Construction Industry Forum

Highlights from Forum on Construction Industry
March 7, 2003 - St. Joseph’s Church, Grand Rapids

At the March 7th JOBS 2020 Construction Industry forum, panelists Doug Hanson of Hawk Construction, Keith Anderson of Anderson & Ophoven Law Office and Ron Nelson of Prudential Hedman Realty and Prudential Lakes Realty talked about trends they are experiencing in their businesses and the challenges they face.

Panelists: Doug Hanson, Hawk Construction, Keith Anderson of Anderson & Ophoven Law Office, and Ron Nelson of Prudential Hedman Realty and Prudential Lakes Realty

Keynote Speaker: Patrick Ryan, Ryan Companies US, Inc.

The seventh in a seven-part JOBS 2020 forum on creating a common vision for the future of the Itasca region was held Friday, March 7th. Panelists were asked to discuss pressing issues/challenges and current trends in the construction industry and the impact those trends have on their business. Panelists were also asked what their business needed from the community in order to succeed.

Keynote speaker Patrick Ryan, told participants that JOBS 2020 is on the right track. The local business community must be engaged intellecturally, emotionally and financially in order to have job creation and sustained economic growth.

Building Construction

Industry Issues, Challenges and Trends:

• Sources of future work are unpredictable
• Workers Compensation and Liability insurance costs are very high and significantly escalate the cost of doing business
• Finding trained field help is difficult – seasonal work makes it hard to attract quality workers
• Providing health care benefits for employees is very expensive
• Competition is high with many small local building contractors and regional large contractors
• Slow payments from customers present challenges in maintaining company credit and credibility.
• Construction is a dangerous business – safety is always an issue

Options:

• Diversify product offerings
• Provide architectural services to increase design/build volume
• Join self-insured group to provide affordable workers compensation insurance
• Emphasize construction management capabilities

How Can the Community Help?

• Support local construction companies
• Patronize all local businesses – a growing and healthy local economy will result in new construction

Land Development

Industry Issues, Challenges and Trends:

• Land is being developed more and more for residential property - outlook for residential development in Itasca County is good
• The age curve is increasing and putting new demands on specific housing needs
• Low interest rates are positive for developers and consumers
• The unstable stock market has made land investments more desirable
• Balancing development of finite resource against environmental responsibility
• Must deal with rising (and justifiable) opposition
• Annexation and reviews of county zoning ordinances often results in increased restrictions placed on a project

How Can the Community Help?

• Get involved – identify what we want to be as a community – participate in county zoning and comprehensive land development meetings
• Form a Developer Support Group! Recruit community leaders to work with developers and sit in on public meetings to speak up and voice support for a project

Real estate development

Industry Issues, Challenges and Trends:

• Significant price appreciation
  • lake homes in Grand Rapids area increased 76% from 1997 through 2002
  • the average home price (as of 12/31/02) is higher in Grand Rapids than in Brainerd
• Substantial population growth
  • Minnesota population projections show Itasca County growing at a slower rate than Crow Wing, Cass and Aitkin Counties
• Increased turnover of properties
• Aging population
• Increased competition (more agents)
• Increased use of the Internet

Options:

• Expansion into other markets
• Consolidating with other companies
• Getting into specialty markets – new construction, elderly housing, etc.

How Can the Community Help?

A community needs:

• Good financial institutions and mortgage lenders (these are now available)
• Good schools, shopping, medical facilities and recreational opportunities
• Better roads
• A local government that doesn’t deny growth
• Affordable and elderly housing
• A good marketing plan for the area

Keynote Address: Patrick Ryan is President of Ryan Companies US, Inc., a leading commercial real estate firm. Ryan provides services in design-build, development, asset, property and facilities management to customers in the industrial, retail, public sector, office, mission, critical, medical and hospitality markets.

Observations:

• Clients are the best ambassadors: integrity, honesty and loyalty matter. (70% of Ryan’s business is repeat clients)
• Availability of an educated workforce essential
• Skilled labor is evaporating
• Web-based technology (location matters less)

What does not work:

• Getting property, putting in the infrastructure, marketing the property and sitting back and waiting for a business to come

What does work:

• Create a quantifiable vision with goals (what does the community want to be?)
• Remove roadblocks
• Work with education system to train workforce – workforce will need to shift from natural resources to services and will have to be trained for that shift
• Engage business community (intellectually, emotionally and financially)

* Don’t chase the new businesses – organic growth is a better investment. Companies, developers and real estate firms all must have their money invested in a project.