CONSTRUCTION ROUNDTABLE: Local experts share their views on a red-hot industry

This summer, IBJ sat down with leaders of some of the city's largest construction contractors and industry groups. The result was a free-wheeling - and occasionally contentiousdiscussion about the state of the local construction industry and the pace with which builders keep up with changes.

Topics that emerged included a growing concern for attracting qualified workers. The discussion grew heated when the topic veered to project labor agreements, which some contend unfairly favor union firms. The participants bemoaned the effects of recent hikes in interest rates and petroleum costs.

With a certain awe, they shared examples of the technological innovations that are changing the way they build and do business. Floating above it all was an unexpected rhapsody for construction - the joy of reshaping the landscape and the sense of accomplishment after finishing a job.

Given the healthy state of the local construction industry, contractors could be singing its praises for years to come.

IBJ: Which construction sectors have seen the most activity, and which are perhaps cooling off?

Sullivan: I am not breaking any ground here in saying that all the demographic information and research points to public and private education markets [being] very strong in the foreseeable future, and we see signs of that here. If you listen to the politicians, they are the No. 1 and No. 2 priorities on the state and national agendas. I am reasonably confident that they will be strong for a number of years.

Palmer: Aging baby boomers would think that long-term health care, or anything health-care related, and geriatric care will be increased.

Freeman: The markets I deal with are a lot of office work and retail work and a little bit of industrial. We see the retail market as still very, very strong with both nationals and momand-pop operators expanding [in Indianapolis]. Their biggest problem is finding workers for the stores so they can continue to expand. The office market still seems reasonably strong. I think here in Indianapolis we do need to worry about losing our corporate entities, because that will hurt the office market.

IBJ: What about the downtown office market? Is it as builtout as it is going to be, leading to more construction in the suburbs?

Freeman: You talk to real estate people, and they say suburban office space isn't all that much less expensive than downtown office space, and it becomes a discussion by corporate managers as to if they want to be in the downtown hub or in the suburbs. It seems to fluctuate. There is a vibrant downtown market. I think a lot of people say it would be a lot of fun to move downtown, and I think you see a lot of the new corporations run by younger people wanting to be downtown rather than the suburbs.

IBJ: The labor situation has been brought up. How do you attract and keep qualified people?

Roan: For our business, there are two facets to that question. One of them is field force and the other is guys with ties-and professional women as well, of course. The thing that Wilhelm has been successful with over the years in maintaining and attracting field force is having good opportunities for these guys to work in relatively close proximity to central Indiana.

We try to do the majority of our work within an hour and a half of home, and we have a 1,000-man field force. And these guys, the big percentage of them are getting to work 2,000 hours a year. For construction guys, that is a lot of hours. On the office side, we try to just be a good place to work and give people an opportunity to work on challenging projects. It's fun to work on challenging-type things.

There is no question that construction as an industry has not done a great job of enhancing its image and its attractiveness to young people. It is my experience that people who are in the construction business are there because they enjoy the building process. It is very satisfying working on a big complicated construction project. When it is done, you can show your children and grandchildren-if you are as old as Billwhat you have done.

Sullivan: It is a calling. You are right. It doesn't show up very high on all of these surveys of top choices for careers by young people. Actually, as difficult as it is to attract employees, it is just as difficult to keep them once you have them. It is a bit of a feeding frenzy out there. Just getting them in the door is only half the battle.

Palmer: Construction employees are becoming increasingly savvy in optimizing their own economic value, and it crosses both union and nonunion sectors. Construction workers may leave one company to go to another because they are working more overtime. One of the trends they have seen in the southeast, where there is a lot of work being done on chemical process plants, is bidding wars among contractors for field force. This contractor is offering 50 cents more [per hour], or 50 cents more plus completion bonus.

Gaylor: I think this area is an area where associations can play a big role. Some of our [ABC's] main goals are in recruiting young people into the industry. We think one of the answers is school-to-work [programs] where we can get kids at 16. They can finish part of their apprenticeship in high school. We already have them in the apprenticeship pipeline and we think that is certainly a long-term answer. They understand it is a career opportunity and that seems to be working.

