Survey Finds Construction Firms Plan to Hire in 2011

According to an industry-wide survey by the Associated General Contractors of America and Navigant, more construction firms will be hiring workers in 2011 than laying them off. The survey, conducted as part of the Construction Industry Hiring and Business Outlook, shows the industry may finally be emerging from a severe downturn that has left millions of skilled workers unemployed.

The survey reports that 27 percent of construction firms say that they plan to add staff in 2011, while only 20 percent plan layoffs. In 2010, 55% of construction firms laid off employees, while only 20% added them. Expanding firms plan to hire an average of 23 employees, while contracting firms plan to lay off an average of only 16 employees. Firms in Iowa are the most optimistic, with 45% planning to hire, while Idaho is the most pessimistic. There, 48% of the firms are planning cutbacks.

Among the 26 states with large enough survey sample sizes, 45 percent of firms in Iowa plan to hire, more than in any other state. Those firms plan to hire an average of 5 employees each, 21 percent of their workforce. Only five percent of Iowa firms plan layoffs. Meanwhile, 48 percent of firms in Idaho plan layoffs for this year, the highest percentage of any state. Those firms plan to lay off an average of 12 employees each, 11 percent of their workforce. Only 14 percent of Idaho firms plan to hire.

View the 2011 Construction Hiring and Business Outlook report.

View the survey results.

Total Construction Spending Up 0.4%, But Private Spending Down

Total construction spending edged up 0.4 percent between July and August to $812 billion, driven by increases in public construction activity including stimulus and base realignment projects, according to an analysis of new Census Bureau data released today by the Associated General Contractors of America. Association officials cautioned, however, that private residential and nonresidential spending both continued to shrink as private-sector demand for construction remains extremely weak.

“Federal investments from the stimulus and other programs are protecting some construction workers from a devastating downturn in private construction activity,” said Ken Simonson, the association’s chief economist. “But the industry will continue to be at risk of greater economic hardships as long as private demand for construction continues to shrink.” Private residential construction dropped 1.7 percent during the past year while private nonresidential spending dropped 24 percent, Simonson noted.

The economist added that all 11 categories of private nonresidential construction in the Census Bureau’s press release had declined from a year earlier, most by double-digit percentages. Even private power construction, which was doing well earlier this year, fell 2.9 percent from July in seasonally adjusted terms and 15.5 percent year-over-year. Simonson added that single-family construction is up 4.2 percent year-over-year but has been dropping since April, and that multi-family construction is down a “devastating” 52 percent over the past 12 months.

While public construction spending increased by 2.5 percent between July and August, it is still down 1.0 percent from August 2009 to August 2010, driven largely by declines in state and local tax revenue, Simonson noted. Stimulus funds appear to have lifted public housing (up 33 percent from August 2009 to August 2010), sewage and waste disposal (up 19 percent), water supply construction (up 5.2 percent) and highway and street construction (up 0.9 percent), Simonson observed. Reconstruction work around New Orleans helped conservation spending rise 18 percent, the economist also suggested.

In contrast, public educational construction, which is almost entirely funded from state and local revenues, slumped 13 percent. Stephen Sandherr, chief executive officer of the construction association, said the new spending data show that stimulus funds for construction have been turning into projects at an increasing rate. But he cautioned that temporary investment measures like the stimulus were likely to expire before private sector investments increase. “Without action soon on long-term infrastructure programs like the highway and transit bill, our industry faces the severe risk of tumbling into another downturn,” Sandherr said.

AIA supports Mayors support of IGCC

The American Institute of Architects (AIA), Washington, applauded the U.S. Conference of Mayors’ endorsement (click here and view p. 89 of the pdf) of the International Green Construction Code (IGCC), a comprehensive set of requirements intended to reduce the negative impact of buildings on the natural environment, while maintaining safety standards and increasing long-term peak performance.
   According to the AIA statement, “The Mayors’ Conference endorsement today of the IGCC at its annual meeting is a major expression of support from an organization outside of the building and construction industry. Such resolutions document support for a policy and represent ways for mayors to learn about and support policies nationally that they are free to adopt in their communities.”
   ”The IGCC needs the backing of leadership within local jurisdictions if it is to have any impact on the carbon footprint of the nation’s building sector, which accounts for almost 40% of America’s energy consumption and 72% of its electricity use,” said George H. Miller, FAIA, president of the AIA. “This resolution, by America’s mayors, is a huge step in that direction.”
   The Mayors Conference resolution calls on local governments “wishing to take a more holistic approach to incorporating energy efficiency, sustainable community planning, and healthy and safe building practices into the codes to adopt the IGCC and consider its Standard 189.1 compliance path as base code in their jurisdiction.”
   According to the AIA, “The IGCC is a document that can be readily used by design professionals, builders, and others in the industry. It was created with the intent to be administered by code officials and adopted by governmental units at any level as a tool to establish a green ‘floor’ above which voluntary rating systems can continue to drive the cutting edge of sustainable and safe design.”
   The IGCC was developed by the International Code Council (ICC), Washington, in association with cooperating sponsors ASTM International (ASTM), West Conshohocken, PA, and the AIA. Other organizations have joined the effort, including the U.S. Green Building Council (USGBC), Washington, producers of the LEED green building rating systems; the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE), Atlanta; responsible for developing the Standard 189.1; and the Illuminating Engineering Society (IES), New York.
   Version 1.0 of the IGCC was publicly released, in Washington, on March 15, 2010. Comments received and testimony presented at the August 14-to-22 hearings in Chicago will be the basis for Public Version 2.0 of the IGCC, scheduled for release in November 2010.—Gary L. Parr

