Buoyed by Governor Whitmer’s announcement of a planned additional $700 million expenditure in Michigan highway and bridge construction in 2024, the Michigan construction and engineering industry is looking to another strong year. The additional highway investment completes $3.5 billion in road construction projects in the state since 2020 and furthers the Governor’s pledge to “fix the damn roads.”
MDOT Director Brad Wieferich announced his 5-year-plan that includes $4 billion investment in 2024 financial year, which is estimated to support 53,000+ jobs annually by continuing the state’s investment in “the preservation of the transportation system, safe mobility for motorists, and efficient system operations.”
Mark Smolinski P.E. and Principal at Troy-based G2 Consulting Group, believes the industry is ready to get the job done. “Despite some ongoing challenges, there is good news on the construction front. The pandemic-induced wildness in material availability and raw material costs is dissipating and the supply industry is starting to normalize. That means we have access to materials we need to get jobs completed on a timely, predictable basis without the dramatic fluctuations in cost.”
Bernd Ronnisch of Ronnisch Construction Group sees the industry remaining strong, as it has been for more than a decade, with access to capital and talent remaining as key issues. “Each year, more and more seasoned construction veterans are retiring. The younger generation is well educated, but there’s just not as many of them nor do they have the experience of those who are exiting.”
“Capital is still tight and higher interest rates are keeping some people on the sidelines. New creative funding solutions are becoming necessary, especially for the legacy-type projects that have longer-term returns,” Ronnisch said. “We’re still seeing office and spec buildings slow, but other niche projects, like car washes and logistics sites, have been hot helping to make up for the office decline. The industry looks strong in 2024, however, it’s somewhat unprecedented to have 12 consecutive years of growth, so we’re keeping our eyes open for any signs that the other shoe may drop.”
Dan Mitchell of Hubbell, Roth & Clark, mentioned the impact from the recent UAW strike and major infrastructure investment as industry drivers. “Although the automotive labor strike initially caused turmoil and delays, the industry quickly recovered and continued on its ambitious facility expansion and redevelopment. The move to EV production, although slower than originally forecasted, requires significant capital investment in new facilities as well as reconfigurations to current ones.”
“Major infrastructure projects are programmed several years in advance and attract firms from across the U.S. The long lead time makes it difficult to price projects given uncertainty in cost of money, labor and materials,” Mitchell said. “Like everyone in the industry, we’re looking for additional team members, but HRC is careful to only hire the right talent to fill our needs – we don’t want to ‘hire and fire’ but rather carefully build our team.”
Scott Willson, Vice President/Owner at Kimley-Horn of Michigan, Inc. in Southfield, cites the downward shift in the Fed rates and the presidential election as two key events in 2024 that could bring about an uptick in development opportunities for certain industries such as light industrial/manufacturing, E-commerce, and mutli-family. “There’s a lot at stake coming out of 2024 and entering 2025 that can change the development landscape that has been lagging behind last year and into this year. Isolated geographic locations and certain industries, such as Mission Critical, have been immune to the recent downward market trends. We’re anticipating increased access to affordable capital in 2024/25 for our clients which will encourage a lot of new projects that have been waiting in the wings. The question remains is how much of the capital will be considered affordable by the development community depending on the Feds and the election. We should know going into 2025, if not earlier.”
“Mission Critical – data centers – have never been stronger for our business across our firm as new technological developments such as Artificial Intelligence have developed further over the recent few years,” Willson said. “With more established and robust tech infrastructure now in existence across the country, data centers no longer need to be concentrated in specific locations such as Chicago or Northern Virginia, but can spring up almost anywhere, provided sufficient access to power and water. Hence, we see data center construction to remain a big portion of the development community over the next several years.”
Along with infrastructure, the industry insiders agree that utilities, alternative energy (particularly solar), ecommerce logistical sites and K-12 education continue as construction standouts in Michigan. Federal support for fiber and internet deployment, especially to underserved and unserved areas, continues to propel the telecom sector.
“Michigan is in a good place with a number of highway and other major infrastructure projects well underway. The transition to EV’s in the auto world is creating opportunities for large manufacturing plants and R&D facilities. We expect the influx of international companies to continue for many years. Michigan’s construction industry is well poised to meet the current challenges and future opportunities. My expectation is another strong year for our company and our industry,” Smolinski said.