Construction slump, job losses likely to continue

And economists aren't expecting the bleeding to stop until 2011.

Employment statistics showed steep losses as both commercial and residential building stagnated. Tucson had 17,900 construction jobs in 2009, a 21 percent drop from the previous year, according to the University of Arizona Eller College of Management economic outlook for Arizona.

The state overall fared worse, with 131,100 construction jobs in 2009 - a nearly 30 percent drop from the previous year.

To cope, construction firms have laid off workers, looked for jobs out of state and taken smaller jobs than they would have in the past, said David Pittman, the director of the Arizona Builders' Alliance.

"While the rest of our economy is in a recession, the construction industry is in a full-blown depression," Pittman said.

Even Arizona-based Sundt Construction Inc. - which has fared relatively well in the downturn compared with other building companies - laid off 450 employees, said Senior Vice President Richard Condit. Sundt, which focuses primarily on commercial building, began to see a decline it its market late in 2008, Condit said. The company had 1,500 workers going into the downturn, he said.

Generally, the commercial market lags about 18 to 24 months behind the residential market when it comes to downturns and recoveries, Condit said. Sundt has sent Tucson employees to jobs in New Mexico, Texas and California, Condit said.

"One day it was an employee's market and now it's an employer's market," he said.

Many of the company's current projects are public ones funded by federal stimulus dollars, he said. Builders have faced additional competition from larger companies vying for smaller jobs they wouldn't have done before the downturn, Condit said. Also, businesses are looking for work in states they previously would not have, Condit said.

A positive aspect for Sundt, which is actually looking to hire about 100 workers, is that it's diversified in the marketplace, he said.

"If you only did homes, or you only did office buildings, or you only did retail, this has been a lot harder for you," Condit said.

Ed Castelhano, a partner of Becklin Construction LLC, said the volume of business for his company, which develops custom homes and small commercial areas, is down substantially.

"The types of jobs are totally different," Castelhano said. "We're doing very few custom homes, and we're finding most of what we're doing is remodeling and small tenant improvements."

About three years ago, business was fairly steady, said Castelhano, who's also the chairman of the Southern Arizona Home Builders Association Executive Board of Trustees. Prospects declined in 2008, and 2009 was especially rough, Castelhano said.

The phone has started ringing again at Becklin, Castelhano said, but it hasn't really generated much new business. The company, which at one time consisted of two partners and three employees, now has only the two partners, he said.

Builder and developer Jim Campbell said that while residential and commercial building have hit a wall, there have been some signs of a turnaround, the main one that home builders began buying finished lots last year.

But even if the market does improve, it's not going to be like it was in 2006 before the housing-market bubble burst.

The construction industry has a long climb to get out of the recession it's in, Campbell said.

Statistics from the Eller College of Management show that there may be some time before the employment situation really starts improving. The forecast predicts an 8.6 percent decrease in construction jobs this year. Jobs are projected to increase to 18,300 in 2011, but there will still be fewer construction jobs than in 2008, the numbers show.

The one positive has been benefits to customers from increased competition and cost-cutting among builders, said Pittman, the Arizona Builders' Alliance director.

"Consumers can get good deals on new construction and renovations," he said.

Contact reporter Dale Quinn at 573-4197 or dquinn@azstarnet.com