State Construction Market Stays Flat

October 14, 2002
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GRAND RAPIDS — Michigan Economic Development Corp. President and CEO Doug Rothwell feels the market for builders and architects across the state will be flat for the near future.

“We tend to see that activity first because of the role we play in the development of projects.

“We usually hear about stuff well before you see them in the ground,” he said after speaking at last week’s luncheon with the Economic Club of Grand Rapids.

“I think the market is going to be very flat. I just don’t see a lot of uptick in activity,” he added. “I don’t see a big downswing. But I don’t see the real up-market turn that a lot of us would like to see.”

Rothwell felt the insecurity of the stock market and the doubt surrounding corporate financial reporting were the main reasons that building projects have slowed across the state.

“I think people are just very nervous,” he said.

“I think the uncertainty of corporate earnings, these corporate scandals that have come out and really scooped the market — people then see their investments go down 20, 30, 40 percent from what they were at the peak and it gets everyone unsettled.”

Rothwell said the same problem was plaguing the retail market, as consumers have pulled back their spending across Michigan over the past few months, and the projections he has seen for holiday shopping season in the state call for fewer sales.

“All of that tells me that I don’t think we’re going to see a big uptick in construction for a while,” he said.

How long? Rothwell wasn’t sure.

“It’s so uncertain that I don’t think we can look out more than six months. But I see it being pretty flat over the next six months.”

Rothwell felt it was difficult to make a longer projection because the corporate factors responsible for a flat construction market are out of a state government’s control. He even felt that there was little, if anything, the federal government could do to snap the market out of its doldrums.

“The Federal Reserve has lowered interest rates and I don’t know how much more interest-rate cuts can do. These would be welcomed, but I’m not sure it would mean that much more,” he said.

“Beyond that, except for maybe another big tax cut in Washington, I’m not sure what the federal government can really do here. This is kind of a self-inflicted wound in the corporate community and I just think we have to hack through it.”

Rothwell is leaving the MEDC at the end of the year after 10 years at the state agency’s helm.

He said he plans on returning to the private sector, but hasn’t accepted a position yet.

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