Freeman: I don't think there is any substitute to giving the opportunity for training and career opportunity, and the way to do that is through education. We are associated with several building trades, and a tremendous amount of them have facilities all over the state specifically for classroom training and on-job training. We spend tremendous amounts of money helping train people through their local union facilities. So, training, training and training makes a safer worker, a happy worker, someone who feels satisfied with their job.

IBJ: How dire is the labor problem locally?

Sullivan: On certain projects, it is pretty dire. [Such as] when you need masonry work, and it's holding up completion of a project and you can't get the bodies out there.

Ford: We bring them in from Canada at times in order to get workers.

IBJ: Are there specific skills or trades seeing shortages right now, or is it all across the board?

Ford: Masons. Carpenters. Finish carpenters. There are some skilled trades that we are starting to miss because people are retiring.

IBJ: I had no idea people were being brought in from Canada for projects here in Indianapolis.

Ford: Yeah, particularly in the northern part of the state. Especially brick masons. Again, there you have to start dealing with the federal government in order to get the correct visas and permits in order for them to come in and work for a certain period of time. You have to pay them in American or Canadian dollars and then [deal with] all the tax with that.

IBJ: Once you get workers, how do you keep them?

Sullivan: Try to fulfill the promises made in the courtship, No. 1. Larry mentioned, you have to have a good work environment. Being family-friendly was never an issue 15 years ago, but it is now. People are looking more for their careers. We use Walker Research, a third-party, to stay on top of employee satisfaction. It is kind of surprising the kind of things that enter into someone's satisfaction.

IBJ: What are they looking for?

Sullivan: Feeling like they are part of where the company is going, like being a participant in the company planning and that sort of thing.

Palmer: You need to look at the recruiting process for the guys with the ties. In the past, when we all went through college and then went looking for a job, the big prestigious corporations would have long, drawn-out hiring processes where you were expected to jump through a series of hoops. They wanted to see how badly you really wanted to work for them. If that is still your approach for hiring college graduates, you are going to miss out, because college graduates realize that they have something to offer.

They are in demand and they will go with the most responsive offer. They look at that drawn-out process as an indication of a bureaucratic management style, an old-fashioned management style, and they are not patient and don't necessarily want to do that. The other thing is, if you draw out the process as an employer, you have no guarantee that the most qualified person is going to be there. To some degree, your hiring process has to be lean, mean and aggressive to get the best people, because it is very competitive. It is amazing when you talk to the folks up at Purdue [University], both on the construction engineering and management side. Those kids are getting snatched up at an incredible rate. Come graduation, all the good ones have already been hired.

Roan: We have had some success with co-oping those kids [in work programs] and that gives you a chance to know them and them a chance to know you, and if both parties like what the other is doing, then it can bear fruit. That has been good.

Freeman: Purdue has had that co-op program for a long time. If you can get people out on a job site and they help create something, that is where the passion develops. We hire a lot of summer students that affiliate with the unions and they develop a passion. They say, "Wow this is really neat to do."

Roan: There is one thing that I think is still happening-and you and Rob may know better than I - but don't many of the [union] apprenticeship programs still resolve in an Ivy Tech [State College] associates degree?

Freeman: Most of them do.

Roan: I think that is a nice thing too. It is more tangible.

Palmer: Building on that are agreements between [IUPUI] and Ivy Tech [that allows students to transfer classes and associate degree credits].

IBJ: Speaking of labor, there's been a lot of attention paid to project labor agreements. Are these becoming more common in Indianapolis?

Freeman: They have been around for a long time. It has developed, unfortunately, into a political basketball. It is not a political basketball at all. It is a business decision that an owner makes, because all it is is a contract. It is nothing more than that. It happens to be a specific contract for a project that deals with labor. Democrats and Republicans have signed them, governments have used them, private school corporations, private sectors use them. Here in Indianapolis and Indiana, I know that Subaru and Toyota all use labor agreements.

Palmer: Farm Bureau [Insurance's offices at 225 S. East St., which was a private project].

