Mainebiz

V O L . X X V N O. I JA N UA R Y 7 , 2 0 1 9 12 2 0 1 9 E C O N O M I C O U T L O O K F O C U S C O N S T R U C T I O N 'Robust' pace of construction expected to continue B y P e t e r V a n a l l e n L andry/French Construction signs are all over southern Maine. at's likely to continue, at least through this year. Kevin French, executive vice president at the Scarborough-based construction firm, has been busy on the India Street corridor in Portland and has numerous projects in the works. "Yes, I believe the robust pace will continue into 2019. We have more backlog and firms calling regu- larly than ever before. If this is any indication, we are looking at a record year," he says. Landry/French has been busy on Munjoy Hill, fin- ishing an India Street office for cPort Federal Credit Union, which is next door to the Mason Block mixed- use building it completed earlier this year. Its work can been seen elsewhere on Munjoy Hill, with the Luminato and 113 Newbury condo buildings. In Augusta, the company built the offices for the Maine Public Employees Retirement System. In Waterville, it worked with Colby College and the city to rejuvenate a four-block section of the downtown. For Wells and Scarborough, Landry/French is building public safety buildings. Like the rest of the industry, Landry/French is struggling to find employees. "Finding new employees is always a challenge for any com- pany," he says. Recruiting has been helped by the fact that the company is 100% employee-owned, "which has helped our company attract new employees, and more importantly, has allowed us to retain," he says. Despite the pace of construction, French says he's concerned about the impact higher interest rates will have on developers and companies look- ing to hire a builder. "For any construction company, higher interest rates are concerning. Private sectors are and will be paying more for their money. is could slow down companies and developers," he says. Add to that the higher cost of labor and building materials and there's the possibility projects could be put on hold. "e current building market is saturated, and cost of materials and labor are a reflection of the 'good times.' We have heard of projects being placed on hold, waiting for a market correction," French says. "Unfortunately, they may have a long wait." We have more backlog and firms calling regularly than ever before. If this is any indication, we are looking at a record year. — Kevin French Landry/French Construction Kevin French P H O T O / T I M G R E E N WAY Economic strong points will include salmon farms, health services and tourism B y P e t e r V a n a l l e n A manda Rector, the Maine state economist, has been a regular part of the Mainebiz forecast issue. While the format of the issue has evolved over the years, we continue to look to her for insights on the state's economy — the growth areas, the impact of public policy on the economy and any signs of trouble she sees for the coming 12 months. Mainebiz caught up with her recently and she replied by email. Mainebiz: For 2019, What do you see as some growth areas in Maine's economy? Amanda Rector: We're continuing to reimagine our traditional industries: the proposed salmon farms in Bucksport and Belfast are great examples of this. Further developments taking advantage of our relationships in the North Atlantic are exciting as well. We're starting to see a truly integrated cluster forming around the beverage manufacturing industry that could serve as an example for other industries in the state. Health services will continue to be a key part of Maine's economy, and there are some technological developments in that area that are expanding the field beyond traditional hospitals and doctors' offices. Tourism also remains critical for Maine's economy, with an expanded fall season and increased numbers of cruise ships as well as the growth of home rentals (think Airbnb) offering new experiences for visitors. MB: Will the new administration in Augusta have any impact on the economy? AR: Any new administration has the opportunity to shape state policies, however, it takes some time for those policy changes to filter through into economic changes that we can see. Those policy changes also take place in the context of the larger national and global economic conditions. While Maine has seen improvements in population growth due to increased numbers of people moving into the state in recent years, the labor market is still exceptionally tight, which will need to remain a key area of focus for the new administration. MB: Any storm clouds on the horizon? We are currently in the second-longest period of economic expansion in U.S. history; it will become the longest in mid-2019. While the underlying economy still appears reasonably strong, there are signs that growth in 2019 may be somewhat lower than in 2018. Recession may not be imminent, but we're closer to the next one than the last one. The tariff situation should be monitored closely: while we haven't seen broad impacts to date here in Maine, there are particular industries and busi- nesses that have had to make adjustments. G OV E R N M E N T P E R S P E C T I V E F I L E P H O T O Amanda Rector While the underlying economy still appears reasonably strong, there are signs that growth in 2019 may be somewhat lower than in 2018. — Amanda Rector Maine state economist

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