Builders try to nail down anything that is going up. (Construction).

During the '90s, Raleigh-based Clancy & Theys Construction could focus on commercial jobs, avoiding the hassles and delays of public projects. Its home market, the Triangle, was booming. But as the economy slipped into recession, demand fell for commercial offices and other private buildings.

Now, like many of the state's contractors, Clancy & Theys is bidding for more public work. "We have 30 superintendents on staff in our Raleigh office. We need two dozen jobs running. We need to land six a quarter." These days, the only way to ensure that the pipeline stays full is to vie for public projects.

"There is just a lot of apprehension and concern about the market right now," says Dave Simpson, North Carolina building director for the Carolinas Associated General Contractors. "Things appeared to be trailing off before Sept. 11. That added to the woes. Contractors are getting jittery."

A sedative for builders has come in the form of a trove of public construction money that began to hit the market in 2001 - $3.1 billion for the state's university system and $1.2 billion for elementary and secondary schools. "We're doing a lot of bids for the bond money," Cutler says.

Commie Johnson, president of Greensboro-based R.L. Casey, which specializes in public jobs, is feeling the new competition: "Where you used to have five contractors bidding on a project, now you have 12 to 15." Indeed, public work has become the lifeblood of many. Backlogs of projects that built up during the '90s boom are starting to dwindle. And banks are hesitant to back new projects.

Of course, not all commercial construction has dried up. Mike Cooke, president of Weaver Cooke Construction in Greensboro, says his company continues to do well in niches such as retirement homes and historical renovations. Weaver started work this year on Asheville's $17 million Grove Arcade, a downtown renovation, and is beginning a $24 million retirement center in Concord called Taylor Glen.

More private projects were supposed to have been sparked by 11 interest-rate cuts in 2001 by the Federal Reserve. The Fed has kept cutting rates to induce businesses to borrow and invest. Trouble is, other regulators are sending the opposite message to lenders. As is typical in a recession, they have been cautioning banks to pay attention to declining credit quality, particularly on commercial real-estate loans.

One area where lower rates have helped is the sales of new and existing homes. Mortgage rates -- at 30-year lows -- fueled a burst in the housing market, and that could give the rest of the state's economy a boost in 2002. "If you've got a job and you want a house, this is a great time to buy one," says James F. Smith, an economist at UNC Chapel Hill's Kenan-Flagler Business School.

In the Triad, 9,231 homes were sold during the first three quarters of 2001, up 8% from 2000. Home sales in Charlotte grew 3%. And the Triangle fell in the middle, with a 6% increase. Some prices are up, too. In the Triangle, the median price of a new single-family home increased 8% between 1999 and 2001. The Triad's median increased 2%. Charlotte's was flat.

Outside the big metro areas, home sales remain weak. In Wilmington, they were off 9% in the first three quarters of 2001, compared with the same period in 1999. Bernard Helm, president of Market Opportunity Research Enterprises in Rocky Mount, blames the sluggish stock market: "Executives can still afford their homes, but they aren't buying beach condos." One positive for Wilmington is that the median sales price of new and existing homes has edged up after leveling off last year. It was $144,000 through the first three quarters of 2001, compared with $135,000 during the same period a year earlier.

The year also was a painful one for the manufactured-housing industry. North Carolina is the second-largest producer in the nation, but shipments of Tar Heel mobile homes were down 36% during the first three quarters, compared with a year ago. The state's biggest mobile-home builder, Greensboro-based Oakwood Homes, followed that trend. It has responded by restructuring, closing 90 retail centers and, in July, appointing Myles Standish as its new president and CEO.

For the fiscal year that ended Sept. 30, Oakwood sales fell from $1.2 billion to $1 billion. But its net loss was down to $120.9 million, compared with $176.1 million the previous year.

[Graph omitted]

N.C. EMPLOYMENT AND WAGES

EMPLOYMENT

                               1996     1998     2000

General contractors          50,571   54,684   58,195
Heavy construction           27,594   31,844   33,282
Trade contractors           110,881  128,532  140,437
TOTAL                       189,046  215,060  231,914

REAL-ESTATE EMPLOYMENT

                               1996     1998     2000

Agents and managers (*)      17,795   20,407   21,504
Operators and lessors         8,162    8,119    8,256
Developers and subdividers    3,928    4,084    4,045
TOTAL                        29,885   32,610   33,805

CONSTRUCTION WAGES (**)

                               1996     1998     2000

General contractors         $526.28  $594.48  $650.72
Heavy construction           520.06   579.25   613.88
Trade contractors            455.38   513.34   555.86
ALL GROUPS                   483.79   543.73   587.99

REAL-ESTATE WAGES (**)

                               1996     1998     2000

Agents and managers (*)     $480.90  $530.48  $568.43
Operators and lessors        402.54   489.56   546.24
Developers and subdividers   503.86   559.36   735.45
ALL GROUPS                   462.52   523.91   583.00

(*)Includes title Insurance worker

(**)average weekly wage

Source: Employment Security Commission
MAJOR CONSTRUCTION PROJECTS

(excludes industrial facilities, highways, prisons and schools)

COMMERCIAL PROJECT/                 COST
 LOCATION                       (in millions)

Intermodal airport hub              $325
 Charlotte
Streets at Southpoint shopping
 mall                                220
 Durham
Hearst Tower                         170
 Charlotte
Westin Hotel                         148
 Charlotte
Gateway Village                      130
 Charlotte
Raleigh-Durham airport parking
 deck                                103
 Morrisville
TIAA-CREF headquarters               100
 Charlotte
SouthPark mall expansion             100
 Charlotte
Barracks at Fort Bragg                66
 Fayetteville
RamsHead Project at UNC               44
 Chapel Hill

Sources: Carolinas Associated General Contractors, published reports,
contractors; projects under construction in 2001
TOP COUNTIES/COMMERCIAL

(dollars in millions)

                  NEW           ADDITIONS/           TOTAL
             PROJECTS    COST  ALTERATIONS    COST    COST

Mecklenburg     1,787  $596.7        2,105  $370.9  $967.6
Durham            226    74.8          455   121.6   196.4
New Hanover       416   135.1          689    39.4   174.5
Wake              342    91.3          390    42.3   133.6
Catawba           410    60.3          125    52.8   113.l
Guilford          244    55.7          281    33.1    88.8
Forsyth           644    39.3          174    23.4    62.7
Iredell           439    41.3          114    14.6    55.9
Pitt              393    40.1          185    15.5    55.6
Buncombe          217    25.6          174    11.8    37.4

Source: N. C. Labor Department, 2000
TOP COUNTIES/RESIDENTIAL

(dollars in millions)

             SINGLE-FAMILY            MULTIFAMILY
               PROJECTS       COST     PROJECTS     COST     TOTAL

Mecklenburg      7,560      $1,091.6     2,143     $206.7  $1,298.3
Wake             6,300         956.6     1,365      131.3   1,087.9
Union            2,083         261.4        64        4.1     265.5
Guilford         1,980         250.9       287       25.6     276.5
Durham           1,369         226.8       101       12.3     239.1
Forsyth          1,565         203.2       321       23.7     226.9
Iredell          1,221         195.7        45        3.8     199.5
New Hanover      1,226         141.5        33        4.1     145.6
Cabarrus         1,292         131.6       109        7.8     139.4
Johnston         1,060         115.4        71        4.7     120.1

Source: Market Opportunity Research Enterprises, 2001