The Detroit News
After decades of growth, companies that build Michigan's highways and public water and sewer systems are closing their doors or laying off workers and seeking work in other states.
A drop in taxpayer funding -- fueled largely by the state's sluggish economy -- has curtailed the multimillion-dollar infrastructure projects. That threatens to further erode highways and bridges. It has also eliminated hundreds of jobs that pay at least $18 per hour, and industry leaders say that number could climb into the thousands.
More than 23,000 people work in highway engineering and construction in Michigan, about the same as in residential construction, which has taken a hit due to the soft housing market.
Slagter Construction, a statewide road builder based in Grand Rapids, has slashed its work force from 102 to 66 in the past five years and, for the first time in its 52-year history, will open a Florida office, President Brian Slagter said. "Our Michigan business plan is nothing more than survival," he said.
It could get worse. Due to dwindling revenue and the end of a highway bond program, state funding for highway construction and maintenance will drop 24 percent over the next four years, from $1.62 billion this year to $1.23 billion in 2011, according to the Michigan Department of Transportation.
"$1.2 billion is still pretty high, historically speaking, but it's obviously not what they're used to," MDOT spokesman Bill Shreck said.
A report released in late June by the Reason Foundation in California contends nearly 13 percent of Michigan's urban interstates are in poor condition -- 42nd worst in the nation. Another recent study, by Washington-based TRIP, says 16 percent of Michigan's interstate overpasses are structurally deficient; only Rhode Island and Oklahoma are worse.
MDOT officials disagree with the reports. But while a recent MDOT report contends that about 90 percent of state highways and interstates are in "good" condition, it shows that percentage dropping to 61 percent by 2014 unless more money is found.
"We can't maintain (quality roads) unless we restructure the way they're funded," Shreck said.
Fay Kodsy, 42, of Macomb Township said some roads are improving, but overall Michigan's thoroughfares are "horrible."
"Go to any other state, and you'll see that the conditions are better," said Kodsy, an office manager who works in Southfield.
The good news: A record number of sewer and water projects funded by low-interest government loans are scheduled this year.
The Michigan Department of Environmental Quality, which administers the "revolving fund" loan program, said it will distribute $600 million for 39 local sewer projects and $76 million for 31 water projects.
The state attributes the rush to get the loans to $40 million in grants it doled out to help cities, townships and counties plan and design the infrastructure systems. Without that seed money -- approved by state lawmakers in 2005 -- municipalities couldn't afford to get the projects started, said Sonya Butler, a DEQ manager. "You can only wait so long if you have failing infrastructure that you need to replace," she said.
But experts say giving out grants is not the ultimate answer. Joe Fivas of the Michigan Municipal League said he believes state lawmakers need to do their part to revitalize the economy by fixing Michigan's long-term budget deficit and providing a steady flow of sales tax revenues to communities.
Fivas said the state has cut $2 billion in revenue-sharing dollars in the past five years, making it difficult for municipalities to undertake infrastructure projects. As a result, officials say, the amount of sewer loans taken out by municipalities dropped dramatically -- from $197 million in 2002 to $92 million in 2006 -- before shooting up to $600 million this year.
Grants not 'long-term fix'
As lawmakers consider funding more grants, industry officials worry the local sewer and water projects will drop off sharply when the grants end. "This grant program was never supposed to be a long-term fix," Fivas said.
Dearborn has one of the region's largest sewer projects under way: $150 million in federally mandated work to prevent untreated sewage from flowing into the Rouge River through underground retention reservoirs, said Kurt Giberson, public works director.
The city is employing three of Metro Detroit's largest contractors -- Barton Malow, Walbridge Aldinger and Posen Construction -- and plans to spend another $170 million on the project, Giberson said.
But some sewer contractors say they're not getting much work.
Milad Ibrahim, vice president of Sunset Excavating, said the Livonia company over the past few years has cut its work force from 180 to 100 -- and is "lucky to keep half those guys busy. We haven't seen a big sewer project out there for a long time," Ibrahim said.
Statewide construction jobs in heavy and civil engineering fell in the past year from 19,200 in May 2006 to 18,200 in May 2007, providing a snapshot of the overall downswing, according to the state Department of Labor and Economic Growth. The department does not keep similar data for highway maintenance workers, paving equipment operators and sewer and water contractors.
Civil engineers make $21.50 an hour on average, according to the state, while paving equipment operators make $18.40. The jobs are mostly seasonal, but contract workers historically log plenty of overtime.
Mike Nystrom, spokesman for the Lansing-based Michigan Infrastructure & Transportation Association, which represents road and sewer builders, said the association has lost more members recently than at any time during the past two decades, although he wouldn't discuss specifics.
In addition to the decrease in public funding, he said the cost of construction materials has spiked about 20 percent.
Fleeing to Florida
Chris Shea, president of PK Contracting in Troy, said he's considering opening an office in Florida for the first time in the 27-year history of the highway striping company. Some of his 100-150 employees are working only two days a week, he said, and the planned reduction in roadwork funding will mean even less work or layoffs.
"We have no intention of abandoning Michigan, but by the same token it's just a monstrous concern around here about what people are going to do," Shea said.
Slagter, president of the Grand Rapids company, said he sent six highway workers to Florida for the first time in early 2006 -- and now has more than 24 employees there, all Michigan transplants younger than 27. He also plans to open his first out-of-state office, in the Palm Beach area, in the next three months. "They're down there buying Jet Skis, they're buying cars and trucks, they're buying homes," Slagter said of the transplants. "Most alarmingly, they'll probably never come back."