Arkansas construction executives discuss impacts of COVID-19

Effects of the COVID-19 (coronavirus) pandemic being felt nationally in the construction industry are, largely, not being felt in Arkansas.

A survey of construction firms by the Associated General Contractors of America (AGC) found more than half of firms have had projects halted, and 74% of businesses have sought loans from the Paycheck Protection Program (PPP) to retain staff. The analysis was released Friday (April 10).

“Owners are not only halting many current construction projects but are canceling a growing number of projects that have not yet started,” said Ken Simonson, the association’s chief economist. “Inevitably, that has caused a growing number of contractors to furlough or terminate jobsite workers.”

The combination of project cancellations and shortages of equipment or materials is forcing nearly 40% of firms to lay off employees, according to the survey, which was conducted April 6-9 and had 830 respondents.

Greg Fogle, a chief operating officer of Conway-based commercial contractor Nabholz, said two customers have discussed the possibility of project cancellations, but have not done so as of Friday. In the most recent list of Largest Commercial Contractors published in June 2019 in the Northwest Arkansas Business Journal, Nabholz ranked No. 1, followed by C.R Crawford Construction of Fayetteville and Kansas-based Crossland Construction Co. The annual list is ranked by annual revenue generated by Northwest Arkansas operations.

According to the company’s website, Nabholz has taken a number of safety precautions to respond to the pandemic. All project sites and offices remain open unless the owner or health department has deemed it unwise to keep operating in specific locations.

The company has also put together an “action team” that meets daily to map out the response to the spread of COVID-19. The action team includes chairman and CEO Greg Williams, COOs Fogle and Brad Hegeman, all regional presidents and other members of the executive leadership team.

“We have had several other customers ask us to postpone their projects for a few months, but overall they represent a small portion of our total business,” Fogle said. “In a few cases, our customers have temporarily closed their operations but added additional work assignments for us during their downtime. This has made a positive difference.”

Nabholz hasn’t instituted any employee layoffs, Fogle said.

“We have been fortunate to be able to adjust resources and manpower between project assignments as the need fluctuated,” he said. “We have had to adjust our operations to ensure that we closely follow CDC [Centers for Disease Control & Prevention] recommendations regarding social distancing and hygiene on all projects. That is very important to not only our employees, but our customers alike.”

C.R. Crawford has not been “drastically” affected by project cancellations in the short-term, according to business development officer Jordan Ligon.

“We are being very intentional on how we are operating, what we can do to help clients and friends, and keeping everyone as safe as possible,” Ligon said.

Ligon said there will likely be some impacts in the number of projects starting construction, or being in the pipeline, later this year.

“Several people are hitting the pause button right now, until they can get enough information to make good decisions on what moving forward looks like,” he said.

Jenni Breeze, the marketing director for Kansas-based Crossland Construction Co., reported Monday no job furloughs or layoffs. She also said all project sites in Arkansas remain open.

Scott Copas, president and CEO of Little Rock-based Baldwin & Shell Construction Co., said the company has not furloughed or laid off any employees.

“A week prior to the passing of any bills in Congress, Baldwin & Shell made a commitment to all employees that it would not furlough or lay anyone off due to the pandemic,” he said.

Some employees, though, are working from home because their children are out of school, Copas said, or they have other circumstances that predispose them more to a work-at-home environment.

Because of COVID-19, however, eight Baldwin & Shell projects, mostly out of state, have shut down for various reasons. Copas said the stoppages came at the owner’s request.

“To our knowledge, we have had no employees or employees of any of our subcontractors infected as of this date,” Copas said. “We have sent a few home to be tested or quarantined and fortunately all have tested negative.”

Patrick Tenney, president of Baldwin & Shell’s Northwest Arkansas office in Rogers, said activity in the region is still busy.

“We are submitting proposals for new projects on a weekly basis and we do not see that waning,” he said. “We are blessed in that we are able to keep moving forward during such an unprecedented time in our world. Keeping our clients and employees healthy is our primary concern while we navigate this new business environment.”

He said Baldwin & Shell is asking workers to follow guidelines as recommended by the CDC. Other safety precautions the company has taken to control the spread of the virus include limiting job sites and offices to allow only one point of entry. Upon entry, there is a checkpoint for the self-temperature scan of each person entering. No one will be allowed to enter the premises with a temperature of 100 degrees or more.

Baldwin & Shell is also making random temperature checks throughout the day of all employees at all company facilities and job sites.

“In spite of the reality of the moment, Baldwin and Shell remains open for business in the comprehensive way our reputation demands,” Copas said. “Our executive team, office personnel, project superintendents and labor forces are on the job and ready to serve and support our clients. We are, however, taking all precautions necessary to keep our job sites and offices safe for our clients and for our employees.  As this situation continues to evolve, we have promised to maintain a line of communication.”

Construction employment in Arkansas increased by 1,300 jobs (2.5%) to 53,400 jobs from January 2019 to January 2020, according to an AGC analysis of Labor Department data released March 16. AGC officials said that the data was collected well before the coronavirus began to impact the economy and that construction employment levels are likely to decline beginning in March as the virus impacts many parts of the economy.

“There is no doubt the coronavirus will have a significant impact on our economy, including the construction sector,” Stephen E. Sandherr, the association’s CEO, said in a statement. “That is why federal officials should act quickly to protect employers and employees, provide contractors with greater flexibility and offset the inevitable private-sector slowdown in construction demand.”

Arkansas’ chapter of national trade group Associated Builders & Contractors Inc. (ABC) also has a website devoted to COVID-19 information and resources.

Bill Roachell, the Arkansas chapter president of ABC, said the state’s construction industry activity remains largely unaffected by the pandemic.

“Our folks are still working,” he said. “In our business, thankfully, we haven’t seen that much of a slowdown.”

Roachell also lauded the efforts during the crisis of Arkansas Gov. Asa Hutchinson and Dr. Nate Smith, the state’s secretary of health. Roachell said when the COVID-19 crisis began, the ABC and other construction groups proactively lobbied the governor to consider commercial construction an essential service.

There hasn’t yet been a need to determine what is and isn’t essential in Arkansas’ workforce. Hutchinson has not issued a statewide stay-at-home order amid the coronavirus pandemic, saying that his “targeted approach” has proven to be effective. As of Monday morning, the Arkansas Department of Health reported 1,398 cases of COVID-19 in Arkansas, with 29 deaths. As of Sunday, there were 77 patients hospitalized and 29 of those are on a ventilator, according to the health department. The department said 376 people have recovered from the virus.

“Thankfully, to this point, [Hutchinson] hasn’t had to act on that [essential services],” Roachell said. “I think the governor and Dr. Smith have done a great job with the targeted approach.”