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Home | News | Small construction firms face competition with large firms

Amid the struggling economy, small construction firms in the Washington, D.C., area have noticed large construction firms are more willing to bid on smaller projects, creating more competition, according to the Washington Business Journal.

"Larger contractors are chasing jobs that generally a company my size would be doing," says Jeffrey Abramson, president of Abramson Construction Corp., Bethesda, Md., which focuses on smaller retail projects.

Now, Abramson and other small contractors are looking elsewhere for work, such as federal projects resulting from federal stimulus legislation.

"I just bid on my first federal job about four days ago," Abramson says. "The contract is for a $1.5 million, 5,000-square-foot build-out at the National Cancer Institute. I was told that 27 general contractors bid on that job."

Private sector construction projects are scarce, and the construction industry continues to shed jobs. Construction employment has decreased in 325 out of 337 metropolitan areas during the past year. Construction spending fell by more than $137 billion in November 2009 to a six-year low of $900 billion. Despite the federal government's presence in Washington, D.C., 6,400 jobs were lost in the Washington area between November 2008 and November 2009.

"Private nonresidential construction is in free fall, with every category except private power construction down sharply compared with a year ago," says Ken Simonson, chief economist for the Associated General Contractors of America. "Those cuts are causing layoffs in virtually every part of the country for tens of thousands of skilled construction workers."

Although some contractors are optimistic about a turnaround for the construction industry, Anirban Basu, chief executive officer of Sage Policy Group Inc., Baltimore, says the construction industry continues to struggle.

"The economic activity stemming from developer-driven projects continues to be extremely weak," Basu says. "With office and retail vacancy rates rising across much of the U.S., and with credit available to developers still tight, recovery in developer-driven activities is not anticipated anytime soon."

2/18/2010

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