Freeman: Anthem [Inc.'s downtown operations center] was a project labor agreement. It is up to the business owner, whoever that is, whether it is a governing agency or private owner. We talked about labor shortages, and I think one of the things that can be written into a project labor agreement is that somebody is going to guarantee - and I think it is typically the union - that there will be enough workers to do this job on time. Like I said, unfortunately, it has developed into a political hot ball between the union and nonunion people. I don't see it that way. I see it as a contractual relationship. An owner - or an owner entity, whether it be private, public or whatever - decides to enter into it because they think for some reason it will benefit their projects.

Gaylor: Let me share why it is a hot topic with merit shops. We don't have any problems with project labor agreements, because merit shops believe in on-time, no work stoppages, on budget-all those things that are in the typical labor agreement. Our concern is where they become exclusionary, uniononly, or where if you win the bid, you have to become signatory of the building trades. With a merit shop, if they don't think that it is in their best interests to be signatory to a labor union, then that essentially locks them out.

Freeman: This is a decision on their part. It is lost on me where it becomes a political issue.

Gaylor: Where it becomes a political issue is that it is an arbitrary intrusion. [Editor's note: Gaylor later clarified his comments, saying that the choice to set a PLA for a public works project can be a political decision. State politicians are beholden to unions, Gaylor said, and use PLAs as direct political paybacks.] In the private sector, the owner certainly has a right to do whatever he wants on that job. We hope it is the best quality contractor, but ...

Freeman: You take any contract, any bid situation [where they accept] the low responsive bidder [the lowest bidder which actually meets all the project requirements]. That is exclusionary, because who is going to determine what "responsiveness" is? All project labor agreements are trying to do is help define "responsiveness." Can you as a contractor supply the labor? Well, if you are signatory to the union, the union agreed that they will supply the manpower, therefore it makes you more responsive now,

Gaylor: Let me share why it is a hot topic with merit shops. We don't have any problems with project labor agreements, because merit shops believe in on-time, no work stoppages, on because they know you are going to be guaranteed the manpower. We have already talked about how tough it is to find manpower. You know, the merit shop-we use merit shop subcontractors all the time - I know you are having trouble finding men. I know the union is having trouble finding men, because we use both kinds of subcontractors. If a business owner, i.e. government, or business owner or private sector or whatever it is, says, "Hey, I want to make sure that I get all qualified men," why is that not a business decision [to pursue a project labor agreement] rather than political?

Sullivan: I think that under any scrutiny you would have to admit that politics do enter into the analysis. I think you have to admit that. ... I think the marketplace is well served here, having a place at the table for both camps. I think that a number of our clients and a number of your clients value that. As long as that condition exists, I think that we have to not impose too many artificial restrictions or limitations or restraints on the marketplace. That was a political answer wasn't it?

Roan: I don't know what you said. That is how good it was.

Sullivan: At the end of the day there needs to be a place at the table for both camps ...

Freeman: To discuss the issue.

Sullivan: Yeah.

Gaylor: Whether you do perceive that these are just business decisions, it does effect the marketplace because the merit shops won't participate in [PLAs]. They won't become signatory [due to various pro-union stipulations in PLA contracts]. Using your logic, even though that is a business decision, what that does is effect the local marketplace in the sense that ...

Freeman: I make those same business decisions. When I travel out of the state-and we do work all over the Midwest - I make that decision every time I walk into a new town, whether I am going to sign up with the unions or whether I am not. Whether it will be an open-shop contract in that particular locale, or whether I want the value of the local union labor market. I make that same decision that those guys are making and it doesn't effect how I do my business.

Roan: Aren't there some nonunion contractors that participate under PLAs.

Freeman: Yeah.

Gaylor: Very few.

Freeman: Here, locally, [the nonunion contractors] are making the decision [not to participate]. I don't know whether it's because the local ABC is taking such a strong stance against PLAs that very few of them participate, but I think you will find nationally an awful lot of project labor agreement jobs have a lot of nonunion people on them.

Ford: Or national companies coming in here and being familiar with that and not seeing it as a big deal.

IBJ: Is it particularly more contentious here in Indianapolis than it is elsewhere?

