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Construction Boom – or Overload?

Los Angeles Business Journal Staff

Building: Opportunities ahead.
Building: Opportunities ahead.
It may be too much of a good thing.

With all the focus in Sacramento on infrastructure funding and the prospect of billions of dollars pouring into the L.A. region to fix highways and speed the movement of goods, an extended boom period appears in the offing for local engineering and construction firms.

But while these companies are ogling the opportunities with anticipation and already are staffing up, there is some concern that the industry is already stretched too thin and that companies may have to pass up what, at other times, would be lucrative projects. This, in turn, could affect the ability of local and state public agencies to deliver projects on time and within budget.

“We just see more and more work coming into an industry that’s got reduced capacity as we speak. We now see this for years to come,” said Ron Tutor, president and chief executive of Sylmar-based Tutor-Saliba Corp., one of the region’s major engineering and construction firms, which recently won a contract to move and widen the south runway at Los Angeles International Airport.

Tutor said his company is in the midst of increasing its salaried and engineering staff 25 percent – and that’s just to meet the backlog of work it already has.

Tutor and other local engineering and construction executives say qualified engineers are now hard to find, causing a bidding war for top talent. And with states across the nation already pouring in millions of surplus dollars into infrastructure projects – not to mention the billions of dollars that will be spent in Gulf Coast recovery efforts – materials costs are going through the roof.

All this points to significant challenges for public works agencies in the months and years ahead, just as the public will be looking to them to deliver the promises made by Gov. Arnold Schwarzenegger and other elected officials to rebuild California’s long-neglected infrastructure.

In his State of the State speech earlier this month, Schwarzenegger laid out a bold plan for $68 billion in state bonds and another $150 billion in federal, state and local funds over the next 10 years for repairing the infrastructure.

“We need more roads, more bridges, more schools, more hospitals, more, more, more,” Schwarzenegger said.

Details, details
The governor and legislative leaders are now hammering out details of what will be in the first bond measure slated for either the June or November ballot. Schwarzenegger has said he’d like the bond to be $12 billion and to make the June ballot.

But last week, L.A. City Councilman Alex Padilla, who is also president of the California League of Cities, told the Los Angeles Current Affairs Forum that there are so many details to be hammered out that it’s unlikely the March deadline for the June ballot will be met.

“The consensus seems to be to aim for a solid, well-crafted bond measure on the November ballot,” Padilla said.

Even if voters do approve the ballot measure, monies won’t begin flowing to transit and other public agencies for at least another year after passage.


  February 8 - 14, 2010
LA Business News
Convention-al Appeal
New downtown hotels and a bustling L.A. Live scene are hailed as big convention business boosters.
Owner Back in the Saddle at Santa Anita Race Track
A deal with creditors will allow owner Frank Stronach to hold on to the reins of Santa Anita Park.
Unions Dropping Anchor in Long Beach?
The Port of Long Beach’s use of project labor agreements may maroon nonunion contractors.
Local Latinos Make Chinese Connection
A contingent of Latino officials from L.A. cities overcame culture clash on a recent trip to China.
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