Counting on the construction boom-bust cycle |

Counting on the construction boom-bust cycle

Construction is one of the twin pillars of Aspen’s economy these days, along with real estate sales. Although the construction industry’s performance isn’t as easy to track as real estate sales, it’s clear that construction has taken even more of a beating since September 11, 2001.

From architectural firms, which are the first to feel a slowdown, to subcontractors who specialize in high-end interior woodwork, the state of the economy has left much of the high-powered industry hustling for work.

And from a homeowner’s perspective, that’s not all bad. They can actually find a plumber willing to answer a service call.

But less work has driven some construction workers out of the valley. The unemployment rate for Pitkin County during the month of June 2003 was 5.9 percent, according to the Colorado Department of Labor and Employment. That is up from 4.8 percent in June 2002.

Those who can find work often toil at a lower hourly wage. Steve Close, who co-owns White River Builders Inc. with his brother, Greg, said he has to bid jobs lower now to stay busy. The firm specializes in interior wood-trim work in some of the nicer houses being built in the Aspen area. Close said his firm’s strong relationship with some of the larger contractors in the area has kept him busy during the economic slump of the last two years.

He keeps 10 to 12 guys busy, but only by diversifying and adjusting. In addition to lowering bids, Close has started taking remodeling jobs and is considering working as a general contractor on a house in Carbondale.

As a result of the slump, Close said, “wages have come down considerably.” He estimated pay is down $5 per hour compared to two or three years ago. Lower wages are a direct result of the lower bids necessary to win jobs these days, Close explained.

Fewer construction workers and lower pay for them has a multiplier effect on the entire Roaring Fork Valley economy. In 2001, there were 1,437 workers for construction firms based in Pitkin County. That dropped to 1,298 workers last year, a decrease of 9.5 percent.

In Garfield County, the number of construction workers fell 11 percent from 3,524 in 2001 to 3,134 last year.

As a comparison, statewide the number of construction workers dropped from 167,440 to 160,353 for a loss of 4 percent.

The downturn hasn’t affected only the small firms in the Roaring Fork Valley. Some of the largest, well-established companies have also been forced to make adjustments. Steve Hansen, owner of Hansen Construction in Aspen for 24 years, said there is a “delicate balance” between too much work and too little.

“It’s clearly been flat for the last two years,” he said. His firm has stayed busy primarily because the houses it constructs are so large and take so long to build. Frankly, he said, the slower pace of the economy has allowed his firm to catch its breath and make some small changes to make it stronger and prepared for when the economy gears up again.

Mike Taets, president of Wells Fargo Bank in Aspen, said the construction industry has fared better than he feared. “I think everybody has enough work to stay alive,” he said.

Architectural firms provide the best clue about the immediate future of the construction industry. If they’re not designing houses this summer, contractors won’t be building them next summer.

Business appears mixed for architects. You know times are tough when even renowned architect Harry Teague – designer of the Aspen Music Tent, among other things – has to spend more time on marketing and less on designing. Through attrition, Teague has let half of his staff of 16 go as projects have wrapped up. But Teague believes it is just a matter of time before business picks up.

“[The local economy] is immune from the real big dips,” he said. “It used to be more boom-bust. Now it’s more rises and dips. I’d say we’re in a dip.”

If not a boom, the last rise lasted for a long, long time. No level of opulence was out of the question for people building homes.

“We had a period for quite a long time where it was almost obscene,” said Teague.

Bill Poss, another well-known Aspen architect, said his firm has stayed busy with the projects it already has on the books. He acknowledged that he was concerned until more calls started coming into his office about one month ago. It’s still too early to tell how many of those calls were converted into business.

Poss, whose firm concentrates on high-end residential jobs, said when there were warnings of the economic slump a couple of years ago, he prepared by going after more jobs in a wider variety of markets, including overseas. That’s helped keep him busy, but Aspen remains his bread and butter.

Like Teague, Poss said he has learned during 26 years as an architect in Aspen that the local economy is as good as it gets.

“It’s the last to get hit and the first to recover from economic downturns,” Poss said.

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