Military construction in the United States in the next five years is widely projected to become the busiest such period in American history.
That’s the good news.
What has contractors feeling anxious is whether they are up to the challenge of doing all that work.
Steve Turner, senior project manager of military programs of the Savannah District of the U.S. Army Corps of Engineers, is well placed to appreciate the impact of the expected surge of construction activity. The Savannah District covers Georgia and North and South Carolina, states that are one focus of nationwide base reconstruction and modernization. Appropriations for the projects still await final congressional approval.
Turner projected U.S. military construction expenditures of $50 billion in fiscal years 2007 to 2011, with “a large share of it” occurring in his corps district. Current contract work in the district is running approximately $600 million a year and Turner anticipates that doubling next year.
In fact, he said, “over the next three years, we expect to see an annual doubling” in contract work.
One impetus for all this dirt-moving and steel work is the epochal Base Realignment and Closure program that concluded last year. The reassessment of military programs and facilities known as BRAC is how the Defense Department periodically reconfigures its vast armed services network.
Previous BRAC rounds were in 1988, 1991, 1993 and 1995 and the realignment process always is a wrenching experience. Military units and programs are shrunk or expanded depending upon perceived need and efficiency, which affects military careers and family life. Military base towns’ economic fortunes and culture rise and fall on the outcome of Pentagon and congressional decisions. National political reputations are cemented or shaken by the ability of members of Congress to protect their home bases at the same time they project an impression of fiscal responsibility.
Somewhere in the mix of all that are numerous contractors whose business plans and prospects are wedded to the health of a military base or program.
This time, however, more than BRAC is making economic waves. The realignment comes at the same time Secretary of Defense Donald Rumsfeld is revamping the fundamental military response mechanism of U.S. forces. The new Pentagon stance will station more uniformed personnel at home rather than abroad with the units being deployable anywhere in the world within three days.
The practical impact of that new deployment model is that bases in the United States will be bigger, or at least fuller, with facilities and programs swollen to match. Private contractors are well positioned to reap the benefits of the base expansion and modernization.
A third leg of this huge sustainable build-up is an ongoing housing construction program. The U.S. Army is in the midst of a goal to create modern living units for all uniformed personnel by 2019. Navy officials are overseeing a similar build-up in new on-shore permanent housing. The stateside redeployment of troops now stationed abroad adds to the urgency of these housing development programs.
A House committee report on the 2006 Family Housing, Military Construction and Veteran Affairs appropriations bill earlier this year recommended $82 billion in new budget authority. It carried this warning:
“The committee reminds the Department [of Defense] that, while undergoing the BRAC 2005 process, it must pay particular attention to coordinating all BRAC-related moves with the return overseas of troops during the overseas rebasing initiative. A failure to do so most certainly jeopardizes the success of the BRAC 2005 effort, in addition to creating untenable circumstances for returning troops.”
The report concluded that “the current backlog of unfunded military construction requirement will only grow more severe as troops return to the United States from installations overseas … a greater commitment to military construction is needed.”
Little Impact in Northeast
That sounds good to construction contractors throughout the country. Those in the Northeast, however, may not even notice the military construction boom.
In Connecticut, for example, military contractors are just thankful that the New London Naval Submarine Base near Groton was saved from a BRAC closure recommendation. The secretary of defense wanted to relocate its functions to coastal bases farther south on the East Coast at a savings over the next 20 years of $1.5 trillion.
“We’re very fortunate we saved our sub base,” said Faith Kuhn, director of the Connecticut Construction Industries Association. Kuhn said “very little closing” will occur because of BRAC and local contractors’ work patterns were not much disturbed by it.
Other sections of the country — notably the Southeast and California — will see major jumps in construction activity. Growth in military construction, in fact, is far more common after this round of BRAC than usually is true. The deputy undersecretary of defense for installations and environment, Philip W. Grone, acknowledged the difference in a BRAC meeting in Atlanta, GA, in May. Grone oversees 46,000 sq. mi. (74,000 sq m) of military installations around the world containing 587,000 buildings, all of which is valued at $640 billion.
“Traditionally, when we’ve done these events, they’ve been very much closure-focused,” Grone said. He noted that the 2005 BRAC program is different in that it “has a very healthy focus on growth. There are a number of locations around the country that are going to see some fairly important growth coming out of this round of BRAC, for a whole variety of reasons.”
The character of the growth indeed will vary. For example, building of housing units will not drive construction activity in the Carolinas and Georgia, according to Turner, the Corps overseer of military programs in those states.
“We’re actually doing very little family housing,” Turner said.
But just about every other kind of structure will be going up in volume on military land in the three states. He describes the mix as a typical assortment of structures built in any city or town in the country. While contractors working at Army and Air Force bases in Turner’s Savannah District indeed will be erecting some barracks, most of the projects will be office buildings, medical clinics, physical fitness centers, fire stations, child care centers — and facilities for just about any other program found in an American community.
“And with that goes all the infrastructure,” he added, meaning streets and sewer lines, water pipes and underground electrical conduit.
Projects in the Savannah District will include one that accommodates the major relocation of the U.S. Army Forces Command and Army Reserve Command from Fort McPherson, GA, to Fort Bragg and Pope Air Force Base in Fayetteville, NC. In another notable move, armored units are being transferred to Fort Benning, GA, from Fort Knox, KY. In yet another Southeast example, Centex Construction of Atlanta is building housing units in Georgia for Fort Stewart and Fort Gordon.