Rockin’ the prairie

Jumers_ring_172bRock Island, IL, isn’t on my radar. Though it and I are both in the Land of Lincoln, it’s out west, on the Mississippi River, while I’m east, in Chicago, on Lake Michigan. When I do think of my fellow Prairie State metropolis, it’s along the lines of Quad Cities or Rock Island Railroad, not high-stakes gambling.
Then a press release crossed my desk about Jumer’s Casino & Hotel in that fair city. The $151 million complex consists of a 170,000-sq.-ft. casino/entertainment center, and a five-story, 205-room hotel. It opened in December 2008. The photos are stunning. The casino changes colors in broad daylight, according to the release, because the aluminum-composite material (ACM) skin changes colors as different wavelengths of light are reflected back to the viewer’s eye.
“With each shift of the sun and clouds, it changes color, from red to orange to almost brown,” said Guy Davidson, KKE Jumers_exterior_047bArchitects, Minneapolis.
Jumer’s is clad in two colors of Alucobond ACM—Spectra Cupral and Texas Copper. Alcan Composites USA, Mooresville, NC, makes the product, which consists of two sheets of 0.02-inch-thick aluminum thermobonded to a plastic core. General contractor was Kraus-Anderson Construction, Minneapolis. M.G. McGrath Architectural Sheet Metal, Maplewood, MN, and SGH, Omaha, NE, installed the material.
Jumers_logo_119b

I feel a road trip coming on.Jim Carper

Construction economics still a mixed bag

The construction outlook bag remains mixed, but the contents are looking more positive, particularly for 2010. I’ll just tell you what the latest reports are saying and you can interpret for yourselves.—Gary L. Parr

  • The September Architecture Billings Index, from AIA, Washington, was 43.1, a slight increase from the 41.7 August number. However, the new-projects inquiry score was 59.1, the highest level since Sept. 2007. “The fact that inquires for new project are so high is an encouraging sign that we may be seeing new construction activity entering the design phase,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “But that optimism has to be tempered by the fact that the marketplace is so competitive that firms are broadening their search for new projects, thereby inflating the number of inquiries that they are reporting. However, some larger stimulus-funded building activity should be coming online over the next several months, partially offsetting the steep decline in private commercial construction.”
  • According to the Assn. of General Contractors of America, Arlington, VA, Sept. construction employment declined in all but one state, compared with 2008. The number of states gaining construction jobs, from Aug. to Sept. 2009, also declined after increasing in June and July. “While there’s little doubt construction employment would have been worse without the stimulus, there’s no question that the industry continues to shed jobs at an alarming rate,” said Ken Simonson, chief economist for the association. “The stimulus remains an important measure, but until private-sector demand for construction resumes, there’s little chance the current construction employment decline will turn around or even stop.”
  • According to Reed Construction Data, Norcross, GA, the drop in construction materials prices is essentially over. Prices fell 7.5% from Sept. 2008 to August 2009, and prices have been essentially steady for the past three months. Prices are not expected to change in the next six months and, if they do, it will be with a slight upward trend. According to the report, “a slight upward trend in prices is expected through the winter because of expected international economic developments. Asian economies are recovering faster than the U.S. Chinese economic growth has already returned to about an 8% annual rate. This rising demand for construction commodities and manufactured materials will pressure U.S. construction materials prices up, in spite of the slack U.S. economy.”
  • Also, according to Reed Construction Data, economic recovery in mid-2009 will lead to construction recovery in early 2010. According to Reed economist, Jim Haughey, “the turnabout to growth in the overall economy last summer started changes in the economic environment that will lead to resumed growth in construction activity during the winter quarter. Single-family housing led the recovery, as it often does, with an initial burst of growth late in the spring that was a major contributor to the growth in GDP last summer. The balance of construction will begin to recover, market by market, a few months ahead. Retail construction will be one of the first markets to recover because it was one of the first markets to collapse. But recovery will be much delayed for manufacturing and power construction where energy-driven projects keep construction spending growing well in 2009. The enabling changes in the construction economic environment, underway in the last half of 2009, include gains in buyer confidence, both consumer and business, declining interest rate spreads for less than prime borrowers, reduction in surplus inventory, including homes for sale and empty nonresidential space and a significant improvement in export sales to a newly expanding world economy, especially in Asia.”

