Construction economy

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(Host) Legend has it that spring is just a fortnight away. But commentator Timothy McQuiston says, if winter decides to continue into April, it could affect the one industry Vermont can’t afford to have suffer.

(McQuiston) It’s beginning to feel like it’s been winter forever. The kids has a snow day before Thanksgiving, and Monday was one of the coldest days on record. But most Vermont businesses carry on in spite of the weather. It doesn’t have much affect on IBM, publishing, accounting, machining or even tourism.

Well, of course if the winter is too dry or too warm – or, as the was the case during President’s Day weekend – too cold, skiing will be affected. But with the massive snow making capabilities of Vermont ski areas, and the fact that summer is the most visited season, tourism is more a matter of marketing at this point, than of weather.

But there is one industry that is absolutely vital to Vermont’s economy – especially now – and it’s one that can be adversely affected by the weather: construction. Construction in Vermont has done well right through the economic downturn of the last two years. It’s kept the ship of state afloat through a massive retraction in manufacturing and devastating dive in the stock market.

Though slightly down last year, construction gained 450 jobs over the last two years and employs upwards of 17,000 Vermonters during the summer peak.

Construction is important because it pays good wages, employs a lot of people, and it’s impact works it way into many other related and unrelated industries: heavy equipment, truck sales, banking, the timber industry, tools, accounting and legal – among others.

Construction has maintained its strength for few different reasons. One is the very low interest rates. Another is the large, ongoing projects like the $300 million Fletcher Allen project in Burlington and the retail/commercial development in Williston. And a third is pent-up housing demand, which has pushed residential construction up across most of Vermont, but especially in the northwest part of the state and in the Upper Valley.

According to the Dodge reports, which look atr the value of construction contracts, Vermont enjoyed a better 2002 than 2001, up 38%. That’s good for a good year, fabulous for a recession – and that’s on top of an 11% increase over the previous year.

It will be awhile yet before we can tell what affects this brutal winter may have had on the construction industry. If jobs are put off, payments are put off, hiring is delayed and the whole thing suffers. But the housing market appears to be strong. Mortgage rates remain absurdly low. Big projects are on the books. And the state may still find a way to put more money into the lagging highway construction budget.

Of course, all bets are off if we go to war, or there’s inflation, or consumer confidence drops even lower. But construction appears – at this point in time – to be Vermont’s most important industry.

This is Timothy McQuiston.

Timothy McQuiston is editor of the Vermont Business magazine.

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