...confident that, based on these results, our members believe the recession has bottomed out,” says Peter Schwartz, CFMA president and CEO.
Private Hell
In ENR’s survey, there is a stark contrast between firms in predominantly private-sector markets and those in public markets. ENR weighs the responses about current market prospects, as well as participants’ views of what it will be doing in the three-to six-month time frame and in 12 to 18 months, to generate its index. This same formula can be applied to individual market sectors.
Applying the CICI index formula to the transportation and water-sewer-waste markets, firms working in those markets gave a CICI rating of 61 out of 100 for both, the best of any market sector. The power market also gained a positive rating at 58, as did the environmental market at 56 and the health-care market at 55.
Markets that are neutral are petroleum at 52, higher education at 50, and the K-12 education market at 48.
Prospects are dim in the predominantly private-sector general-building markets. Confidence in the retail and commercial office markets was the lowest among respondents, each rating 19 on a scale of 100.
Other markets surveyed fared little better, with distribution and warehouses coming in at 22, hotels and hospitality at 23, entertainment and civic at 26 and multi-unit residential at 28. Participants also don’t see any quick turnaround for the manufacturing and industrial-process market, rating it at 33.
Pessimism in the private-sector markets stems in large part from continuing uncertainty in the credit and financing sector. Many survey participants complain the flow of money to fund projects has basically stopped, and there is no evidence that a change is in the offing.
“Availability and access to capital, regardless of the market and their associated sources and mechanisms, has fundamentally changed,” says an executive at a large architectural firm. He does not believe that credit availability will return to pre-recession levels, even when the economy begins to pick up.
As a way to gauge the impact of the recession, ENR’s CICI survey asked whether participating firms have had projects cancelled or deferred. Of 640 companies responding, only 61 said they had not suffered cancellations or deferrals, while 579—over 90%—said they had.
ENR once again asked firms responding to the CICI survey what their executives thought of the American Recovery and Reinvestment Act, and the verdict continued to be ambivalent. Nearly half (49.5%) of respondents disagreed that ARRA is benefiting the industry, including 28.6% who strongly disagreed. Only 31.2% believed it is benefiting the industry. When asked whether they had gained any additional work under ARRA, 148 out of 640 firms said they had.
In a difficult market such as this, many firms complained about the level of competition. Some expressed frustration at what they called foolish bidding practices that jeopardize the financial health of the bidders. For those who engage in such bidding, one contractor had a simple prediction: “Death for a lot of contracting companies bidding below cost.”
