Carolinas construction industry on the mend?

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Is the Carolinas construction industry on its way to recovery? Both North and South Carolina have experienced some positives in the last year–including a major plant announcement for North Carolina earlier this month–and both states are experiencing improved contract activity so far in 2010, according to the editor-in-chief of Southeast Construction magazine.

In his recent blog, Southeast Construction’s Scott Judy observes the latest anecdotal evidence of a market upturn came earlier this month, when Caterpillar Inc. announced it was selecting Winston-Salem, as the site of its new $426-million manufacturing plant, instead of sites in Montgomery, AL and Spartanburg, SC.

But the good news has been going on for awhile now says Scott Judy. It seemed to start in late 2009, when South Carolina beat out the state of Washington to land Boeing’s new final assembly plant for its 787 Dreamliner. The $250-million contract was awarded to a joint venture of BE&K Building Group, Turner Construction Co. and designer BRPH Cos.

Together, these two projects represent some of the highest-profile, non-public contracts to move forward in the Southeast during the past year or so. Through the first half of 2010, the reported contract activity of both NC and SC outperformed, in percentage terms, the other two states in the region, FL and GA, which were down at the year’s midpoint.

In NC, for example, through June, the value of new contracts for future construction activity is roughly 15% ahead of 2009’s pace, according to McGraw-Hill Construction. Despite that overall improvement, however, there remains plenty of cause for concern. The category showing the greatest percentage gains has been the nonbuilding sector, which includes infrastructure contracts–such as “stimulus”-funded projects. This category is up 79% compared to a year ago. At the same time, the state’s nonresidential category is down 17% compared to last year’s pace through June.

The story is similar in SC, where the overall value of new contracts was 20% ahead of 2009’s pace at midyear, according to McGraw-Hill Construction. Like its northern counterpart, however, the overall number is the result of up and down market sectors. The value of new nonbuilding contracts is estimated at more than twice last year’s pace, and residential is up 20% overall. However, the critical nonresidential market remains in decline, at about 20% behind last year’s pace.

So, as is the case with assessing the prospects for “recovery” on a national basis, it’s equally hard to tell where the Carolinas stand. Are the negative numbers for nonresidential a prediction of continuing correction and pain for the Southeast’s construction industry? Or are the promising residential figures a harbinger of better times to come? Or, is the answer to both of these questions “Yes”?

Click Here to view the Southeast Construction blog.

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