Commercial builders.

• Position: Industry Outlook - Panel Discussion

THOUGH UTAH'S BUILDING BOOM has slowed since the Olympics, construction companies are optimistic that an influx of people and businesses to our state will result in new projects. UB's first executive roundtable of 2003 involved local leaders in the commercial construction industry.

Participants included George Ambrose, The Layton Companies; Bud Bailey, Bud Bailey Construction; Kim Briggs, Marsh, Inc.; Bob Campbell, CAMCO Construction; Tom Case, Granite Construction; Paul Clyde, W.W. Clyde & Co.; Bill Garrf, Garrf Construction; Jim Gramoll, Gramoll Construction; Todd Hughes, Hughes General Construction; Richard Hunt, R.C. Hunt Electric; Richard Kirkham, Jacobsen Construction Company; Jim Laub, Cache Valley Electric; Tom Mabey, Sahara Inc.; Ben Nilsen, Oakland Construction; Scott Parson, Staker & Parson Companies; Al Schellenberg, Geneva Rock Products; Bill Smith, Big-D Construction; and Cal Wadsworth, Cal Wadsworth Construction.

Special thanks to Richard Thorn, president and CEO of Associated General Contractors, for moderating this month's discussion.

What's the state of commercial construction in Utah?

GARFF: Construction is way down. Large projects are gone. The freeway work's done. The conference center is done. The Olympic work is done. We've picked up our work, but it's been tough.

SMITH: Non-residential commercial construction has for years been around $400 million in Utah, to about the early to mid-90s, and then it peaked in '97 at about $1.37 billion. It's down 42 percent this year. The feeling is that it won't be that robust in 2003. Perhaps more than 50 percent of our work is outside Utah.

NILSEN: That condition brings to owners very competitive pricing. It is an excellent time for them. It also causes contractors to reduce their fees. We're hurting with one or two subcontractors on every project because they go out of business.

CASE: We do work in the public sector for UDOT and various agencies, and we've seen a shifting in funds from the metropolitan area to the outlying areas and a decrease in the funding levels since the pre-Olympic infrastructure build-up.

CLYDE: Our company did a lot of work on the Olympic venues, but we have quite a bit of work in water resources, so we've been strong in that area with the Central Utah Water Conservancy District. We've seen a decrease in our private sector marker.

LAUB: Subcontractors are getting cheaper. About half our work is outside Utah, and even though Utah has its problems in construction, Utah in a lot of ways is stronger than a lot of the states we are working in. The construction industry right now is unsettled.

HUNT: It's a strange market right now as a subcontractor. The better contractors know about what their costs are, and they're not willing to cut their prices lower and will only cur so far. We're having to travel out of state to find the margins that make sense.

SCHELLENBERG: We work as a supplies; subcontractor and a general contractor, We have seen over the years the build-up of capacity, and there's much more capacity to provide concrete and asphalt products than there is a demand now, so that has made that area very competitive.

PARSON: There is overcapacity in our market. We track construction values each month and compare them with last year the same time period. Back in June and July, permitted values were down about 25 percent. To the end of November, they were down about 18 percent. That's hopefully a sign that the economy is recovering, that there is some construction being permitted that should happen next year.

AMBROSE: We are seeing quite a bit of remodel work being done, and the vacancy rate is pretty high for developers. They're having to just about give away profit just to get people into the lease. We're seeing quite a bit of activity there compared to last year. It's competitive. It's weeding out the weaker subcontractors. You have to screen them closer.

Many of you have chased work out of state. Are you comfortable with that?

WADSWORTH: Diversifying and looking at other states is critical, being willing to change.

CAMPBELL: There's obviously a lack of work in Utah, and we're all looking outside. I'm most comfortable going with an owner that I developed a relationship with. He knows I'm going to rake care of it. He'll let me pick subs that I know can perform and also not go bankrupt in the middle of a job, which is something we are experiencing in Utah.

Many believe construction drives the economy. If that's true, what does the future look like?

MABEY: We've come off a boom time in the construction industry, and things are getting back to normal. It's (an) unsettled economy now, and I've seen...