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Building for the future: having dodged the recession, Arkansas contractors optimistic about 1992.

It is difficult to convince Arkansas commercial contractors there is a recession.

The numbers indicate the state's construction industry may have weathered the latest economic storm.

And contractors say the industry's growth markets -- educational facilities, hospitals, prisons, roads and manufacturing plants -- should keep the good news coming in 1992.

Jack Kinnaman, president of Kinco Inc. at Little Rock, claims times are not that bad in Arkansas.

"Where do you get this recession talk?" Kinnaman asks. "Construction dollars are up. I don't know where everybody gets this recession talk. I haven't seen it."

Jim May III, chairman of May Construction Co. in Little Rock, says his company is doing more business now than at any time during its six-year history.

"It is peculiar to the area," May says of the recession. "There are pockets of deep recession and pockets of the country that are doing very well.

"We're doing well. The Southeast -- North Carolina, South Carolina, Florida, Georgia -- is doing well. It's real bad on the West Coast and the East Coast. They're having a hard time."

Arkansas "never really experienced a recession," an economist for the National Association of Home Builders recently told Construction News.

In 1990, non-residential construction in the state totaled $454 million. Last year, construction dollars increased slightly to $461.2 million.

Both totals are down significantly from 1989's high of $784 million. But the '89 figure was inflated by a $400 million infusion from the manufacturing sector. Of that, $320 million went to expand a paper mill at Ashdown, which now is owned by Georgia-Pacific Corp.

Holding Steady

Arkansas, of course, is not immune to recessions. The state's construction sector has had its slumps.

In 1988, non-residential construction spending hit a six-year low of $320.2 million. It was the fourth consecutive drop.

Still, compared with other regions, the dips have been gradual.

"It is not as ghastly as it has been in other parts of the country," says Chris Ames, director of education for the Associated Builders and Contractors of Arkansas.

Bob Nabholz Sr. agrees.

The chairman emeritus of Conway's Nabholz Construction Corp. has been in the business since 1949.

He's seen the good and the bad.

"I don't know if we're recession proof," Nabholz says. "We did not have much going for a number of years. Because of that, maybe we were not hurt as bad."

Nabholz Construction does a lot of work on college and university campuses. Like other commercial construction firms, it benefited from a state bond issue that earmarked $100 million for construction at public institutions.

"You take $100 million in school construction, that helps," Kinnaman says. "For a state the size of Arkansas that is not just a drop in the bucket."

Eight educational facilities were among the top 20 construction projects let in 1991.

The top construction contract overall was awarded to Hensel Phelps Construction Co., which is building a jail for Pulaski County at an estimated cost of $26.7 million. Hensel Phelps is a nationwide company with offices at Little Rock. It had 1991 revenues of $86.3 million.

CDI Contractors Inc. of Little Rock was first among Arkansas-based commercial contractors with $141 million in revenues. CDI was awarded the contract on the $6.5 million Alltel Corp. office building, which is next to the existing Alltel headquarters in the Riverdale area of Little Rock.

Ranked next was Nabholz with $126.8 million in revenues, an increase of $14.8 million over 1990. Among the projects Nabholz completed last year was the $75 million St. Joseph's Regional Health Center at Hot Springs.

The hospital industry has been good to Arkansas contractors. During the past two years, $167.8 million has been spent on hospital buildings and clinics.

"We're expanding a Searcy hospital right now," May says. "Just look around Little Rock. There seems to be continuous construction. Look at Baptist |Medical Center~, St. Vincent |Infirmary Medical Center~, Arkansas Children's Hospital. They've all built."

The health care industry is booming as the state's population ages, and contractors are taking advantage of it.

Office and Retail

When it comes to office buildings and shopping centers, though, the days of wine and roses are over.

After suffering a 19 percent decline in 1990, office and retail construction increased slightly in 1991. But only three of the top 20 contracts awarded in Arkansas last year were in this construction sector. CDI is building the Alltel building. Crane Construction Co. of Little Rock is building a $6.5 million Lowe's store at Hot Springs. And Western Builders of Amarillo Inc. was awarded the contract to build a $5.2 million Wal-Mart Stores Inc. Supercenter at Springdale.

"There is some minor work, but there is not the expansion of the retail stores and shopping centers you saw in the mid-1980s," Kinnaman says.


The money is there.

For 1992, the state Highway and Transportation Department has budgeted almost $300 million for construction, an increase of 35 percent over last year. A $105 million maintenance-renovation budget will be retained for 1992.

Contractors believe the new state and federal road programs will provide a boost to the economy, generating thousands of jobs annually.

Educational Buildings

The state bond issue has been the impetus for construction on campuses statewide.

Among the largest educational construction projects begun last year were additions to the library at Arkansas State University at Jonesboro and expansion of the University of Arkansas at Little Rock's Donaghey Student Center. Inman Construction Corp. of Memphis, Tenn., has the contract on the $11.3 million ASU library addition. Vratsinas Construction Co. of Little Rock is working on the $10.7 million UALR student center expansion.

There is also construction taking place at the state's private universities. Baldwin & Shell Construction Co. of Little Rock is building a $5.5 million performing arts center at Arkadelphia's Ouachita Baptist University.


Manufacturing construction took another dip in 1991, but those in the industry expect the industrial market to pick up.

Recent announcements have included those of R&G Sloane Co. to build a $25 million plant at the Little Rock Port Industrial Park and Rohr Inc. to build a $25 million facility at the Clark County Industrial Park near Arkadelphia.

Ames says manufacturing construction also is taking place in northwest Arkansas.

Still, 10 fewer projects were let in 1991 than the previous year, and there was a 44 percent drop in the amount of money spent.


When Ames was asked to list the construction industry's top growth markets, he named hospitals, education and prisons.


"If we don't educate them, we have to find someplace to put them -- and that's prison," he says. "Either spend money to educate or plan a place to put them."

Hospitals And Clinics

Five medical projects of $5 million or more were awarded in 1991, and 95 projects were let overall.

James H. Cone Inc. of Little Rock was awarded the largest contract, the $12.9 million Biomedical Research Building on the University of Arkansas for Medical Sciences campus in Little Rock.

Although there were more projects in 1991 than in 1990, $12.2 million less was spent on the construction of hospitals and clinics in Arkansas.
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Title Annotation:Raising Steel: Focus on Construction, Part 1
Author:Webb, Kane
Publication:Arkansas Business
Article Type:Industry Overview
Date:Mar 16, 1992
Previous Article:The verdict is in: female attorneys consistently earn less than their male counterparts in Arkansas.
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