ACHRNEWS

Atlantic City Contractors Feel Effects Of Sept. 11

December 22, 2001
ATLANTIC CITY, NJ — Attendees at this year’s ASHRAE meetings and International Exposition will be able to take advantage of the entertainment and fine dining in the many casinos and resorts found here.

More than 33 million people visit Atlantic City each year to take advantage of the many attractions offered here. Even though there are numerous things to see and do, the terrorist attacks in nearby New York City on September 11 have put a bit of a crimp in the normal hustle and bustle of “America’s Favorite Playground.”

That’s because many people are opting to stay closer to home, just in case there are more terrorist attacks. In addition, New York is working on legislation that would allow gambling in six sites around the state as a way to pay for the devastation that occurred on September 11. This has Atlantic City casinos worried that customers will no longer travel to New Jersey if gambling is legalized in their home state.

Local contractors note that business is a little slower than usual, as many casinos are putting their projects on hold for at least six months, hoping that people will begin to travel again and that the legislation in New York will fail. Most feel this is a temporary downturn in the local economy and that by next summer, things will be back to normal.

THINGS SLOW DOWN

“Everything has slowed down a great deal since September 11, especially the remodeling projects,” says Dave Dandrea, senior project manager, Falasca Mechanical, Vineland, NJ. “We work in just about every casino in town, and some of them are holding back at this point.”

Dandrea knows the casino business very well. Falasca Mechanical has been around for about 40 years. With sales in the range of $40 million to $50 million annually and approximately 35 people in the office and warehouse, and 200 men out in the field, Falasca is able to cover all of South Jersey, North Jersey, Philadelphia, and Delaware. The company specializes in commercial new construction and remodeling; about 25% of the work it does is in casinos.

While many casinos in town have put their major renovations on hold, Dandrea notes that some smaller remodeling projects are continuing to move forward.

“The casinos are constantly renewing, refacing, and rejuvenating their businesses by dressing them up and adding new restaurants. Much of the small work is still going on,” he says.

And with the casino part of its business down a little bit at this point, Falasca can turn to other commercial projects, such as state work, schools, and private office buildings. “Fortunately, in our business, if Atlantic City is hurting, hopefully we’ll pick up some other work in the state or in the surrounding area to compensate for it.

“We don’t totally rely on Atlantic City,” notes Dandrea.

Construction in Atlantic City is expected to rebound in 2002.

OTHER WORK AVAILABLE

Another contracting firm in the area that also doesn’t put all its eggs in the casino basket is Labov Mechanical, a subsidiary of Emcor Group, Atlantic City, NJ.

“Last year, probably 20% of our work was in the casinos,” says Steve Labov, ceo, Labov Mechanical. “This year will be probably 20%, and then we would hope in the coming years maybe it would move back up to 30% or 40%.

“There was a period of time when I would’ve said 50% or 60% of our work was done in the casinos. We’ve tried to decentralize from that and spread out to different things.”

The 82-year-old company is in a growth mode, currently pulling in about $40 million to $60 million a year and looking to increase its sales. Labov Mechanical employs anywhere from 150 to 350 people, depending on the amount of work there is. About 45% of its projects are in the commercial sector, 45% in industrial, and 10% in commercial kitchens. Much of that work is in new construction or major renovations.

With Atlantic City in a bit of a slump, Labov Mechanical has turned its focus to North Jersey, where a lot of construction is taking place. In fact, business there may be booming because of September 11.

“In North Jersey, the unions are probably 200% employed, and there’s a great deal of industrial work going on,” says Labov. “There will probably be a fairly substantial boom in office construction as well because of the office space lost on September 11.” The labor problems that have affected the rest of the country have also affected New Jersey, though. As Labov notes, even though the Atlantic City area is nowhere near peak levels of construction, it already has a thin supply of qualified labor.

“If we’re at the front end of another boom, my guess is there will be a labor shortage like there is in North Jersey.”

THINGS WILL GET BETTER

That labor shortage may be more apparent by next summer, which is when both Dandrea and Labov believe construction in Atlantic City will rebound.

“I think it’s going to bounce back, because the casinos in New Jersey have a captive audience right here,” notes Dandrea. “There are no other casinos here, and it’s within traveling distance from New York and Philadelphia or any major city on the East Coast. People who are afraid to fly can drive and within two or three hours, they could be here. I think Atlantic City will continue to grow.”

In fact, Labov believes that Atlantic City is long overdue for a construction boom. He says that they’ve been expecting major growth for the last three years. That’s due in part to the opening of the Atlantic City Convention Center. In addition, a new connector corridor makes it easier to get down the expressway and over to the Marina casinos.

“Atlantic City has been very short of rooms for the past 10 years. Now there’s a new convention business going and thousands of rooms currently under construction. Most of the casinos are planning major expansions that should happen over the next couple of years,” says Labov.

And Americans are a resilient people who are already showing signs of wanting to get back on the road and go places where they can forget their worries for a while. Atlantic City is such a place.

As Labov notes, “We’re a tank of gas for about 80 million people, so with the price of gas being way down and with the room numbers going up steadily in Atlantic City and the surrounding areas, and with the fact that it is a beautiful seashore environment, we think it’s going to get stronger and the summer should bring significant business to the Jersey shore.”

Publication date: 01/01/2002