Construction Outlook 2009-2010

Despite uptick, construction in our region remains slow

by R. Brock Pronko, Regional Business Analyst

construction-sidebar1Region – Near the end of Colonnade Boulevard, overlooking Mt. Nittany Expressway in Patton Township, Centre County, sits a large vacant lot.

A year ago, Leonard S. Fiore Construction, headquartered in Altoona, began preparing the lot to build the P Hotel and Spa, which will feature luxury condominiums and hotel suites, business conference rooms, a fine dining restaurant, and a health spa aimed at upscale Penn State alumni who visit regularly for football games and other events.

No less than a dozen of Fiore’s heavy equipment vehicles could be seen (and heard) on the lot, day and night, six days, sometimes, seven days a week bulldozing, pounding, loading, and dumping.

Then one day, the frenzy suddenly stopped.

A year later, hedgehogs make their home in the landfill, Killdeer birds lay their eggs in the gravel, and the solitary column of steel girders is covered in rust.

If this had happened anywhere but State College, that might have been the end of the story, but the “hiccup” in construction after the credit markets froze, as Patty Kleban, VP of Marketing and Sales for P Hotel and Spa, described it, gave the developers a chance hire Da Vinci Design Associates, an international spa consulting group, to reassess the project.

Da Vinci’s marketing research showed greater interest in the destination spa than anticipated, so the hotel space was expanded from 5,000 to 25,000 sq. ft.

“The P” developers include the Tricore Group – Bruce Heim and his sons, Ben and John – John and Doug Wolf of Wolf Furniture Enterprises; Michael, Richard, and Leonard Fiore of Leonard S. Fiore, Inc.; and Mark DiSanto of Triple Crown Corporation.

“It took the slowdown to get things worked out the way we wanted,” said Kleban. “We let our clients know we’re behind schedule and that we would return their deposits, but so far all of them still want to purchase suites and some have made plans to hold events at the spa when we open in fall of 2010.”

Suites cost $269,000 and up, depending on square footage and amenities.  The project will resume construction this month and is expected to create 400 to 500 jobs.

Across the street from the construction site are the offices of Glenn O. Hawbaker Inc., a general contractor, which laid off 300 workers after the Crash of 2008.

Hawbaker was the first Pennsylvania contractor to receive a stimulus project and won bids on six additional projects.

“The stimulus projects were very helpful, because they allowed us to rehire most of our workforce, but when those projects run out next year, we’ll be back in the same boat as before, and so will many other contractors,” said company president Dan Hawbaker.

“We need Congress to do more than merely reauthorize the highway program at current levels, because it won’t meet the needs of our transportation system, and it won’t put people back to work,” said Hawbaker.

“There are plenty of transportation projects waiting to be funded – right outside my window is a bridge project at the Waddle Road interchange with Mt. Nittany Expressway that the township put on top of its priority list.

“It’s a $16 million job, but it’s got to be executed quickly because nobody knows where the money will come from after the federal highway fund runs out in October,” said Hawbaker.

“Our politicians are busy debating the president’s programs, but the real debate should focus on how we can create new jobs.

“Otherwise, the rest doesn’t matter, because without working taxpayers and thriving businesses, the government won’t have the tax revenue to accomplish all those programs.”

To survive the downturn, Hawbaker is diversifying its operations by building a rail terminal in Pleasant Gap so it can offload materials such as salt and coal and transport them by truck to various destinations for sale.

The downturn also forced Tiadaghton Contractors, Inc. in Williamsport to change its business.

“We currently don’t have any new residential housing under construction so we’re doing renovations, alterations, and additions,” said Fred Machmer, VP of Tiadaghton.

construction-outlook-picCommercial jobs fell from 40 projects a year to only eight so far this year. Company revenues, which had been up 40 percent before the crash, are down 50 percent from 2008.

From December 2008 to the present, Tiadaghton laid off two of its five office personnel and 14 of its 16 field workers.  Four employees were rehired.

“Customer lending seems to be loosening, however it’s taking banks at least 60 days or more to process a loan for a project,” said Machmer.

“I don’t see an upturn next year in the housing or commercial markets,” said Machmer. “High unemployment and a weak economy do not encourage spending, only a wait and see attitude.”

Berkebile Bros. Inc. and Johnstown Construction Services, both in Johnstown, were contacted but declined comment.

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