Steady growth means steady work for construction firms
Growth at U.Va. powers jobs and business

By Charlotte Crystal

Doug Horn’s father, Jack, came to Charlottesville in 1956 to study civil engineering and play football at the University. He stayed to work in construction, starting his own company in 1979.

Photo by Bill Sublette

U.Va. construction projects, such as the Small Special Collections Library and the Harrison Institute, will pump an estimated $1.1 billion into the local economy and generate about 1,450 jobs.

The business found a good mix of work in the area, including projects affiliated with U.Va. From construction of Klöckner Stadium to a renovation of the Medical Center’s Intensive Care Unit to the erection of a new columbarium wall, the company’s projects have run the gamut.

Now Martin/Horn Inc. has about 100 employees, and roughly half work on University-related projects.

“I don’t know if our company would exist without U.Va.,” said Doug Horn, who with his brother, Ted, serves as vice president of the family business, while brother Jack Jr. is president and their father serves as chief executive officer.

Martin/Horn is just one of many companies competing to build projects for U.Va., which has embarked on a construction program that rivals any since its founding. In this decade, the University expects to spend well over half a billion dollars on construction projects that will sharpen and expand its academic, research and entertainment capabilities, while preserving its world heritage Grounds.

Most of the money the University spends on construction cycles through the metro-Charlottesville economy and into Central Virginia from Harrisonburg to Richmond, according to University and construction officials. And spending is split about 50-50 between materials and labor, said Richard Dickman, contract administration manager for U.Va.’s Department of Facilities Management.

Most materials are purchased locally — within a 50-mile radius of Charlottesville — except for major pieces of equipment that are needed but not produced in Virginia. So, approximately half of the funds spent on University building projects go to pay for building materials at regional retailers and manufacturers, he said.

As for labor, the University taps both in-state and out-of-state industry professionals, hiring architects, engineers and construction companies according to the expertise required for a particular project. Over the past five years, U.Va. has awarded 74 percent of its architectural and engineering contracts to Virginia-based firms, although out-of-state firms generally have landed the larger projects — which usually require more specialized expertise — earning 46 percent of the nearly $87.5 million the University paid in such fees.

“Because the University is a state agency, we have to go through the public procurement process, and contractors have to be licensed in Virginia to bid on our projects,” Dickman said. “As a general rule, we take the lowest bid.”

When it comes to the construction itself, most of the companies are either based in Virginia or have permanent offices in the state, University officials said. Most of the skilled and unskilled labor is supplied locally, at least from within the state, they said.

“All our employees are local, coming from no farther away than Richmond,” said Doug Horn. “Even our [subcontractors] and our subs’ subs are virtually all local.”
Doug Lowe, president of Artisan Construction Inc., which, as Martin/Horn does, bids frequently on University projects, said the exceptions come when specialized skills are required. “For the most part, we use local subcontractors, except when a project requires a level of expertise that we can’t get locally,” he said. All in all, about 90 percent of the University’s work is done by local contractors and suppliers, Dickman said. And construction workers, regardless of their permanent residence, spend about 60 percent of their paychecks locally, and pay state income and sales taxes, he said.

Using U.S. Commerce Department figures, Leonard Sandridge, U.Va. executive vice president and chief operating officer, estimates the economic benefit to the community from the University’s construction expenditures at about $1.1 billion, and he expects the spending to create about 1,450 jobs, directly and indirectly.

U.Va.’s anticipated total expenditure for building projects from 2000-08 is about $761.1 million (excluding U.Va.’s College at Wise construction projects). About $68.8 million was completed before Virginia voters approved $68.3 million in general obligation bonds last fall. Charles “Sack” Johannesmeyer, U.Va. director of facilities planning and construction, said the lion’s share of the funding will come from private gifts, outside research grants and the University’s local business operations, such as parking fees and bookstore sales.

“We have been able to leverage the state funding and bring in significant private gifts and research dollars to pay for much of this needed construction,” Johannesmeyer said.

That blend of public and private funds will enable U.Va. to renovate old buildings and erect new ones for student classrooms, faculty offices, scientific laboratories, art studios and performance halls.

And while business with the University fluctuates among local firms, it exerts a stabilizing influence on the area’s construction industry, Doug Horn said.

“Without U.Va. we would probably only have about one-quarter of our employees, and wages and benefits would be a lot less,” Horn said. “All you have to do is to go into the [Shenandoah] Valley and see the market — the kind of wages and benefits people pay in the construction industry — to get an idea of what the market would be like here without U.Va.

“Tidewater and Northern Virginia have had incredible booms in the construction industry, but during the down times, they’ve had big layoffs,” he said. “That hasn’t happened here in large part because of the steady stream of business flowing out of the University.”

An EconomicEngine is an ongoing series in Inside UVA. For more information, go to www.virginia.edu/insideuva/ and www.virginia.edu/communityrelations