Chris Walters: Foxconn construction will affect area businesses

June 10–Foxconn’s decision earlier this year to build a new liquid-crystal display, or LCD, factory in Racine, Wisconsin, has generated many projections and much speculation about how the construction will affect Wisconsin’s economy. It will take years to know how the investment pans out at a macro level, but many Coulee Region business are already starting to feel the tide moving.

The project is massive, creating 22 million square feet of factory buildings on 787 acres. Construction alone is estimated to cost $10 billion and support 16,205 construction and related jobs in the state. Gilbane Building Company and M+W Group, the construction-design team for the factory, expects 10,000 of those jobs will occur directly onsite over a four-year construction schedule. Gilbane/M&W also estimate the project will consume 150,000 pounds of steel (that’s five times more steel than required for the new Milwaukee Bucks stadium currently under construction).

Those 16,000 laborers have to come from somewhere, as does all that steel; and the fact is that some of what will be going to Foxconn will be coming from our region (and others like ours), where labor and materials are already in short supply.

While the labor needs may not pull many general contractors or construction managers from the region, subcontractors and suppliers in the region will have significant opportunities to bid on various packages associated with the project. That means subcontractors such as concrete companies, carpenters, electricians, plumbers and other skilled laborers may be in even higher demand for the next few years.

Where does this leave businesses in the Coulee Region? It could leave them with longer wait-times for materials and labor and potentially higher costs for new construction, build-outs or renovations. With a little extra planning, however, area business owners don’t need to alter their project plans but instead consider approaching them a little differently.

Plan farther ahead. The more advance planning businesses can do, the more flexibility their contractors will have in working around material and labor lead times. Subcontractors and suppliers are busier today than they have ever been, so it’s important to provide as much advance notice of your project to the vendor community as possible. It’s advantageous for contractors to begin generating a database of interested subcontractors and suppliers well in advance of the bidding phase, typically during the early phases of design and provide updates to vendors to keep them interested in your project.

Stay abreast of price fluctuations. As we all learned in basic economics, scarcity means higher prices, and that holds true here for both materials and labor. Labor prices are on the rise and experts expect it’s a trend that will continue beyond Foxconn’s construction as fewer young people are pursuing construction jobs. Keeping abreast of global marketplace factors (such as tariffs), natural disaster rebuilding demands and weather issues that can compound resource scarcity will help ensure you minimize unexpected costs and other unwelcome surprises.

Consider wood framing in place of steel. While steel still offers multiple benefits, wood framing has its own advantages and may allow businesses to fulfill their facility needs at a lower cost. Wood has a higher insulating capacity, requires less expensive fasteners than steel and involves shorter lead times.

Schedule construction during the off-season. Wisconsin winters have trained many to wait until the spring thaw to begin new projects, but that tactic can have an impact on the availability of laborers and materials.

While some businesses don’t have the luxury of planning around the seasons, those who can take advantage of the off-season can find both materials and labor in lower demand. Availability of key materials, like steel, increase and the lead-time for those supplies decreases. Also, the availability of subcontractors and laborers increases in the colder months which can pave the way for improved pricing and project schedules. Proactive and strategic coordination is required by the contractor to minimize winter conditions.

Emphasize communication and collaboration. In the Foxconn climate — and the added stress on materials and labor that comes with it — it’s never been more important for project architects and construction firms to work closely together. All team members should work together to carefully scope all timelines, budgets and staffing schedules to work around today’s market realities. And ongoing collaboration and communication are a must.

As the largest construction project in Wisconsin’s history, building the Foxconn factory in Wisconsin is like landing a blimp in Lake Onalaska. The impact will be widely felt, creating more than mere ripples in the water. Rather, we’re likely to see the effects–both good and bad–throughout the state’s economy and extending well beyond the construction sector. Businesses in all industries throughout the state would be wise to examine and prepare for what the coming tide means for them.

This article provided by NewsEdge.