Palmer: Absolutely not. It's - and J.R. can tell you - it is a huge issue in California. It is a huge issue in Georgia. Nothing happens in the world that doesn't happen more extremely in California. It is a big issue out there. The ABC nationally has brought lawsuits in Boston, in Alaska. California, Minnesota. To date I am not aware of any of these being ultimately successful. It's no more or no less contentious here in Indiana. We are blessed by the fact that we all have Hoosier common sense.

Roan: I was just going to say, I think this whole issue is just going to make your readers' eyes glaze over, because it is an insider-based thing.

Freeman: Like I said, it boils down to a business contract, and it cart be different on every project.

Gaylor: The practicality is the merit shops in Indiana are not going to become signatory, and they are not going to bid [PLAs]. Two-third of all construction workers now in this state are not represented by unions, so if you don't have the merit shop bidding and participating, the building trades have to bring in people from out of state to [finish the job.] I see that as an ironic choice. Labor unions on one hand are wanting to advocate local labor, yet ...

Freeman: Be careful with those statistics, J.R., because this isn't to say twothirds of the construction workers are nonunion. You need to talk about segments. Project labor agreements aren't typically drawn up on a house. OK? So if you are quoting me that two-thirds of the construction workers in Indiana are [nonunion], and you are including the residential market, it doesn't surprise me. What percentage of people who have the skill set to complete the projects that we are talking about - what percentage of those are union and nonunion? Because you are not going to have a project labor agreement on somebody's house. Or strip center, or anything like that. So, be careful of throwing out statistics that really don't make sense, you know.

Gaylor: That gives you a flavor of the overall marketplace and where that trend is going.

Freeman: I read someplace that the ABC is touting that they had 1,100 students statewide in their apprenticeship programs and the unions now are about 8,000 students. [Editor's note: The ABC figure does not include apprenticeship programs run by other nonunion organizations, or by contractors themselves]. And if that is true, and the union sector is only 30 percent or one-third of the market, and yet they are training eight times as many people as the nonunion sector, well, where are the skilled workers coming from? Therefore, who do you want on your project with a project labor agreement? I think you would want the union people because there are just so many more of them and you can ensure ontime [delivery of the project], and so forth.

Roan: I think what most customers care about is that there is competitiveness in the marketplace and that they are able to exact a good value and have what they want at the end of the day. Whether it is done via union worker or contractor or nonunion worker or contractor is truly invisible or not really an issue to most customers. The important factor is whether the project be done on time.

Freeman: And on budget.

IBJ: Lets move on. How have the higher gasoline prices hit you guys this year? How does this affect construction in the local market?

Palmer: If inputs increase in price. You either see a decrease in profits or increase in total price of product. Basic high school economics tells you that. But, there are some hidden things that are going to be affected by oil prices that as an industry we need to be cognizant of. Obviously, the supply and demand issues with OPEC production have raised the price. The federal government is about to change the requirements on diesel fuel. The fuel industry [reports] - and I may have my numbers slightly off-about 500 parts per million of sulphur in diesel fuel. The fuel industry says they think they can get it down to about 50 parts per million. The EPA says they think it ought to be 15 parts per million. Now, from what the fuel folks tell me, the difference between 50 and 15 is huge in terms of cost. Trying to get down that last 35 parts per million is huge. The difference in cost between 500 parts per million down to 50 parts per million isn't. Almost everyone here relies heavily on diesel, if not to run the equipment then to get the equipment from job site to job site. You have to figure that environmental regulations like that are going to force up the cost of diesel, which is going to force up the cost of construction.

Ford: I think, though, generally speaking right now, there has been very little effect in cost, because for the most part the work that we have going on is already contracted. So when cost increase happens so rapidly, there really is no time for adjustment. We are already under contract, so if there is a loss, it is in profits. It certainly is not going to cost the consumer at this point in time. If it continues long term, then you may see some effect.

Roan: The next bid.

Sullivan: Asphalt, drywall, masonry, plastic pipe. ... I mean, supply and demand are forcing that more than ...

IBJ: Right. Beyond the cost of the gasoline that goes into your vehicles, where else do you see cost increases on the job site?

