The sluggish homebuilding market has been detrimental to the construction industry for the past year, but the robust nonresidential market has helped many companies stay afloat and keep their workers busy.

It’s no secret that the residential market has taken a turn for the worse in the last year.

With the mortgage lending industry in crisis and many developers with excess inventory, construction has come to a grinding halt in many areas across the country. Some established firms have not been able to weather the storm.

Neumann Homes, one of the Chicago area’s largest homebuilders, filed for bankruptcy in October.

Yet while residential developers are struggling, nonresidential builders are having positive years and employment is increasing.

“Today’s employment report shows nonresidential construction is still boosting the economy, despite the homebuilding meltdown,” said Ken Simonson, chief economist for The Associated General Contractors of America, commenting on the Oct. 5 payroll employment report from the Bureau of Labor Statistics. “In fact, nonresidential construction is far stronger than first inspection of the data reveals.”

Total construction employment dropped 14,000 in September, and was down 1.5 percent, or, 112,000 from one year ago, the report showed.

However, over the past 12 months nonresidential has climbed in three nonresidential categories—nonresidential building, specialty trades, plus heavy and civil engineering—by 1 percent, or, 42,000 jobs.

Residential building and specialty trades employment has shed 154,000 jobs in that time period.

“That gap, while large, vastly understates the actual difference,” Simonson asserted. “Census Bureau figures for August show residential construction spending was down 16 percent from a year before and nonresidential was up almost 15 percent.

“With all signs pointing to still less homebuilding ahead, it’s likely that residential employment is also down roughly 16 percent. That means about 400,000 ‘residential’ specialty trade contractors are now doing nonresidential electrical, plumbing and other work.”

Local contractors have seen this trend as well. Many firms have posted increased sales this year and the labor pool has been strong.

“Everything is up,” said Jeff Krusinski, business development manager for Krusinski Construction Company in Oak Brook. “Industrial remains strong, office and built-to-suite are strong, and health care is strong.”

The firm has not had a problem acquiring labor, noting that many of the trade laborers can apply their skills to both the residential or nonresidential market, depending on where the majority of the work is.

“There has been a pretty good supply of labor,” said Krusinski. “Some of the trades can switch over. A wood framer may not be able to go from residential to nonresidential, but iron workers and electricians can switch over.”

Krusinski said that the only safe investment in the residential market right now is mixed-use condo developments located in vibrant suburban downtowns.

Lamp Incorporated in Elgin has found a niche in educational and health care facilities in the Fox Valley area. The firm does not deal exclusively with these areas, but recently a large portion of its business has been in this market.

“Our numbers will be better in 2007 (as opposed to last year,” said Craig Lamp, president. “We have been busier than the past couple of years.”

Lamp said that infrastructure improvements for school districts have been in demand lately as growing populations in the far western suburbs have caused many schools to put on additions.

“We’ve had a good year,” said Dave Rock, president of IHC Construction Companies LLC in Elgin. “We are fortunate that we work in multiple markets and have been able to find a lot of work.”

A large portion of IHC’s work this past year has been contracted by public sources such as the Illinois State Toll Highway Authority and the Chicago Department of Streets and Sanitation.

Rock said that he is not “overly optimistic” about the market, but that his firm has improved this year over last and a significant portion of next year’s work is already on the books.

“We don’t have all the work we need for next year yet, but we have about 60 percent of it,” said Rock.

Rock said that a robust, state-financed capital program for infrastructure and road improvements would be beneficial to the construction industry.

Lamp said that his firm already has $40 million-$50 million in construction management jobs lined up for next year. That figure does not count as sales for the company and its profit will be a smaller portion of that number.

Yet the dust has not quite settled on 2007 and many companies and municipalities have set aside money for developments and improvements in 2008 but are still waiting to hire contractors.

“There still is a large amount of capital that needs to be placed,” said Krusinski. “Budgets for next year have been approved and the work will be there. The market should be healthy in 2008.”

However, for the long term most builders are skeptical, because eventually the residential market will affect nonresidential construction.

“It’s hard to look ahead more than six months, but if the residential market remains this way it will affect people trying to pull the trigger on retail developments,” said Krusinski. “Retail is always a gamble when put in relation to rooftops.”