Crystal Ball Design Build Associated General Contractors of Michigan’s Hill: Construction companies ready to help rebuild state
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Damian Hill, industry relations director at Associated General Contractors of Michigan, participated in a Q&A with MiBiz Managing Editor Joe Boomgaard about the organization’s outlook for 2011.
Hill: Surviving is one thing, thriving is perhaps another! The construction industry is populated with men and women who are willing to take risks. It has always been a risky business. Construction companies go where there is work, and for too long now, Michigan has not been one of those places. Hopefully, that will change over the next few years as Michigan’s economy transitions from one based in manufacturing to alternative energy and other growth areas. The construction industry is poised to help “Rebuild Michigan” and return our state to prominence in the future. But Michigan-based construction companies should not have to rely on doing work in other states just to survive.
Hill: The construction industry always faces its fair share of challenges, but with challenges come opportunities. The commercial construction industry, particularly in Michigan, has had to survive a prolonged economic downturn waiting for the state to recover. The economic meltdown across the U.S. in the fall of 2008 made things that much worse. Money was not being lent, owners would not risk capital and projects were shut down mid-stream with little hope of ever being completed. So construction as an industry in Michigan will continue to face limited growth opportunities in 2011. But the industry survives because construction is not a luxury, it is a necessity. There will always be the need for new infrastructure including wastewater treatment facilities, schools, roads, bridges, etc. And the need for new hospitals, shopping centers, churches, restaurants, entertainment facilities and more. Construction means progress and Michigan could use some of that progress!
Hill: That’s a great question for the Magic 8 Ball! Reply: “hazy, try again!” Every time we seem to turn a corner, something new veers us off course. It looks like Michigan will add a small number of jobs in 2011 and 2012 for the first time in many years. But it will only dent the massive job losses — more than 800,000 — the state suffered between 2001 and 2009. Unfortunately the construction industry typically lags behind general employment, so any significant increase in construction employment appears several years away. But the state must keep moving forward. We need to work to improve the business climate and attract new companies, entrepreneurs and job creators. We didn’t dig the hole overnight, so we can’t fill it in overnight. Steady progress fueled by sound legislative and regulatory policy and a renewed sense of commitment to turn things around is critical. Michigan must solve its problems from the inside out.
Hill: New technology and business process improvements are driving change in the construction industry. The increased use of mobile devices on construction projects to transmit and process information and make critical decisions is booming. And the use of software applications that allow designers and builders to build “virtually” before turning any dirt are now very common.
On the “process” front, the industry is collaborating at much higher levels and eliminating some of the friction there used to be on construction projects. Project delivery systems like Integrated Project Delivery (IPD) have raised the bar for collaboration on construction projects. IPD typically involves a multi-party contract where the construction owner signs a multi-party agreement with the prime designer, contractor and other key project stakeholders. Traditionally, owners would have separate contracts with each key stakeholder. The cooperation and teamwork required under this type of agreement was virtually unprecedented in the construction industry until a few years ago.
Hill: Obviously a pro-business change to Michigan’s tax structure would benefit small businesses and help spur growth and development. As much as Michigan’s old Single Business Tax was disliked, the new Michigan Business Tax is even less popular. If the state decides to make tax changes, it needs to get it right this time. There also needs to be meaningful and permanent budget reform so the state won’t have to make drastic cuts year in and year out to balance the budget. Difficult decisions have to be made now to put Michigan on the road to recovery.
Hill: Governor-elect Snyder and the new legislators have a unique but challenging opportunity ahead of them. Michigan needs solutions to some very difficult and systemic problems. Business or politics as usual will not be acceptable. Bold changes will have to be made including difficult budget-cutting measures and probably a new and improved tax structure. The first six months will prove critical to meaningful success down the road as the governor and legislators begin to address some longstanding structural problems to state government.