Contracts of $250 million or more in the district include the expansion at Bragg and Pope as well as construction of a hospital at Benning and upgrading of a National Security Agency intelligence facility at Gordon.
Building Ties With the Military
Bloomsdale Excavating is a 60-year-old Midwest contracting company with a history of completing projects at Fort Leonard Wood in southern Missouri. Tom Manion, Bloomsdale’s vice president of the Rolla Region, was brought to the company 17 years ago to forge contacts at the U.S. Army facility. He has developed those to where “hardly a year goes by without Bloomsdale having a project at the fort.”
Notable jobs at Fort Leonard Wood include development of a 4.5-mi. (7.2-km) roadway into the fort through Ozark hills. The $25 million project included moving 2.8 million cu. yds. (2.1 million cu m) of dirt and constructing a bridge with five spans. It was the first design-build highway project in Missouri and was completed several months ahead of schedule by Bloomsdale and a partnering Kansas City engineering firm.
A $60 million basic combat training complex project at the fort involved Bloomsdale Caterpillar scrapers moving some 260,000 cu. yds. (198,000 cu m) of material. The sewer system development had Cat excavators digging trenches 30 ft. (9.1 m) deep in some places.
Manion said the company’s dependable working relationship fostered with U.S. Corps of Engineers officials in these and other projects bodes well for future work at the fort. Consequently, he expected “more of a construction boom this [BRAC] round.”
A Focus on Federal Work
Caddell Construction Co. Inc. of Montgomery, AL, is a significant player in federal construction projects, military and non-military. The company is the general contractor, for example, of U.S. Department of State embassy and consulate projects under way in Moscow, Russia, and Ciudad Juarez, Mexico.
“Our company does 99 percent federal work,” said Eddie Stewart, Caddell president and chief operating officer. “Federal work has been our bread and butter.”
Current Caddell military work includes a $41-million barracks project at Fort Benning and a $68-million officer support facility at Fort Bragg. Said Stewart: “We have more work than you can shake a stick at.”
He said BRAC “has made a tremendous impact” on the industry, along with the bringing home of troops previously stationed overseas. “The net effect on the Carolinas is a big plus.”
All the potential for military contracts aside, Stewart is among the industry executives who wonder about the capacity of the industry to meet the demand facing it in the next five years. He said the problem is two-fold.
First, he acknowledges the widely recognized shortage of skilled craft people — carpenters, electricians, pipefitters and other specialists. It is a chronic problem of demographics: More aging craftsmen and women are leaving the field than trained young people are entering it.
The other part of the dilemma is in management, Stewart said.
“We don’t have enough qualified candidates going in or coming out of construction management programs,” he said, so supervisory positions in the field go unfilled. Stewart noted the difference now and when he graduated from Georgia Tech University in 1978, when he stood in line at 2 a.m. to land a job.
On a scale of one to 10, Stewart said the qualified personnel problem “is close to a 10. We’re passing on work. We can’t get the work force to go do it.”
Stewart is in a position to know the extent of the problem industry-wide. He is president of Associated General Contractors (AGC) of Alabama and vice chairman of the Federal and Heavy Division of the national AGC organization.
“The problem has been on all of our radars for years,” he said.
Henry Hagood, the executive director of the Alabama AGC, looked at the BRAC round as a boon to the state’s contractors. But he, too, cautions that “we have a great amount of work in the state, more work than we have craft people.”
Some of the Alabama work force no longer available to contractors has gone to places like the modern Hyundai automotive manufacturing plant near Montgomery, Hagood said, and other workers moved to Louisiana and Mississippi to help with post-hurricane construction work in those battered states. That migration left some construction companies high and dry.
Quick Work, But No One to Do It
Marco Giamberardino, an AGC staffer in Washington, DC, who keeps an eye on the national legislature, said the next few years are apt to be “the busiest time ever in terms of contracts and amount of work. It definitely is a major ramp-up of activity and could present some problems down the line.”
The relatively short timetable involved in both the BRAC and housing construction campaigns “poses a great challenge,” said Giamberardino. “It will be a challenge for government and the construction community.”
In Utah, the CEO and president of the state’s Associated General Contractors is Rich Thorn. He grew up around heavy construction and his organization is actively “reaching out to the next generation of potential craft people” by interacting with Utah high schools.
Thorn also is vice chairman of the AGC of America’s Executive Leadership Council. From that vantage point, Thorn sees the same industry problem. “It seems like in the meetings I attend one of the top issues always is manpower and work force development. Qualified manpower is a challenge.”
One response to the challenge, Thorn said, might be cultivating interest in construction crafts among America’s “non-native” population.
He is not alone in speculating about the potential of immigrants to rescue the industry. Eddie Stewart of Caddell also said the current wave of new residents from Mexico and places south could be “one of the answers to solving the problem. We are not going to make up the deficit just by recruiting” from the traditional manpower pool.
The industry’s manpower shortage especially begs for resolution with the Corps of Engineers in hot pursuit of capable and fully staffed contracting companies to deliver in this crunch time of military construction. What is lacking, Stewart said, is a coordinated effort to resolve the dilemma.
“Lots of companies and organizations are doing things to try to solve the problem,” he said. “A lot of people are doing a lot of things, but there is not one cohesive push.” CEG