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Construction Industry Finds Pockets of Prosperity

September 13, 1981

With monotonous regularity, the releases stream out of the Department of Economic Development in Hartford. ''Construction in Connecticut headed for all-time high,'' read the May report. ''Construction in Connecticut crosses the $1 billion mark,'' said the August release, which also noted that contracts through the first seven months of 1981 increased 32 percent over the 1980 figure, nearly triple the rate recorded nationally. ''This is going to be the biggest year in construction in the state's history,'' said Edward J. Stockton, the Commissioner of the department.

It is a curious boom. Office buildings are rising in lower Fairfield County and Hartford at a record rate, but other areas and other sectors of the Connecticut construction industry are not sharing in the prosperity. ''We know we're in a full-blown depression,'' said Richard Davis, executive director of the Home Builders Association of Connecticut. He expects housing starts this year to total about 10,000 units, a pace about equal to that of 1980, which was the weakest year since World War II.

"There's a terrible sense of despair on every job," said Marvin Morganbesser, reflecting the state's limited highway construction program and the Reagan Administration's cutbacks of money for sewers and waste-water treatment plants.

Mr. Morganbesser, president of the Connecticut Construction Industries Association in Wethersfield, which represents companies that specialize in heavy contracting, said that the industry was plagued with tremendous excess capacity now and has no new work in sight.

Even among the half-dozen major Connecticut commercial builders - the chief beneficiaries of the curr ent demand for office space - there is some apprehension. ''The market is spotty,'' said Paul Morganti, pre sident of Morganti Inc., the Ridgefield builder that just complete d the new Hilton Inn along I-84 in Danbury. ''Stamford and Hartford are the two poles, with very little in between.''

The current surge in office construction has shown up in the Connecticut Labor Department's employment statistics. In July, the construction work force numbered 53,200, an increase of 2.7 percent over the past year. But while this reflects a healthy recovery from 1976, when there were 41,000 construction jobs, it is still significantly below the peak employment level of 59,000 recorded early in the decade.

Since then, housing and heavy construction in Connecticut have gone through wrenching changes. Mr. Davis of the Home Builders Association said that in the early 1970's housing starts averaged 24,000 a year. From 1975 to 1979, production leveled off at 14,600 units annually, including about 10,000 single-family homes, the part of the market in which members of the Home Builders Association -small builders who put up 25 to 100 houses a year - specialize. Last year, however, total housing construction tumbled to about 10,000 units, with single-family starts down one-third, he said.

In Vernon, Eric Santini said his company was building only four speculative houses, priced at $69,900, in a current subdivision. In previous years, he said, he liked to work on 10 houses at a time. Instead of working on two subdivisions and an apartment building simultaneously, as he had in the past, he has only one subdivision active now.

In heavy construction, business has been more sluggish and for an even longer time. ''In the last seven years, it's been a disaster,'' said Sonny Metz, business manager for Local 478 of the International Union of Operating Engineers in Hamden. Union members, who operate the heavy equipment used in road and sewer work, have dwindled from 6,200 in the early 1970's to half that number now, and 30 to 40 percent of those who remain are without work, he said. Highway construction is ''absolutely finished,'' one observer said. While the state road network is being improved along Route 8 in the Naugatuck Valley and along I-86 East of Hartford, other major projects, such as the new Route 7 and the extension of I-84 East to Rhode Island are years in the future.

Among the office builders, the picture is different. In Hartford, ''insurance is going crazy, all the major companies have big projects either planned or under way,'' said Frank White Jr., who until the beginning of this month was president of the Association General Contractors of Connecticut. ''And for the past couple of years you couldn't walk down the street in Stamford without finding a tower crane every block.'' he said.

Mr. Morganti, whose company has been particularly active in Danbury, said that the market there had cooled. After building the Hilton Inn, one of the buildings in Boehringer-Ingelheim's huge pharmaceutical complex, and several other offices and factories nearby, he said the number of company employees, including those in operations in Washington, D.C., and Florida, had been pared back 50 percent from a peak of almost 600. Mr. Morganti's company owns several pieces of heavy equipment and does its own excavation, concrete, masonry, and carpentry work.

Of prospects for public construction projects, Mr. Morganti said, ''nobody has any dollars.'' Schools and other medium-sized jobs, once a mainstay of companies like Mr. Morganti's, are no longer being built. Mr. Morganti says he does expect more hospital construction - the company is now working on the Yale-New Haven Hospital addition - but small factory projects, in the $500,000 to $3 million range, are scarce and ''are drawing a lot of bidders.''

In Stamford, Atlas Construction Company, like the Morganti outfit a family-owned enterprise, has work worth $42 million going on now and a backlog of $36 million, roughly quadruple the volume of three years ago, according to Joseph Gambino, president. Atlas is working on two projects for International Playtex and U.S. Industries, in the Soundview Farms office park.

One local beneficiary of this trend is the E & F Construction Company of Bridgeport. C. Philip Epifano, its president, said that E & F would work in association with Walsh Construction Company, a national builder based in California, on the huge new office that General Reinsurance Corporation is planning in downtown Stamford. E & F is also responsible for $6 million of concrete work as a subcontractor to Turner Construction Company, also of New York, for a 400,000-square-foot office building under construction in Darien.

E & F, which, like Morganti, maintains its own equipment and large staff and has diversified into development for its own account, nevertheless confines its activities ''exclusively'' to Connecticut, Mr. Epifano said. Other current projects include the huge municipal garage straddling Route 34 in New Haven, and a $10 million addition to the Combustion Engineering headquarters in Stamford.

Around Hartford, where ''all the insurance companies decided to build at one time,'' according to Angelo Giardini, chairman of Associated Construction Company, the largest contracts have also been awarded to national companies based out of state. Connecticut General Corporation's new $75 million office in Bloomfield is being built by the Turner Organization, and Aetna Life and Casualty Company's $130 million Middletown facility, which will be the largest building in the state, was awarded to a Rhode Island company. Nonetheless, Associated is doing two large remodeling projects for the Hartford Insurance Gro up and for Aetna, he said.

In remarks that characterize opinion throughout the industry, Mr. Epifano said that ''the outlook is kind of healthy,'' primarily because large corporations are proceeding with expansion projects. In the face of high interest rates, however, smaller clients, such as municipal and state government and light manufacturers, tend to ''put things on the shelf,'' he said. ''Sometimes they remember it's there and dust it off, but sometimes they don't.''