According to Stephen Sandherr, CEO of the Associated General Contractors of America (AGC), an estimated 30% of the nation’s non-residential construction workers’ jobs are at risk this year if market conditions don’t improve.
Based on surveys conducted in recent weeks of a variety of its members, AGC estimates that two-thirds are planning to cut their payrolls, resulting in a 30% decline in the number of people working on construction projects.
Taking directly from AGC’s January 8, 2009 Conference Call summary:
“Unless the business climate changes significantly and soon, the construction sector will continue to experience the kind of devastating job losses and crippling declines in business activity that will undermine efforts to end the recession,” Sandherr prophesied.
The forecast results, which are based on a representative survey conducted by the construction association late in 2008, found no relief in sight for construction companies that already have been among the hardest hit by the economic slowdown. Many construction companies experienced significant slowdowns beginning late last year, resulting in a 10% decline in the number of construction workers since 2006, Sandherr noted.
According to the forecast figures, the association’s member companies have seen or are planning for declining activity in every type of construction market. Ninety-two percent of building contractors and 93% of road builders are expecting or experiencing declining activity. Over 83% of utility contractors are bracing for declines, while 77% of water resource contractors are expecting a decline in business building levees or locks.
The forecast did find, however, that planned investments in infrastructure projects as part of the stimulus package are likely to dramatically improve the employment and business outlook for the year. For example, 85% of nonresidential construction companies would either cancel layoffs or add new employees if states embarked on stimulus-funded infrastructure projects.
According to the forecast, construction companies would increase their payrolls by 25% if the stimulus included new infrastructure investments. And construction companies predict they would invest an average of $500,000 this year in new equipment if they received new work as part of the stimulus package.
“With a stimulus, construction companies can get more people to work and more money into the economy in a way that will immediately boost our economy,” Sandherr said. “Without a stimulus, construction companies will cut jobs, slash spending, and continue to be among the hardest hit sectors within our economy.”
Sandherr noted that the association was working to find ways to improve the business environment for the construction community. He said builders across the country were urging Congress to include infrastructure investments in the stimulus, and that the association was calling for $2.2 billion to help renovate hundreds of federal facilities and for additional funds to repair crumbling schools.
He noted that the association was working with a range of building, design, and labor groups to call today for new tax incentives to encourage conversion to energy-efficient buildings, construction of renewable-energy facilities, remediation of brownfields, and construction of new airport and commercial projects.
Sandherr added that the groups were proposing the creation of “economic crisis zones” that would, similar to natural disaster zones, provide tax exemptions and private activity bonding authority to finance construction projects in communities experiencing two consecutive months of double-digit unemployment.
So where does that leave us? Allow me to repeat what I said in my November 24, 2008 blog titled, Focusing on the Future:
What the stock market needs is not an infusion of cash, but the freedom to make decisions on free market needs rather than those based on political expediency. And it’s not the perpetuation of the system that just collapsed that’s needed, but rather the overhaul of long-neglected infrastructure…energy, water conveyance and treatment, roads, bridges, buildings, and nearly everything else that used to make the US the marvel of the planet. That’s the message we need to send to our elected officials at every level, before they launch forth in the new year.
If you want to have a say in your future, take the time to contact your representative and senators, because they are the keepers of the keys to the future.