The construction industry has gone from boom to bust, figures released this week by the Government show.

The Quarterly Bulletin of Statistics highlights an alarming shrinkage in the industry which employed more that 3,600 people — or nine percent of the Island's workforce — at the end of 2008.

The estimated value of private-sector construction work put in place in the last three months of last year was $5.1 million — a steep drop-off since the first quarter of last year when the figure was $135.6 million.

The conclusion of a series of major projects, coupled with the economic downturn stifling further development, has deal a severe blow to the industry.

Andy Pereira, president of the Construction Association of Bermuda and a principal of D&J Construction Ltd., said yesterday that the impact on construction companies had been significant.

"Some companies have no work and have had to close," Mr. Pereira said. "Lay-offs started in 2009 and will continue through 2010."

He added that firms were down-sizing, cutting costs and looking to diversify in order to stay in business.

Government could help the situation by investing in capital projects and by providing further tax relief to stimulate the new hotel projects, he added.

Alex DeCouto, past CAB president and president of Greymane Contracting, said there had been a significant drop in workload across the industry.

"For us it means that we will struggle to meet our turnover needs. We have project costs that are variable (i.e. tradespersons who are only hired when we have the projects for them to work on), but we have overhead costs (like accountants, equipment, facilities, etc.) that are not variable that still need to be covered," Mr. DeCouto said.

"It is extremely painful for a business to cut overheads because they take a tremendous amount of time, effort and investment to develop and grow.

"What we have done, and what others have also, is to reduce expenses and staff where possible and become extremely aggressive on pricing to secure what work is out there. It will be survival of the fittest for the foreseeable future."

The value of work put in place last year was $232 million in the private sector — down by more than 40 percent from the $390.9 million achieved in 2008.

Public sector work put in place fell by seven percent to $50.7 million from $54.5 million in 2008.

More disturbing for the industry is the value of new projects started in the fourth quarter — indicating work in the pipeline — totalled just $1.8 million, the lowest number since the first quarter of 2005.

Mr. DeCouto said Government would be in much better shape to aid the industry if it had run a surplus during the years of the Island's economic expansion — however that had not happened.

"We as a country have accumulated unprecedented levels of debt and we run the risk of soiling our stellar international reputation if it were to become unmanageable," Mr. DeCouto said.

"We are stuck with the dichotomy of asking them to both spend and cut spending. I wish there was a simple answer but there isn't."