CITYWIDE — There have been many victims of the ongoing economic crises, however, City Hall and Santa Monica College have recently been able to capitalize on a falling demand in private and commercial construction as well as a drop in labor and materials costs.
“We had a problem in the last five or six years, until just recently, the construction costs were going up tremendously,” said Greg Brown, director of facilities planning at SMC.
Brown said that Phase 1 of the college’s new $77 million Student Services Building came in $3 million under budget due to cheaper materials.
“Our budget has been tight and it has been hard to complete our projects under budget,” Brown said. “The savings will just guarantee we can complete all of our projects.”
City Hall is also seeing similar trends brought on by heavy competition in publicly funded construction.
On Sept. 25, 2007, City Hall had six contractors bidding on a citywide street light project. The final bid accepted was 12 percent below their initial estimate. Then on Nov. 11 2008, on a similar project, 12 contractors bid and the awarded contract was 30 percent below their estimate.
“We have doubled, in the amount of bidders, and it looks like our projects are coming in anywhere from 10 to 30 percent below the prices we were getting previously,” Lee Swain, director of public works, said.
“It simply means we can do more projects with the same amount of funding,” Swain added. “The more competitive the bidding market is — it’s more ideal to get projects done. You can get more work for the same dollar.”
While City Hall capitalizes, contractors cringe
“The year is not looking good,” said Refaat Mina, president of Minco Construction, which is currently working on Phase 1 of the new SMC Student Services Building.
“When the housing market went belly up all of the private contractors came to the public sector,” Mina said. “These guys, who come from the private sector, are bidding really, really low. They are bringing the prices down.”
However, the transition from private and commercial to public projects isn’t without its complications. Swain and Mina both agreed that it is imperative for contractors to be educated on the strict guidelines that go along with federally-funded projects.
Regardless of the added red tape, President Abeer Sweis of SYN.THE.SIS, a residential and commercial design and construction company in Santa Monica, had no reservations when she expressed she would “love” to work on public projects.
Abeer has seen her business drop “very sharply,” about 75 percent in the last three months.
“There’s really no new projects being generated, at all, and the ones that are — people aren’t really ready to move forward,” Abeer said.
Les Cho, supervisor of building and safety for City Hall said, in a period from July 2008 to February 2009, there was a 23 percent decline in permit requests for single- and multi-family homes compared to the previous year.
Abeer said her high-end clientele don’t feel confident in the future of their jobs, and the stringent credit market hasn’t helped either.
“It’s pretty extreme,” Abeer said.
A concrete problem
The situation at Bourget Bros. Building Materials seems to be getting worse every day.
“With the recession, there are reductions of prices that are coming out daily,” John Bourget, president of Bourget Bros. said.
Bourget said most of his items are selling at 15 percent below their value. In addition to falling product values he said his transactions have dropped 25 percent.
“Competition is getting so fierce that everyone is trying to sell products at a lower price,” Bourget said. “A lot of them are cutting prices, like the bigger guys, but the little guys have trouble keeping up with them.”
Bourget blames the falling prices on the bad economy and how it has affected the upper stratum of society that populates the Westside and who he and many others in the business rely upon for new projects.
“Those type of people have to have a lot of money coming in to pay their expenses and they’re all worried,” Bourget said. “It’s cut into our industry, in our area, for the first time in 15 years it’s starting to hurt.”
Business is so bad at Bourget Bros. the company is at the “threshold” of beginning to lose money. Bourget became sentimental at the thought of what he will have to do to keep his company afloat.
“You have to cut labor and cut inventory, you got to tighten, you have to get smart,” Bourget said. “You got to do what you got to do to survive.”
If there is any other silver lining it is that not all of the private contractors in the Santa Monica are feeling the pinch.
Craig Bradley, owner of Bradley Construction and Design is surviving and flourishing in the private and commercial construction business by doing things the way he always has.
“I’m a member of what I call the 5 o’clock club,” Bradley said. “I get up at five and I’m ready at six, and people like that.”