WASHINGTON — Still reeling from the subprime mortgage mess and the economic downturn it spawned, the troubled construction industry got another jolt of bad news recently when the production of single-family homes hit its lowest annual rate since 1991.
Homebuilders, stung by a glut of unsold units, slowed production nearly 3 percent in July and, in doing so, helped send 22,000 more construction workers to the unemployment line.
At a time of the year when residential and commercial construction should be peaking, the homebuilding industry is in its worst slump since the Great Depression and many commercial projects have been canceled or postponed until the economy rebounds.
This double whammy has made it a cruel summer for construction workers.
The industry's July unemployment rate of 8 percent is the highest in 13 years. Across the nation, some 783,000 jobless laborers, carpenters, plumbers, pipefitters and other tradesmen are looking for work wherever they can find it.
After being laid off in May, Gerry Cassani, an electrician from Harrison Township, Mich., took a job in Louisville, Ky., because work in the Detroit area had dried up because of the struggling automobile industry.
Cassani hoped the out-of-town work would keep him from drawing down his unemployment benefits. But in early July — after only eight weeks on the job — he was laid off again.
Cassani, 52, is one of roughly 1,200 unemployed members of the International Brotherhood of Electrical Workers, Local 58, in Detroit. Each night he checks the union telephone information line about local job opportunities, but openings are scarce.
"If the auto industry is doing bad, everyone is doing bad. It's like everything's on hold," Cassani said.
He's hoping things will pick up in October when Marathon Oil is expected to begin work on a new refinery near Monroe, Mich. Up to 300 electricians could be needed. But Cassani has heard it all before.
"At first it was supposed to start last April. Then it was supposed to start in August. Now it's supposed to be starting in October. They keep on pushing it back, so until I see it," Cassani said, he's keeping his fingers crossed.
Douglas Fleming of Anderson, Ind., lost his job as a quality assurance manager with Beazer Homes in October 2007 because of the subprime mortgage crisis. Since then, Fleming said he has mailed, faxed, e-mailed and delivered his resume to more than 700 prospective employers with no luck.
A journeyman plumber by trade, Fleming, 41, was optimistic about getting a maintenance pipefitter job after recently scoring well on an IQ test and a skills assessment test. Again, however, he wasn't hired.
"I was just floored," Fleming said. "The roller coaster of emotions is just unreal."
Since its September 2006 employment peak, the construction sector has lost 557,000 positions. Nearly three-quarters of those lost jobs occurred after October 2007, when the economy officially began to tank.
Specialty trade contractors like Cassani accounted for 20,000 of the 22,000 construction jobs that were lost in July, according to the Department of Labor.
Other construction workers unable to find steady full-time work are settling for part-time work. In fact, since July 2007, the number of part-time construction workers who want full-time work has jumped by 249,000, or 40 percent. That's the most among all industries, said Steve Hipple, a Labor Department economist.
The slowdown in new housing construction is likely continue into early 2009 before picking up, said Robert Denk, an economist at the National Association of Homebuilders.
Single-family home production in the 2nd quarter of 2008 was at just 39 percent of the record production level of the first quarter of 2006. That's the equivalent of 638,000 new homes being built in 2008, Denk said.
"The slowdown in housing starts has been very painful for the industry, but it is the necessary medicine to work down the inventory of unsold homes," Denk said. "We need for sales to outpace production so we can work down these inventories. That's what has to happen before we can get this thing back on track."
Fleming is looking forward to that day. If Congress hadn't voted recently to extend unemployment benefits by 13 weeks, Fleming would be in a deep financial mess.
After taking out loans against his 401K, Fleming and his wife are down to about $120 in their bank account. "We're wiped, so it's week-to-week," he said, adding that it's a good possibility he could lose his home.
Fleming is considering going to college to complete his training in computer-assisted drafting, but in the meantime, he's looking for whatever job he can find.
But many employers won't hire him because they think he's overqualified, Fleming said. He said they often tell him: "We know the moment you find something that's more suitable to your needs, you're gone."
Fleming is hoping things get better soon. "I'm under the assumption it can't be much longer," he said. "Something's got to give."
McClatchy Newspapers 2008