Editor's note: This article is part of Construction Dive's 50 States of Construction series, in which we talk with industry leaders across the U.S. about the business conditions in their market.
The Midwest might not draw the same attention as high-profile areas of the East and West coasts, but just like in those markets, the construction industry in the heart of the country is thriving.
Wisconsin has reached "a new level of stability," according to Jim Rossmeissl, senior executive vice president and chief marketing officer, for Appleton, WI–based Boldt, one of the state's largest contractors. However, external forces like the labor shortage and uncertainty regarding healthcare and other national issues could threaten that stability.
Boldt, which is transferring its majority ownership to employees as part of the family-owned business' succession plan, specializes in the healthcare and power sectors and operates across the U.S.
Construction Dive spoke with Rossmeissl about the main factors influencing demand in Wisconsin, major challenges facing contractors and the potential regulatory impact of a new presidential administration.
Editor's note: This interview has been edited and condensed.
Which regions within the state are seeing the most activity?
ROSSMEISSL: We’re all over the state, and our involvement kind of goes with the flow. If you go back eight years, the city of Madison — so that means the state [capital] and the university — was doing a lot of work, and we were involved a great deal in that. In about a 15-year period, we had been involved in over $1 billion worth of work in Madison for the state and university. As we all know, the state budget now isn’t producing a lot of state and university projects, so our activity in Madison has waned a bit. But it has picked up in the Milwaukee area, mostly in healthcare. Although we’re all over the state on a continuing basis, we’re in some areas more than others. Rarely have we seen every city and every region of the state hitting on all cylinders at the same time.
How would you describe overall demand in Wisconsin right now?
ROSSMEISSL: I would characterize it as stable. If you look at the construction industry in general in the state, it’s very busy. Contractors are busy trying to digest the work that they have, so maybe the bar is now higher, but we’ve reached a new level of stability. As we look ahead, we’re projecting more of the same in terms of stability. I don’t think we’re foreseeing any tremendous downturns, and I don’t see any tremendous peaks ahead of us compared to where we are now. It’s a pretty constant level of busy activity at this point.
At any other point in time, we could look at the Midwest and almost always say it’s not as busy as the East Coast or the West Coast or the South, but in this unusual period we’re in right now, there’s stability all over. It’s a good feeling, and we’re hopeful that it continues.
Are you seeing that strong demand in both of your main sectors?
ROSSMEISSL: Yes. We’re seeing a [good level] of wind and gas projects. This state isn’t big on solar, but I think wind is going to continue in the state. In the fossil fuel market, it’s more gas than coal. Coal is relatively non-existent at this point.
And what about the healthcare market?
ROSSMEISSL: Demand is strong, but we’re seeing a temporary lull in that market. This is not unlike the period of time before Obamacare was passed. There was demand, but [owners] were waiting to see what the legislation would bring them with regard to Medicare and Medicaid reimbursements. We’re seeing that same thing now with the pending Republican response to Obamacare and what’s going to happen with all of that. There’s some concern in the market about what the future is.
It’s interesting that there was anxiety over Obamacare in the healthcare sector, and after Obamacare was enacted and played out for a couple years, the healthcare industry, by and large, was very pleased with what it did for their business. I think they’re concerned now that a Republican response would somehow change that formula, and it likely would. It’s frustrating because there’s very little we can do about that; it’s a wait-and-see kind of thing.
We’re involved in a lot of planning right now, we’ve got a lot of strong relationships, and we’re well-respected in that market space. It’s going to move forward, but a lot of it depends on [what happens at the federal level].
What are the biggest challenges your company is currently facing?
ROSSMEISSL: Finding good, experienced employees. That is for two reasons: A lot of people involved in the construction industry back in the downturn evolved out of it as the market waned and some of those jobs went away. And it’s hard getting millennials and the younger generations involved in the construction trades. It’s hard work, but it’s rewarding. The [positions] are well-paid. It isn’t like it used to be. It’s not seasonal, especially when you’re employed by a larger construction organization.
Good labor is a challenge and will continue to be a challenge. We’re doing a lot to educate younger people on the opportunities in the construction industry. We’re very fortunate that we’re a good, strong company with good business values and family values. Once we land an employee, they’re here for the long haul. But it has been hard. Because of that, there’s upward pressure on salaries for the salaried part of the profession, and I think we’re going to see some upward pressure on labor rates as we go forward. I wouldn’t classify it as inflationary, but I think we’ll see a more rapid advance than we have in the recent past.
Are there any state or federal regulations that have a significant impact on your business?
ROSSMEISSL: Specifically to the construction industry, I don’t think so. What we see from OSHA with regard to safety and the environment, they’re probably good for the industry in general. We’re all very interested in safety, and we believe the government oversight is appropriate and necessary. When it comes to business regulations, I don’t believe the construction industry is overly regulated, in general. The way businesses are regulated in this country, the way they’re taxed in this country and the impact it has on the business community — that would have an indirect impact on our industry specifically. But I don’t think the construction industry is singled out.
Do you expect the current presidential administration to bring any major changes that could impact the construction industry?
ROSSMEISSL: I don’t think we’re going to back away [from regulations] in a major substantial way. Some of the detail is cumbersome, but we’re not going to go back to the Wild West, there’s no question about that. This is the good part of it: There’s too much regard for protecting life.
The biggest opportunity seems to be from the sentiment — the emotion in the country — around the Trump administration and [the possibility of] a better business climate that could be more conducive to growth versus more restraint.
How could Trump’s massive infrastructure proposal impact the overall industry?
ROSSMEISSL: If they are successful, it would cause somewhat of a migration into [infrastructure work], so we’d see new and existing contracting entities expand their market offerings and move into the infrastructure sector. As companies get busy in the infrastructure sector, for those not involved in it, it’s going to create new market space for them. Any time you start spending like that, it’s going to be good for the majority of the market sectors in the construction industry. There are a whole lot of businesses that support the construction industry that will also benefit from that kind of activity.
Where do you see the market going in the next few years?
ROSSMEISSL: The projection right now looks pretty solid. There are a couple areas that we're not involved with that [could start to slow]. We’re probably seeing the multiunit residential market reaching close to capacity, so we think that market’s going to slow down, and maybe the same for retail. For the rest of the markets, we and our industry are projecting stability. But if the Trump administration strikes out on reducing business regulations, I think that would cause a slowdown, and probably a fairly rapid one.