The project will be a shot in the arm for a beleaguered industry. The top five ranked building contractors in the BusinessNorth coverage region reported a collective $289.5 million in revenues during 2008, and only $114.4 million one year later.

According to District 1 Transportation Department spokesman John Bray, the I-35 project will provide significant local employment. “Nationally, the construction industry projects that 32 jobs will be created in the private sector both directly and indirectly for every $1 million spent in highway construction,” he said.

Construction on the Duluth Public Schools long-range facilities plan also is underway. From 2008 through 2012, the plan calls for $300 million in construction and predicts $442 million in economic impact.

School spending will provide a big boost for the Duluth regional office of Minneapolis-based Kraus-Anderson Construction — whose revenues fell to just $28.6 million in 2009 from $100.6 million in 2008. “This is going to be a real busy year . . . a banner year,” said business development director Greg Wegler. “We’re going to be real busy over the next 18 months,” he said.

That’s because the Duluth office is managing construction of three of those new Duluth school projects and three new schools for the St. Louis County Schools district. Kraus-Anderson also is managing construction of the new Duluth International Airport terminal.

The company’s Bemidji regional office also is the construction manager for a new $11 million headquarters complex underway at Voyageurs National Park in International Falls.

Other major building firms aren’t so sanguine. “There’s an up tick in projects, but this will be another challenging year,” said Kirk Ilenda, business development manager at Boldt Construction’s Cloquet regional office. “There’s not a lot of industrial, and private commercial work.”

Todd Rothe, president and co-owner of J.R. Jensen Construction Co. in Superior, echoed that clouded overall outlook for building contractors. But he said his firm’s recent record in landing major industrial work “makes the company very positive.” J.R. Jensen won subcontracts on the Mesabi Nugget direct reduced iron plant completed in 2009, grain terminal and utility upgrades, and significant work at Murphy Oil’s Superior refinery and Enbridge Energy’s $1.5 billion expansion of its oil pipeline system between northern Alberta, Canada and the Midwest.

The three-year Enbridge project was completed in 2009. That system of three interconnected pipelines transports petroleum products from the Alberta Oil Sands to Midwestern refineries, including Murphy Oil in Superior. The system also transports diluents (necessary to thin the heavy Canadian oils) from Chicago to Alberta.

The big pipeline project helps explain an anomaly in 2009: Although revenues for the region’s building contractors sank, Northeast Minnesota construction payrolls were at record levels in the third quarter of 2009. Construction payrolls added up to $83.7 million in the third quarter of 2009, up from $82.1 million in the same quarter of 2008, according to the Minnesota Department of Employment and Economic Development.

While that third quarter 2009 payroll suggests stability, overall construction employment in the sector actually has fallen 15 percent from 2005 levels, said Drew Digby, the agency’s regional labor market analyst.

The completion of the $1.5 billion shot in the arm from Enbridge that employed as many as 2,000 workers is showing up elsewhere, said Diane Weber, interim president of Grand Rapids-based Itasca Economic Development Corp. “There are vacancies back in hotels and not as much business in local restaurants,” she said.

Landlords along the Enbridge pipeline corridor also are feeling the impact. Peggy Walker owns a property in Grand Rapids she’s trying to sell at the intersection of 5th Avenue and Golf Course Road. Pipeline workers have provided her rental income since August 2009, but the last of those workers moved out in April.

If she can’t sell the house, finding new renters may prove difficult, she said, adding she isn’t alone in this west Range community feeling the economic void. “You have to wonder if there’s anything that can step in and fill this gap,” she said.

Nevertheless, projects are popping up. Weber’s development group acquired the shuttered Ainsworth oriented strand board mill in Grand Rapids in 2009 and is investing $5.5 million to renovate the site for a multi-tenant eco-industrial park. Demolition is scheduled this summer.

Other major Iron Range projects remain on the horizon, said Iron Range Resources Commissioner Sandy Layman. India-based Essar Steel Minnesota plans a taconite to steel making operation at the former Butler Taconite mine near Nashwauk. Layman said blasting and earth moving work will be underway this summer. But delays, in part due to the company’s problems in obtaining project financing, mean a taconite plant isn’t going up this season.

Meanwhile, new housing construction likely won’t roar back this season. While housing starts are anticipated to rise 25 percent from 2009, that activity would only be about half the normal level of housing construction in recent years, according to the Minneapolis Star-Tribune.

Despite this less than robust outlook, Layman said this year will be better than last. “There are indicators that the economy is coming around,” she said. “This year, we (Iron Range Resources) are again talking to businesses that are thinking of investing in this region.”

In Grand Rapids, a community with an unemployment rate north of 15 percent, Weber is less optimistic. “I think it’s going to be a tough year,” she said.

Staffwriter Wayne Nelson contributed to this story.

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