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Some Builders Hiring; Defense, Health Care Projects Trickle In

George Rogers feels fortunate that his company, RQ Construction Inc., has enough military base infrastructure work that it plans to add 30 to 40 employees in the coming year, bolstering its current workforce of approximately 180.

“We actually have more work lined up on the East Coast than the West Coast at this point,” said Rogers, president of the Carlsbad-based firm, noting that its defense-related projects have recently moved well beyond San Diego County to bases in Virginia, North Carolina and the Mid-Atlantic region.

He acknowledged, however, that most San Diego County contractors will be hard-pressed to add workers in 2012, even as the economy continues to improve.

“It’s not going to be anything to party over,” he said. “The market has probably hit bottom, but the hiring is going to stay really slow for a while.”

That sentiment reflects recent surveys and data released by The Associated General Contractors of America, an industry trade group, indicating that 45 percent of California contractors queried plan to add workers in 2012, up from 26 percent a year ago. An additional 23 percent plan no change this year, 11 percent plan layoffs, and 21 percent don’t know.

Of those who plan to add workers, the largest share of respondents, 37 percent, will likely take on five or fewer new

employees.

Upward Jobs Trend

The AGC also noted that California led the nation in the number of new construction jobs created in 2011 — a total of 21,300, up 3.9 percent from 2010.

But the hiring climate generally remains dicey for individual markets, including San Diego County. The region ranked 211th out of 337 U.S. metro areas in an AGC report, as construction jobs dipped from 54,300 in 2010 to 54,000 in 2011. The rankings are based on the percentage change in construction jobs during the past year. Top-ranked areas had the highest percentage gains in construction jobs.

“The market overall is still at rock bottom, so any work that comes along this year is probably going to cause a noticeable increase in demand for workers,” said Doug Barnhart, chairman of J. Reese Construction Inc. in San Diego.

Barnhart said the firm continues to get projects in the health care sector, with recent work on Sharp Healthcare’s cancer center in Chula Vista and medical office buildings in the works in southern Riverside County. It also does tenant improvement projects throughout San Diego.

Barnhart, who in the 1980s founded the company formerly known as Barnhart Construction, which he sold to Balfour Beatty in 2008, said the military sector remains a strong source for local firms’ work, despite talk of future federal defense budget cuts.

But competition for projects has intensified considerably in recent months. Barnhart noted that when his company recently bid on a project to build a firing range at the U.S. Army’s Fort Irwin in San Bernardino County, it found itself up against 26 other firms.

“I haven’t seen anything like that since about 1982,” Barnhart said. One result of the climate is that his workforce this year will likely hold steady, at around 10 full-time staffers, with more hirings possible as projects require.

“I think things in 2012 will be about the same as 2011,” he said. “You just have too much uncertainty out there with the spending cuts, the politics and the health care reform issues.”

Industry observers note that construction indicators remain mixed, as contractors face continued challenges with tight credit, government spending cuts and generally low user demand that is keeping new construction in check in most markets.

“Many communities are benefiting from growing demand from the private sector for new construction activity,” said Ken Simonson, Associated General Contractors’ chief economist, in a statement. “Unfortunately, too many other areas are still coping with construction employment losses as the overall market remains relatively weak.”

More Building Permits

Local contractors could see some relief this year from projects that went into the planning pipeline in 2011.

According to the latest data from the Construction Industry Research Board, a nonprofit information bureau, San Diego County builders took out more than $2.3 billion in construction permits in 2011, up 45 percent from 2010.

The figures include new construction projects, renovations and additions. Residential permits rose 34 percent in the past year, while commercial permits were up 63 percent.

Overall, local construction based on permit values reached 2008 levels in 2011, although the region remained short of the $4 billion in activity seen in 2006 and $3.2 billion in 2007.

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