Fair focused on wood use in commercial buildings

To the casual observer, wood is rarely included in the materials list for commercial buildings. But that’s not necessarily the case. Learn more at the Wood Solutions Fair, organized by the people at WoodWorks for Non-residential Construction, Tacoma, WA.
   The fair will be held Oct. 29 at the Univ. of Illinois-Chicago Forum, Chicago. It is a free, multi-faceted, day-long educational event on the use of wood in commercial buildings. It combines topical seminars with relevant trade booths to deliver a comprehensive educational experience for architects, engineers, builders, building designers, and specifiers. WoodWorks is an approved AIA provider and attendees qualify for six HSW credits.
   For more information, visit www.woodworks.org.—Gary L. Parr

Learn green construction in Eng. Soc. of Detroit courses

Need to learn more about green building construction? Maybe a trip to Detroit is in order? In Aug. and Sept. the Engineering Society of Detroit is offering two new classes on sustainable construction. The classes will focus on how to design or redesign buildings so they are more energy efficient and structurally relevant. “Introduction to Sustainable Construction” will be held on Aug. 12 and 13 and Sept. 9 and 10. An HVAC and Integrated Design course will be offered Aug. 20 and Sept. 17. Both will be held at the Engineering Society of Detroit’s newly-constructed, energy-efficient headquarters in Southfield, MI.
   ”We’ve been getting more and more into green construction,” said Ron Smith, director of education and community outreach for the Engineering Society of Detroit. “We’re in a great position to bring this education to our engineers.”
   The courses will cover the history and background of the green building movement, the impact of green/sustainable building practices on traditional construction and design, and the certification process for LEED accreditation.
   For information, call 248-353-0735.—Gary L. Parr

AIA misses chance to tell positive construction forecast story

The American Institute of Architects, Washington, missed an opportunity Monday to shine a bright light on the non-residential construction market. A press release from that august organization, describing its semi-annual Consensus Construction Forecast,was titled “Significant Downturn in Nonresidential Construction Activity Projected through 2010.” I read that headline and my first thought was “how can 2010 possibly be worse than 2009?”
   Then I read in the first line of the release, “nonresidential construction spending is expected to decrease by 16 percent in 2009 and drop by another almost 12 percent in 2010 in inflation adjusted terms.”  That made me scratch my head a bit because that seemed like progress to me. So I jumped to the numbers. They also said progress:

  • Retail: -28% in 2009, -12.6% in 2010
  • Hotels: -25.8% in 2009, -16.8% in 2010
  • Office buildings: -21.5% in 2009, -17.3% in 2010
  • Education: -8.2% in 2009, -0.7% in 2010
  • Healthcare: -1.5% in 2009, -0.8% in 2010

   Maybe it’s just my optimistic view, but these numbers are telling me that the falloff in construction activity is slowing significantly and healthcare (0.8%) and education (0.7%) are basically projected to break even. Many people would consider that to be a victory. I was surprised and very encouraged to see that the drop in retail construction will be less than half of the 2009 number. I didn’t think we’d see retail progress of any kind for a couple of years.
   I doubt there is anyone who expects commercial construction to go from a significant slowdown to growth just because the calendar date changes. It’s going to take time for things to get back on the positive side, but this forecast tells me things are heading in the right direction. I also doubt that this forecast does a very good job of representing the extensive amount of remodeling/retrofitting work that is going on to make existing buildings more energy efficient/greener.
   In my mind, this forecast is good news, not another black cloud of disaster, and the AIA blew its first chance in a long time to make a positive statement.—Gary L. Parr

Construction spending headed north?

These days we are seeing all kinds of signs that the economy has found a solid bottom and might be headed for improvement. Those of us in the commercial construction world got some very encouraging news this past Tuesday when the U.S. Dept. of Commerce, Washington, reported that U.S. construction spending rose 0.8% in April, the largest one-month increase since August 2008. According to CNN and others, the experts were expecting a drop of at least 0.8%. Even more encouraging is that the Dept. of Commerce report tells us that nonresidential construction rose 1.8% in April, putting the annual spending level at $408.2 billion. This news bodes well for the remainder of 2009 and certainly for 2010.—Gary L. Parr

Another hint of recovery?

The Architecture Billings Index, a monthly market-status indicator produced by the American Institute of Architects, Washington, has now given us consecutive months of positive news. The index increased eight points in March, the first increase since August 2008. The April index fell less than a point and, for the first time since August and September 2008, the index has consecutive months higher than 40. Any score of 50 or more indicates an increase in billings. While this still has the market in a declining state, the good news is that the new projects inquiry score for April was 56.8. “The most encouraging part of this news is that this is the second month with very strong inquiries for new projects. A growing number of architecture firms report potential projects arising from federal stimulus funds,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Still, too many architects are continuing to report difficult conditions to feel confident that the economic landscape for the construction industry will improve very quickly. What these figures mean is that we could be seeing things turn around over a period of several months.”
   While we are all cautious, the construction news these days has a much more positive flavor to it than it did a couple of months ago.—Gary L. Parr

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