February 1, 2021

What’s on the horizon for the local construction industry?

The DJC caught up with Curt Gimmestad, the returning AGC of Washington president, to find out what’s happening in the local construction industry. Gimmestad is vice president of industry engagement for Puyallup-based general contractor Absher Construction and was one of the presenters at Friday’s online celebration.

gGimmestad

Q: How do you feel about a second term as AGC president?

A: I am really looking forward to a second year and opportunity help lead the organization and the construction industry coming out of COVID. One of the positives of social distancing and limited in-person meetings was being able to participate in more industry meetings and conversations. That allowed me to hear more of what challenges we are facing and the good work we as a construction industry have accomplished and continue to work on.

I am, though, looking forward to quickly getting back to in-person meetings and industry functions to continue the dialogue, and getting back to the true interaction connection you get when sitting at the same table.

Q: How did the pandemic change AGC board meetings?

A: I would anticipate that we were probably no different than many business entities and associations. We adapted pretty quickly to the web platforms to carry on with business, in fact our AGC of Washington annual meeting/celebration is virtual this year.

The downside to these virtual meetings is the lack of really good connectivity on the personal side of business. Fortunately for the board coming into 2020 and now into 2021, we all had been spending time in meetings and events in 2019. Maybe we convinced ourselves again that it is good to move through chair positions in these types of organizations.

Dawn Stephens, Grace Pizzey and I were looking towards advancing our golf games together and we were looking forward to more of Glyn Slattery’s awesome smoked salmon. We all look forward to getting back together as we hope all of this settles down quickly; and I don’t like the term “new normal.”

For me, the positive to the meeting “change” allowed for more interaction and engagement in more AGC committee meetings. It has also allowed us to be more engaged with our AGC Inland Chapter partners and I have seen more coordination of industry stakeholders from the entire state via web platform meetings. I would suspect that we will see more meetings in some hybrid form of “all in person” meetings moving forward. I have mentioned to many that Zoom is now synonymous with web meetings as Kleenex is to tissue and we have replaced the iconic phrase “you’ve got mail” with “you’re still on mute.”

Q: Outside of the pandemic, what challenges are facing the construction industry?

A: Wow, challenges facing the construction industry? A question with many facets but certainly managing challenges, planning and mitigating to ensure some kind of consistency in your business plan is something I think the construction industry does well. We have to or we don’t survive, it feels like. So, what are we dealing with:

• Burdensome environmental regulatory requirements. I don’t talk to anyone who does not care about the environment and the great place we call the Pacific Northwest. I recall growing up watching a commercial where a Native American stood in a field on a slope and the cameras shows him crying and pans back showing garbage everywhere. The lesson then was we need to take better care of our environment, it made an impression on me.

Today’s discussions feel like we have done nothing over the last 40 to 50 years. There are bills encapsulating carbon fees, others that want to eliminate the use of fossil fuels to heat your house and ultimately eliminate the use of natural gas altogether. At one time it was the clean energy source. These measures drive up costs of construction, cost of development and the cost of housing.

There is a court-ordered mandate to replace culverts to support fish runs and passage. A positive to a natural resource but the length of time to go through permitting baffles one sometimes when we have good intentions but a slow process to implement our good intentions.

I know as contractors we are ready to sit down and quickly put plans in place to mitigate risk of the construction so we can get through permitting and environmental reviews and at the end of the day make a difference. We must also realize that those who have built their careers in an industry only to have it decided it is not viable are not going to recoup the lost opportunity and income by starting a new career, unless they may have just started in that career.

• Tax burden regulation. There were significant tax increases impacting business coming out of the last legislative budget cycle and looking at bills being considered this year, it often feels relentless. We are seeing some bills to relieve the tax implications associated with grants and PPP loans that were put in place to help us get through COVID, these are positive. There is also a bill being discussed to provide some B&O tax relief.

Those are good but then you see bills that want to increase other funding sources and where you believe you make up some ground, it may just play out that you don’t.

The increases in the employer unemployment tax burden now to be levied to businesses coming out of the layoffs of 2020 are staggering and for many contractors and businesses in general I can see being a significant impact. Many will not be able to withstand or it will impact how many employees they bring back.

Directly related to COVID and a significant impact to many is the cost of implementing COVID protocols along with the increased time (costs) to get the work done. Many contracts have language that says these costs cannot be recouped from the owner. We suspect some contracting entities will recoup COVID costs where others are being told “no” — and for smaller contracting businesses who are being told “no” they cannot recoup those costs, which can be the difference in survival or not. There is a bill being introduced (SB 5333 Fair Compensation for COVID) we hope passes, providing some opportunity for relief.

• Workforce. This has been talked about a lot for many years as the aging trade workforce begins to retire out; the industry needs to replace that experienced workforce before the mentoring knowledge goes away. The positive in workforce development is the increased emphasis and education of our younger generations, including those coming through the K-12 system, to realize that construction is and can be a great rewarding career choice and a great financially rewarding career choice.

This last year the AGC of Washington Education Foundation introduced their Core Plus for Construction, a program to be introduced to high schools throughout the state and approved by OSPI in March 2020. Core Plus is a 1,080-hour construction program that prepares students for the high-demand jobs of construction. Despite COVID we are rolling out the program and working with the schools, their teachers and counselors to get them up to speed on the curriculum and what the construction industry can provide to their students. This program offers the student access to credit options in science, mathematics and English language arts.

Out of all the challenges, there are many who come together and find solutions, that is always encouraging.

Q: Any other challenges?

A: Growth management. As we see the state population grow, our growth management plans are evolving and it sometimes feels like it is constant change. We know that there is a push to slow, if not try to eliminate growth, in rural areas for the sake of increased density in regional growth centers spread throughout the region. In my town of Puyallup, there are two regional growth centers and with the prescribed/projected density intended for these areas, it could conceivably double the size of Puyallup. I just read a bill the other day on growth management that tells the municipalities to incorporate into their comprehensive plans at least six net dwelling units per acre for areas zoned for housing.

The varied plans help some contracting entities but hurt others, the challenge is to stay on top of which way the wind blows to make and implement a good business and strategic plan to move forward.

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