Northcott Construction Inc. President Ian Northcott visits a house near Hamilton where his crew is repairing water damage. The nation’s economic woes have caused local building firms to layoff employees and scramble for clients. WILL MOSS - Ravalli Republic

Across Montana, new home starts have decreased significantly in the first nine months of 2008 compared to the same period last year, according to the state Department of Labor and Industry and the Montana Building Industry Association.

The state’s fastest growing areas have been especially hard hit by the recession.

Since last year, new home starts have dropped 37 percent in Ravalli County, 33 percent in Missoula County and 35 percent in Flathead County.

Things are even worse in Gallatin County, where new home starts have dropped 38 percent in the unincorporated area, 50 percent in Bozeman and 97 percent in Belgrade, where one house has been built this year.

State and Ravalli County industry officials said many laid-off construction workers have signed up for unemployment benefits or have left the area in search of jobs in the oil fields, mining and other sectors that are hiring.

In 2008, Ravalli County had 160 single-family housing starts through the end of September compared to 253 starts for the same period last year.

The county had 327 starts in 2006, 339 starts in 2005 (during the peak of the housing boom countywide and statewide) and 260 in 2004.

John Lavey, interim planning director for Ravalli County, said the number of subdivision proposals has slowed significantly, especially for large developments.

“Over the last six months and especially the last three months, it’s been nothing close to past activity,” he said. “Now we’re just seeing (proposals for) two or three lots on small acreages.”

Lavey attributed the slowdown, in part, to the uncertainty of the county’s growth policy and zoning proposals, which voters rejected Nov. 4.“But now I think it’s mostly larger economic conditions,” he said.

Dustin Stewart, executive director of the Montana Building Industry Association, said the construction slowdown underscores Montana’s dependence on the building industry as an economic engine.

He cited a decline in consumer confidence, the downturn in the housing market and the nation’s ailing economy.

One in four houses in Montana are built for out-of-staters, many of whom are having trouble selling their houses in cities where the market has collapsed, Stewart said.

The ripple effect is hurting builders as well as manufacturers, retailers, distributors and other sectors that depend on construction in Montana, he said.

Stewart said Ravalli County’s proposal to adopt impact fees, its subdivision regulations and its now-defunct growth policy and zoning proposal further hurt local builders.

“Local government is making it extremely difficult,” he said.

Willie Schrock, owner of Schrock Construction in Victor and the second vice president of the Bitterroot Building Industry Association, said his company was thriving until this fall when the national economy went sour.

Since the election, though, his business has picked up slightly, giving Schrock hope that the recession won’t last. His firm does residential, commercial, manufacturing, farm and other construction.

“Consumers have been very hesitant,” Schrock said. “It’s all about consumer confidence and people are worried because of all the media reports about this bank closing and that bank closing. What it does is make everybody freeze.”

Schrock said a number of small contractors and subcontractors have left the Bitterroot Valley because they couldn’t make a living anymore.

His firm has shrunk from 16 to four workers and further layoffs may happen, he said.

“It’s as tight as I’ve ever seen it,” he said. “The home building industry is a huge, huge thing here, so it’s a tough situation for a lot of people.”

Like other fast-growing areas, Ravalli County may have relied too heavily on a housing expansion bubble that was bound to burst, Schrock said.

“The building industry has always gone in waves, but maybe now this downturn will create more stable growth, a steadier, leaner kind of operation,” he said. “I think this slow down is a good time for county officials and think tanks and other people to get together to get some new plans on the table.”

Northcott, who is president of Northcott Construction, Inc., in Hamilton, attributes the drop off in Ravalli County’s residential construction to the collapse of the housing market, the national recession, the credit crisis and a lack of consumer confidence. He said commercial construction is suffering as well.

He has cut his crews from 14 workers to four full-time and one part-time worker since last summer.

“We’re doing a lot of little stuff now,” including renovations, remodeling and fire and water damage to houses, he said. “If it comes up, we’ll do it. The big jobs just aren’t there anymore.”

Northcott, 56, a native of Canada who is now a U.S. citizen, moved from southern California with his wife to the Bitterroot Valley in 1993.

His business thrived on residential and commercial jobs across the West until last May “when things started shutting down everywhere,” Northcott said.

Jobs that typically attracted a few bids started drawing eight or more as firms struggled to find new work, he said.

Many people who planned to build homes in the Bitterroot Valley are holding off until the economy improves, he said.

“The recession has been here for a while, but since September there’s been no refuting there’s a global problem,” Northcott said. “Anybody who says otherwise is fooling themselves.”

Northcott dislikes the federal bailout of Wall Street, saying the nation’s economy and housing industry were overheated and that the free enterprise system should be allowed to correct itself naturally.

He said the economy may not recover for several years, but that his company’s reputation for quality work will help it to survive.

Northcott Construction also built and owns the Maple Grove commercial park south of Hamilton, which he envisioned as a hub for home-building firms.

“This will truly be a test of our mettle,” he said. “But I think we’ll make it.”

Reporter John Cramer can be reached at 363-3300 or jcramer@ravallirepublic.com.

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LB wrote on Dec 11, 2008 12:27 PM:

" Very true, Matthew. I always found it interesting how many people in The Bitterroot went on about how vital our construction jobs were...when it isn't a perpetual industry...how many buildings can we build before we run out of room and the construction people have to move elsewhere anyway? So we listened to how important these jobs were(and let them do whatever they wanted with zero penalty while our agricultural lands (which truly ARE perpetual and highly beneficial to the community) were being plastered with houses. I think this is a good time to get things together...there are way WAY too many builders and realtors in this valley for how much land there is to go around. Maybe we can start to keep open what very little open land is left. "

Matthew Koehler wrote on Dec 4, 2008 10:54 AM:

" The economic crisis facing America is the result of over-consumption and over-development. Clearly the building industry has played a big roll in the crisis we face today. They happily built too many big houses and too many strip malls.

In general, American's have consumed too many of the world's resources. Just one example is that Americans represent 4 percent of the world's population, but the US accounts for 22 percent of world energy consumption.

Clearly this is not sustainable and it has to change. The best future for America is one that is clean, green and sustainable. 5000 square foot second homes, huge sprawling developments and more of the same is just not an option anymore. "

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