INSIGHT ON: Commercial Construction – Bursting at the seams

Posted on Feb 1, 2015 :: Commercial Construction , Insight On
Sean P. Johnson
Posted by , Insight on Business Staff Writer
Hoffman Planning, Design & Construction is working on a $25 million, 162,000- square-foot expansion to Bemis Co.’s medical packaging facility in Oshkosh, one of the major projects the company will pursue in 2015.  Photo courtesy of Hoffman

Hoffman Planning, Design & Construction is working on a $25 million, 162,000- square-foot expansion to Bemis Co.’s medical packaging facility in Oshkosh, one of the major projects the company will pursue in 2015. Photo courtesy of Hoffman Planning, Design & Construction

The tidal wave has been building.

For the past two years, as the economy of the New North region has slowly pulled itself out of the Great Recession, area manufacturers have ramped up filling orders and putting folks back to work. Uncertain if the recovery was real, many chose to squeeze every last square inch out of their existing space rather than commit to new buildings.

They can wait no more. With work orders continuing to pile up and existing space exhausted, a figurative tsunami of building projects has washed over Northeast Wisconsin, as manufacturers have discovered they need more people, more equipment and more space to meet customer orders.

The surge of demand is welcome news to the region’s builders.

“The past few years, there has really been a pent-up demand for these expansion projects,” says Dean Hunt, director of commercial development at Bayland Buildings, Inc. “They have been at capacity and waiting to see if that business would continue. After a couple of solid years, they finally feel confident.”

An upward trend of demand for expansions and new construction in the manufacturing and industrial sectors began to show itself a couple of years ago, those in the construction industry say. The wave reached an apex in late 2014, when two-thirds of manufacturers responding to the Northeast Wisconsin Manufacturing Alliance’s Manufacturing Vitality Index said they planned a modernization in 2015, and 30 percent planned an expansion.

“It’s been about two years since we have seen the turnaround,” says Pat Nate, vice president for industrial operations at Miron Construction Co., Inc. “The segment leading the way has been food manufacturing and the demand for cheese.”

Since the trend began, Miron has completed expansion and renovation projects for food producers such as Agropur in Luxemburg, Galloway Company in Neenah and Sara Lee in New London. The company has seen the trend working nationally as well.

“What we have seen both nationally and in Wisconsin is that 2014 was a profitable year with these types of projects,” says Dan Voss, vice president of food and beverage for Miron. “The capital projects really took off as these companies expanded their brands. Modernization and food safety have also been big drivers.”

While the recession put a significant dent in manufacturing construction projects, most builders say they were able to find enough projects in other sectors to keep crews working. Still, they are glad to see the region’s manufacturers in growth mode.

“We are coming off of two record years and things are looking pretty good going forward,” says Jim Perras, project director with Consolidated Construction. “People seem really confident in the future and interest rates for projects continue to be good.”

Consolidated will begin 2015 with an expansion project for Werner Electric Supply Co. in Grand Chute and recently wrapped up expansion projects for Bay Valley Foods and Kundinger Fluid Power.

“A lot of the fundamentals are in place to move forward with these projects,” Perras says.

If there is any challenge that could dampen the surge in manufacturing construction projects, it is, ironically, the same challenge that many manufacturers themselves face: a shortage of skilled workers.

The industry is facing challenges to replace those who left during the lean years, as well as baby boomers who are close to calling it a career.

“Right now, as the market is bouncing back, those quality candidates are a bit harder to find,” says Miles Girouard, president of Hoffman Planning, Design & Construction, Inc., noting that like many other industries, technology plays a much greater role in construction jobs than it did just a few years ago.

Nate says Miron is investing time on the high school level making sure students understand the needs and rewards from a career in construction.

“The skilled labor shortage is only going to get worse if we don’t take action now,” he says.

If the economy stays on its current path, Girouard expects amanufacturing companies will continue to expand.

“The labor rates in places like China and India are getting more competitive, so it’s making less sense to move things offshore,” he says. “Many companies are bringing their manufacturing processes back to the U.S., and they need to hire workers and have a place to put them.”

Under Construction

A sampling of manufacturing-related projects recently completed or under construction:

» Galloway Company, Neenah — $15 million expansion and renovation of the company’s corporate headquarters and production facility.

» Bemis Co., Oshkosh — 163,000-square-foot expansion to the company’s health care packaging manufacturing facility and office complex.

» Grande Cheese Company, Fond du Lac — 87,000-square-foot corporate headquarters and research park.

» HC&S, Clintonville, — 37,000-square-foot manufacturing facility.

» Bay Valley Foods, Green Bay — 25,000-square-foot expansion of its existing manufacturing facility.