the company’s purpose, cause and passion of “Building Forward. Giving Back,” he said.
In addition to new bidding software that eliminates online searching and subsequent cold-calling, Browning is appreciative of the efficiency of cloud technology and file sharing.
“Being able to share approvals of materials or get answers on project questions within seconds versus hours has made project management and quality a lot easier,” he said.
Kathie Stamps is a correspondent for The Lane Report. She can be reached at [email protected]