Roan: Anything plastic.

Freeman: You are getting into a lot of the synthetic. We have moved a lot away from the "natural" products like plaster to a synthetic product called EIFS, which is an exterior insulation finish system [a synthetic plaster]. So that price is going to go up, and then plaster will all of a sudden become more economical. None of us can predict that.

Ford: Anything that is going to be delivered from some place is going to be effected by it.

Sullivan: In the last 18 months we have seen a pretty dramatic rise [in cost of drywall and masonry services].

Freeman: There was a national labor shortage last year.

Sullivan: Masonry costs, as our discussion earlier would indicate, have really gone up in the last 18 months.

lBJ: What about rising interest rates? How does that effect you guys?

Freeman: It probably effects us a whole lot more than oil prices. Any new construction is economically driven. If you are going to build a new building, you are going to ask, "How much is this going to cost, and what are my carrying costs?" If the interest rates go too high then you will sit there and say, "No, I am going to wait." That 2-percent [interest rate hike] makes a heck of a difference in the bottom line for somebody.

Sullivan: It is already a soft market, like for office buildings.

Palmer: I read somewhere that part of the speculation is that we have gotten accustomed to this [scenario of] build it now and we can refinance it later. And that might be why construction has become less sensitive to interest rates than it has in the past. I would agree with Bill that, absolutely, it is always a dollarfigure decision. But one of the national commentators, Kipling or someone, was speculating that that is one reason you haven't seen a huge dropoff [in construction], even though you have seen interest rates go up for the last three quarters. It seems that every time the [Board of Governors of the Federal Reserve Bank] meets, they up it another quarter percent. And you haven't seen a huge screeching halt. People say, "Hey, we'll take care of finances later. Let's just keep building."

Roan: I don't know about whether that mentality exists or not. I think there is no question that interest rates have had a dampening effect on speculative development in our area. No question on that. Has it had a dampening effect on other sectors, manufacturing and industrial? I don't know. It is harder to say. In my view, the industrial area broadly has been soft for a while. There are pockets of vibrancy, so to speak, and happily our friends at Eli Lilly and Co. continue to spend money on facilities and construction. Subaru-Isuzu [Automotive Inc.'s assembly plant near Lafayette]. Toyota [Motor Manufacturing Indiana in Princeton] is expanding again. There will be related industries that go from that.

Freeman: There are a lot of people in industry today that have never seen the down times. Especially here in Indianapolis, especially in the construction industry, it has been an awfully good couple of decades. I have people working for me that weren't born in the last downturn. So I think there is maybe a false sense of security that things won't get bad or can't get bad. And I'm not a doom sayer, because I don't think they will get bad for a while. But it has been an incredible run in central Indiana.

Sullivan: And when you have been through a couple of those cycles, it definitely impacts the way you view everything.

Gaylor: Is there any up side to a [downturn]? I have heard that maybe that's good sometimes in an industry, because it trims away some of the marginal contractors. Do you see any?

Freeman: That's a good question, and I don't believe in that. I believe that the free market that we have in central Indiana and the United States will weed out the bad ones anyhow.

Sullivan: I don't see any good out of a downturn. What it does is put downward pressure on fees, and we don't need that.

Roan: We are not smart enough to raise them.

IBJ: Lets talk about new technologies. What sorts of new technologies and new construction methods are you discovering?

Sullivan: I think this Internet thing might work.

Ford: I know, but we are going to wait a few more years.

Freeman: The construction industry traditionally has lagged tremendously behind the rest of the world. The United States construction industry also has lagged behind the rest of the world in technology development. I think I mentioned EIFS before, which is the exterior synthetic plaster that you see on so many buildings now. I think you are going to see-because of the competitiveness and price pressures-that people are going to find a better way to skin a cat, and if you don't jump with it real quick you are going to be left out in the cold.

Sullivan: It's not a question of "if," it's "when." [The Internet] is absolutely going to change the way we procure materials, the way we convey plans and specifications, the way we do takeoffs. There is no question about it. The efficiencies are already being realized.

