MS Contractors Propose Reducing Hours to Prevent Future Layoffs

Tue July 20, 2004 - Southeast Edition

In an effort to put the brakes on a potential downward economic spiral in Mississippi’s construction industry, Mississippi Department of Transportation (MDOT) highway contractors are piecing together a proposal to save road construction jobs in Mississippi, the Clarion-Ledger reported in June.

Contractors who build the state’s highways have proposed extending project deadlines and cutting work hours to avoid or reduce a projected layoff of 10,000 construction jobs because of budget cuts at the state Department of Transportation, the paper reported.

With $133 million of MDOT’s budget being shifted to the state’s general fund, a number of Mississippi’s road projects are being left unfunded. The department’s budget slid from slightly more than $1 billion in fiscal 2004 to $850 million in fiscal 2005. Officials said projects still in the design phases will remain on paper while projects under way will receive funding.

MDOT deferred construction projects statewide in the June letting, said MDOT Executive Director Larry L. “Butch” Brown, who noted that 15 state-funded projects and seven federal aid projects were deferred. A few of those projects included project offices and storage buildings for MDOT district offices.

“We [MDOT] hate it, but we are forced to defer the letting of these 22 projects until we have a firm assessment of our financial situation,” Brown said. “It is our agency’s obligation to build and maintain the state transportation system, but we are forced to comprise that obligation in order to get back on track financially.”

David Barton, director of the Mississippi Road Builders Association (MRBA), told the Ledger on June 20 that the situation is not sitting easy with contractors.

“We don’t know if the wolf is in the door yet, or just outside it, but we know he’s there,” he said.

The association, with nearly 100 road contractors as members, asked the department of transportation to consider extending project completion dates at the request of the contractor, who could then cut back the work week, possibly to four days, Central District Transportation Commissioner Dick Hall told the Ledger.

“They could spread out the work over a longer period so there’d be no layoffs ... I have no problems with it. We’re just trying to decide the legalities. It may take an attorney general’s opinion,” Hall said.

On average, the state bids 95 projects annually, MDOT spokeswoman Amy Hornback told the Ledger. So far this year, 61 projects have been assigned.

“In June, we only let four. Usually, we do twice that in a month. But we’ve scaled back and delayed some projects until we know the extent of what we’re going to have to do,” Hornback said.

According to the Ledger, the association estimates that $1 billion spent by the state generates 43,000 construction and supply jobs.

“An orderly flow of work keeps you in business ... If there’s reduced bid-letting [the process] starts eating on itself. The competition becomes fiercer; so to stay alive, companies bid at lower cost and that can eventually force some out of business. Or, if there’s no work, the companies are gone,” Barton said in June. “Construction of roads is a very important economic program in Mississippi.”

Mike Blain, of Blain Companies, was one of several contractors who proposed the plan to MDOT. His company is a third-generation family business in Mount Olive, employing 250 people.

“We’ll be looking at cutting that in half at the end of the year if something doesn’t change –– as will several other companies,” Blain said.

Blain Companies is upgrading U.S. 61 in Jefferson County to a four-lane highway with a completion date of April 2005. He told the Ledger that project could be extended a couple of months without negatively impacting the public because it is new road.

“It would be better than laying off people,” Blain said. “If we don’t do something, we’ll have more people leaving construction jobs than Nissan employed.” Nissan has approximately 5,500 employees.

Blain also fears the road construction industry will lose its most skilled laborers.

“They will find another job and we’ll end up with a huge unskilled work force when it does pick back up,” Blain said.

But David Trevathan, president of Key Constructors Inc. of Madison, told the Ledger he does not favor extending contracts to avoid layoffs. His firm is working on several major construction projects around the metro area, including a Nissan interchange in Madison County.

A slower workweek would leave expensive equipment sitting idle, he said.

“You can’t string a job out like that. There’s too much overhead and fixed costs,” Trevathan said. “We’re under pressure now to get the job done. You extend the contract and the public is going to be more unhappy.”

Construction workers Charles Gains of Jackson and Timothy Ford of Carthage, working on the $58.8 million improvements at The Stack at I-55 and I-20, weren’t impressed with the idea either. Both work for Superior Asphalt of Byram.

“We can just make it on five days a week; go back to four and it would hurt us,” Gains, a supervisor, told the Ledger.

Deputy Attorney General Mike Landford told the Ledger MDOT has not asked for an opinion.

“I can understand the reasoning behind [the plan], but whether they can do it legally is hard to say,” Landford said.

One problem, the Ledger noted, could be contract incentives to get the job done early and penalties for delays on completion. Not all state road contracts have those built in, but some do.

Barton said the association’s plan would not work for all contractors but would be helpful to some.

Gerald Hill, of Hill Brothers Construction and Engineering of Falkner, the prime contractor on The Stack, told the Ledger that if given the option, he would like to extend work on the project.

But he said he would have to do some research before he could say how long an extension he would propose.

“Why are we working at a hard, fast-paced schedule when we’re running people out of work in the future?” he asked.

The company no longer has extended work hours or overtime and cut back from 625 employees in March to 450, according to the Ledger.

Hill said he believes the estimated 10,000 job loss is low because other industries also will feel the impact. “It’s not just the guy knocking down dirt or laying asphalt ... it’s going to affect fuel purchases, equipment dealers and suppliers,” he said.

MDOT Photo: Contractors who build Mississippi’s highways have proposed extending project deadlines and cutting work hours to avoid or reduce a projected layoff of 10,000 construction jobs because of MDOT budget cuts.