Contractors Report Projects Smaller, Mostly Privately Funded

YOUNGSTOWN, Ohio — After a bitter winter with little or no project activity, commercial builders in the Mahoning and Shenango valleys say the market is on the mend.

A flurry of new bidding opportunities has emerged with the construction season in full swing.

Regardless, the makeup of projects over the last several years has changed. Gone, for example, are the days of the state of Ohio funding construction of new schools on a large scale. Instead, that work has been replaced with an increase in smaller, private projects in the area.

Contractors Joe DeSalvo of DeSalvo Construction Co. Inc., Larry Lencyk of Lencyk Masonry Co. Inc., Jim Brees of Jack Gibson Construction Co., and Paul Johnson of Adolph Johnson & Son Co., all agree that the market has improved over the last five years, but in a recovery less than robust.

“It was a terrible winter,” notes Joe DeSalvo, executive vice president of DeSalvo Construction in Liberty. “This year looks really good. We’re at the same pace as last year, and last year was a terrific year.”

DeSalvo is making the transition from larger projects, such as state-funded school construction, to more jobs in the private sector. “We’ve been working on a lot of car dealerships,” the companny’s executive vice president says. The recent addition at Fred Martin Ford in Austintown and renovations at Sweeney Buick GMC in Boardman have kept his company busy here while other projects have taken the contractor as far west as Chicago.

Over the last decade, multimillion-dollar school building projects dominated the local market, made possible because the state funded them with the proceeds of its settlement with Big Tobacco in the early 2000s.

That work is dwindling in this region now that many of the schools in the Mahoning Valley have either been built or had massive renovations completed. In addition, the state has changed the way these contracts are awarded.

Previously, the larger, out-of-town construction managers hired for these projects would select local general contractors to do the work, DeSalvo says. The new rules, however, allow the construction manager to assume the role of general contractor. “It cuts us out of the loop,” he notes.

That hasn’t affected business at DeSalvo, he relates. “There are a lot of private jobs with smaller revenues,” he says. DeSalvo estimates his company should have about 50 skilled tradesmen in the field once the season kicks in.

Among the most prominent projects the company in which the company is involved is the new headquarters building for The Cafaro Co., under construction at the Eastwood Mall complex in Niles. Work at area hospitals such as St. Elizabeth’s Boardman campus and Salem Regional Medical Center have also kept the construction firm busy.

Another project the company recently finished is the new Biotest Pharmaceuticals office in the Austintown Plaza. “That was a $1.4 million renovation – a big job,” DeSalvo says. The company is also preparing to work on The Marian Commons, a 40 single-bedroom housing complex to be built on the north side of Youngstown. The project is a partnership that involves Compass & Community Services, Meridian Community Care and Help Hotline Crisis Center.

“It’s going to be a beautiful building,” DeSalvo says. “We should start in late summer.”

Expansions and renovations in the area’s health-care sector are also helping construction firms, adds Jim Brees, president of Gibson Construction, Warren.

“We’re doing some work at Salem Regional Medical Center,” he says, namely the new oncology, orthopedic and pain clinic renovations there. Meanwhile, Gibson is finishing renovation work at Mercy St. Elizabeth’s behavioral health clinic on its Youngstown campus, and the second tower at St. E’s Boardman campus.

“The first part of the year was quiet,” Brees says. Since then, bidding opportunities have increased, and the company president says he’s confident that Gibson will win its fair share of the work. “The opportunity is there to quote,” he says, “both in the public and private sectors.”

Gibson Construction has been successful in landing public projects such as a new wastewater treatment plant in Neshannock Township in Mercer County, Pa., and a water pollution control system in Ashtabula. “We’re optimistic,” Brees says.

Still, it’s clear that the absence of public school projects has affected investment in the nonresidential construction market this year, says Kevin Reilly, executive vice president of The Builders Association of Eastern Ohio and Western Pennsylvania.

In the first half of its fiscal 2014 (Oct. 1, 2013, to Sept. 30, 2014), for example, $59 million was booked for area school improvements and new construction – $30 million of which earmarked for the Beaver Local School District. That’s down to $6 million for the first half of fiscal 2015.

However, the overall value of commercial building projects is up compared to last year. “It’s up over 13% versus last year,” Reilly notes.

The total man-hours tradesmen worked through the first half of fiscal 2015 is slightly ahead of pace compared to the same period last year, Reilly says. “Man-hours are up a little bit – 3.26%,” he notes. “There’s a lot of hotel work going on, and more coming.”

The hotel construction market has helped the bottom line of Lencyk Masonry Co. this year, says its president, Larry Lencyk. “We’ve done eight or 10 hotels between Cleveland and West Virginia,” he reports.

Lencyk says his company will soon start its part of Matalco’s $124 million plant in Lordstown, and notices the bidding environment is much more brisk than last year. “It’s busier from a bidding standpoint, but in the field it’s about the same as last year,” he says.

That’s good news, Lencyk qualifies, because 2014 was a record year for his company. “Business is going very well for us,” he reports. Lencyk Masonry has won bids for school projects outside the Mahoning Valley while it’s just finishing up work at Springfield Local Schools.

“There are no really large projects right now in the Youngstown,” Lencyk says. “But there are smaller projects such as banks, retail and some industrial.”

Other construction contractors say that although the market is better than it was five years ago, the economic recovery has merely inched forward, and small businesses remain wary because of the uncertainty they perceive.

“I’d say the jury is still out as far as the market is concerned,” says Paul Johnson, president of Adolph Johnson & Son, Mineral Ridge. “The recovery has been painfully slow. It’s still not where it was.”

There might be a fair amount to bid, Johnson finds, but many are smaller projects of less than $1 million. And out-of-town contractors that have a long-standing relationship with national chains and franchises have cut into new retail construction in the area, he adds.

“One significant project we did is the addition and renovation of the Greenwood Chevrolet showroom in Austintown,” he notes. “That’s a nice project.”

Johnson observes that small businesses are still reluctant to reinvest in and expand their operations, something he sees as a major source of business for the construction trade. “I don’t know when small business is going to regain their footing and gain confidence,” he says. “Expansion is what helps our business.”

Pictured: Paul Mirage is the project manager for B&B Contractors & Developers Inc., Youngstown, which is overseeing construction of the Cafaro Co. headquarters at the Eastwood Complex in Niles. Rob Wilt is project superintendent for DeSalvo Construction, Hubbard.

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