Roan: It is a great communication tool. Just the manner in which information is transmitted among the project participants, the use of electronic systems to do so. We have all these field workers, and they all keep track of their time and they get paid per hour and that is now done paperless. It is all inputted at the job site. It is all electronically communicated to the main office where their paychecks are processed. So there are no more timecards. That seems like a small thing, but to us it's ...

Sullivan: You can sort and analyze all that data.

Roan: Absolutely.

Sullivan: We have a client with remote facilities in several states. The owner is in Tennessee. The designers are in several other states. And now we can have close to real-time project photos, digitally done at the site to advise the owner what is going on. It is becoming commonplace for all the project participants to see revisions, requests for information, meeting minutes, schedule updates, cost reports. It is clearly an area that has moved from the theoretical productivity gains to the real. I think we are all seeing that.

Ford: It is all management. It is all how we conduct our business. What happens out in the field still happens for the most part the way it has happened for the last 20 years.

Freeman: I kind of disagree with that, Dave. We are buying devices every day that just flabbergast me. We have a device now that you put down on the floor, and you push a button and it tells you the joist is 24 feet, 3 inches, and keeps it plum for you and tells you exactly how much to cut the stud. You have one guy doing this work, and it used to be a three-man operation. I think we are building the efficiencies in that way. But we are archaic compared to most other industries. We are getting computer-controlled screens for concrete finish. I think we are changing. I think we see it every day and don't see the changes. But I think that someone who worked in construction 20 years ago would walk on the job site [today] and say, "What the hell is going on here?"

Ford: I still think that a lot of what our field workers do is the same. We haven't figured a way to increase brick production. We still pour concrete the same way. We may have tools that help us a little bit, but the fact of what we do and how we do it traditionally has not changed, and [technological improvements are] mostly on the management side.

IBJ: Do the efficiencies outweigh the costs of new technology?

Ford: We are betting on some of that.

Freeman: I don't see change. I run my business this way. No matter what you do, no matter how many layers of construction managers, owner representatives, project manager and everything else you put in place, somebody has got to hold the hammer and pound the nail, and it goes back down to the field worker. The No. I goal of everybody sitting at this table is attracting and retaining those workers. As Dave said, we have not figured out how to get the dirt to magically just jump up and walk off. No matter how big a machine you put it in, there has to be somebody there doing it.

IBJ: You referred to Internet for procurement of materials, and you were talking about using the Internet for market research.

Palmer: It runs the whole gamut - e-commerce, dot-com, whatever you want to call it. Whether it is market information material procurement, exchanging plans back and forth, all of those seem to be concentric circles or overlapping circles.

IBJ: I think when people first hear about combining construction and the Internet, they say, "What?"

Sullivan: We test the waters with the procurement [of construction services over the Internet]. It's not there yet. It is inherently a local industry still. Now, research. We have a number of different niche operating groups that concentrate on [building facilities for] health care, commercial office, retail and so on. We start that process by researching [those market segments], and it is so easy and so efficient to do most of that research on the Internet. It allows you to have a much more sophisticated understanding of the marketplace. No doubt.

IBJ: Lets look into the future a little bit. What are the significant events or trends that you predict for the market?

Ford: I think we have to be careful as an industry, that [technology] doesn't run ahead of us. I am sure we all have seen this, where we go into a job that should have been a 12month job, and somebody says, "Well, I can punch a few buttons on a computer and make that schedule come out to be a 6-month job," and somebody starts to buy into that. I think central Indiana is blessed with a lot of good contractors and a lot of good labor. There is a good work ethic, and that has spoken well for our industry for a long period of time, and I think that will continue. I think we have good leadership within the community that helps fuel our economy. We were very blessed 10 years ago with a strong private market and Lilly doing a lot of work, and as that work has died down, the city has come up and invested a lot of time and money in the city and we see that coming back. The state seems to be a very active player now within our industry. With a lot of work going on. I see good things. The school system always continues to stay strong. I see positive things at least for the next four or five years.

