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US Home Improvement Companies Busier Than Ever - 2001-08-28

While President Bush is away on vacation the White House is undergoing major home improvements, including wall and fence painting, floor finishing, re-carpeting, re-upholstering and power cleaning. The First Family seems to be part of a general trend in The United States. Despite the economic slowdown, construction and home improvement companies are busier than ever.

Public relations specialist Cindy Wallack got married about ten months ago and moved with her husband into a historic district of St. Louis, Missouri. Mrs. Wallack says she and her husband wanted to completely remodel the two bathrooms in the old house, finish the basement and connect the garage to the house. "We had appointments with six different contractors," she said. "The three that we had show up we asked for bids. Out of the three that we asked for bids, we ended up with one bid."

But the contractor who accepted the job did not show up to actually do the work, so the Wallacks are still looking for a company to remodel their house. Mrs. Wallack says she has had a similar experience with electricians, plumbers and landscapers. The situation is not unique to St. Louis, Missouri. Tony Young, the owner of a Washington D.C. area home improvement company specializing in wood flooring, says most contractors accept more job offers than they can handle. "I think that most contractors will try their best to get as much work as they can, but the downplay of that is that the client loses and therefore you get a lot of frustrated clients and what contractors do is they tend to jump from one place to another," he said. "If they get a high bid they'll go out there and do it just to try to rake in as much money as they can."

And while some large corporations lay off workers and downsize, construction and remodeling companies often struggle to keep employees. Tony Young says larger construction companies lure workers from small businesses like his with offers of higher wages and more benefits. He says he often has to hire unskilled laborers and train them. Richard Baron, president of the McCormack-Baron development firm, based in St. Louis, Missouri, says his company has no problem finding people to do its projects, but he admits there is a shortage of blue-collar labor in this country. "Typically, our projects are large enough that we can get the kind of firms to do the work," he said. "My problem is like yours - it's at home. They said if you have a heart attack, you are in a very good shape in this country, but if you have a leaking toilet, you are in trouble."

According to the National Association of Home Builders, Americans spent more than $150 billion in home improvements and repairs last year, which is roughly two percent of the nations gross domestic product. Despite the economic slowdown, the construction and remodeling industry is not showing any signs of decline. The National Association of Remodeling Industry says more than three million homes change ownership annually. Analysts say this, coupled with the aging housing stock, may mean a growth in remodeling industry for decades to come.

But the shortage of labor has contributed to increased construction costs. A building in suburban Virginia, for example, cost 20 percent more to build this year than a similar building did four years ago. Some organizations and private citizens, unprepared for the recent rise in construction costs, have had to trim down their projects or add money to their renovation budgets. For many Americans, the solution to the rising cost of home improvement is: doit yourself. Djordje Putic of Arlington, Virginia says he has built his own driveway, remodeled his kitchen and bathroom and finished his basement. He and his wife have painted the walls, refinished furniture and landscaped their garden. "I do all my home repairs and improvements first of all because I like it," he said. "It's great fun and it's much cheaper. America is heaven for handymen. The tools are cheap, they are widely available, the construction material is available, only the hands are expensive. So I try not to employ any outside contractors. I try to do whatever I can myself and I enjoy it."

According to the U.S. Census Bureau, 18 percent of remodeling is done by homeowners. In a recent survey by Getting to Know You - the largest home buyer welcoming program in the United States - almost 80 percent of respondents said they plan to make home improvements within the year. Most of them plan to remodel their bath or kitchen, others want to build a deck or porch, replace fence or roof and buy siding and insulation.

During the next few weeks, the Internal Revenue Service will have sent about 92 million checks to Americans as advance return of next year's taxes: up to $300 for single filers or $600 for joint filers. Home improvement retailers such as Home Depot, Wal-Mart and Kmart expect that much of this money will be spent on their merchandize. So they are offering to cash the Internal Revenue Service checks with any purchase from their stores.

In the United States home is - often - where the hammer is.