Construction construction: the tight economy put a squeeze on many builders, but it wound up squashing one of the state's biggest.

• Author: Maley, Frank
• Position: Building North Carolina

Charlotte developer Jim Gross was less than two months from finishing a building that already had tongues wagging -- $50 million, 25-story tower of pink glass with residential condominiums, stores and offices just south of downtown. Early in the project, some neighbors had complained that the building was an eyesore, but that didn't deter him. Construction workers kept pushing The Arlington toward completion.

In early February, Gross, president of The Metropolitan Group, met with his general contractor. About 70% of the condo units had been sold. Two-thirds of the office space was leased. Setting up a schedule for walk-throughs and closings, he said he was counting on Miller Building Corp. to finish by March 31. The response: "No problem." So he sent letters to customers, telling them when they could see their units.

A week later, a Miller Building rep called to say the company would be financially unable to finish the project. Gross expects completion -- under a new contractor -- to be delayed until summer. "So I made myself look like a complete idiot," he says. "Miller just completely dropped me in the grease." He wasn't the only one. The contractor walked away from its other jobs, too, including a $36.8 million jail in Cumberland County, and dropped off BUSINESS NORTH CAROLINA'S list of the state's largest general contractors. Before collapsing in late February, it had been a perennial top-five builder. "We felt lucky to get Miller because of their reputation and their quality of work," says Tom Cooney, assistant county engineer in Cumberland County. "Absolutely nobody I know saw this coming or could foresee it."

Project owners and developers got hints of trouble during the last quarter of 2001 -- subcontractors not being paid, work slowing down -- but Miller Building kept up appearances until close to the end. In late February, Chairman Hank Miller told The Wilmington Morning Star that the company was hurting but urged people to have faith that it would survive. Less than a week later, it started quitting jobs.

The company's slide was more gradual than it seemed. Going into 2001, it had a $130 million work backlog. By year's end, that had dropped to $40 million. When it closed the doors, the backlog was down to about $30 million. A sour economy shrank the number of jobs it won. "We just kept getting folks that would bid lower than us, lower than our costs in a lot of cases," Miller says.

After Sept. 11, roughly $35 million in jobs the company had lined up -- but hadn't started -- were halted by owners and developers. At the same time, Miller Building was spending heavily on lawyers' fees to get paid for work it had done. Owners withheld about $20 million last year because of disputes over delays and cost overruns on five projects. As cash flow ebbed, the company started cutting costs, but not fast enough. "A $100 million organization looks a lot different than a $30 million organization."

The company could have survived a bad economy or having to go to court...