Freeman: I am a little bit more optimistic. I look at a 10-year cycle, a 7-to10-year cycle. I still think we are going to be in very, very good shape. I think a lot of Dick Lugar and all the Republican mayors since then, and I think a lot of Bart Peterson. And I finally see Bart addressing the infrastructure problem. It has been something that has been put on the back burner for too long because it is kind of like the furnace in your homeyou don't see the duct work, but if it isn't done right you are not going to get the cooling. I would like to see us invest quite a bit of money into the infrastructure so we can keep the building going and that would include [utilities]. They all need to make sure that they're invested in the infrastructure.

Palmer: No trend in the construction industry is permanent. Ten to 15 years ago, unified bid construction contracts were on the decline. Construction management was the wave of the future. We haven't seen the unified bid delivery method disappear. Now you see designbuild on the rise. It's a project delivery system that has a lot of romance to it, but not every project is not going to be done design-build, just like not every project was done with a construction manager. No single method is a panacea. The other thing you talked about was infrastructure. Building construction tends to lag behind infrastructure, so when you look at the billions and billions of dollars the federal government is spending [on transportation projects], you can't drive am where in Indianapolis and not see the fruits of that work. That will stimulate building construction. Take a look at 96, Street and the development that has gone - on there since they put the bridge over White River.

Sullivan: I just agree completely with Bill. The infrastructure and capital investment does directly impact the contractors represented at the table here today. It has a long-term benefit for all of us that is probably more important. I am very happy to see willingness in the Peterson administration needed to tackle those infrastructure issues now. Secondly, I guess I still see a continuation of a longterm trend toward negotiated work [in which a contractor is chosen for its qualifications rather than the size of its bid on a project]. There is so much gridlock in the industry now where the architects and engineers and subcontractors and everybody is close to capacity. I believe there is a value added in a negotiated approach anyway. I see this trend away from harddollar bidding [in which the contractor with the lowest bid is, chosen]. Public projects are a notable exception. They are spending a lot of money right now that the tax coffers are full. I think private industry is still going to choose a negotiated approach more and more. And I have one other point. I think it is going to be more and more difficult for generalists to succeed. I think there is a lot of value for owners when we choose to be experts in specific market sectors.

Roan: I will tip my hat to the infrastructure comment. An opportunity that construction companies have today that they always haven't had historically is to provide leadership in the design phase of a project. There is a need [among owners] to have the construction company lead the design phase. I also see the need to have specific expertise and niches. I think it is important if you want to be successful long term to have those niches be diverse. We talked earlier how construction lags the general economy and that is a true statement. We lag the national economy, which is both good and bad. The valleys aren't as deep and the peaks aren't as high. That's OK.

Gaylor: I don't disagree with all of your analysis of the market. A couple [product types] that we didn't mention were prison construction and some other public-type things that unfortunately will be strong. There is infrastructure other than roads - like sewer construction. Those are going to be real challenges. My real concern is the worker shortage. I think the opportunity for construction will be there and we'll get the work. I'm just real concerned where the expertise is going to come from. We collectively have to do a better job of recruiting. I see that as the real challenge. ... The other concern for the association that I represent is that we still see government's role in some respects as very artificial, in regard to setting wages on public works jobs [known as "prevailing wage"]. That is a traditional concern of ours. We think it would benefit the public a lot more if government wasn't setting wages in regard to public works projects. Again, we disagree on other kinds of exclusive agreements that may be struck with public works that we see as artificial.

Ford: One other comment I've got. You have to be a little more flexible as a company, because now you have to be able to deliver a lot of different types of projects a lot of different ways. It always wasn't the case. You could go out there and make a living being a hard-bid general contractor or just by doing some specialty work. Now you have to be a little more flexible.

Sullivan: I think that is where the research comes in. With things like the Internet, you are able to see that healthcare spending is on the decline now, so all that you have invested in health care you might want to switch over to a comparable industry that is going to be trending correctly.

Roan: The point of serving niches and market diversity is that trends are rarely in perfect sync, so you can maintain a level of productivity for your organization because you can ride those trends out.

Freeman: The last thing that I would like to leave with the readers - especially the younger readers that may be reading this - is that construction is really a lot of fun. It is so rewarding once you get into it. It is just a great, great industry, and we all have a lot of fun. We are all competitors and we all are friends.