America’s contractors are in for an even-tougher year in 2010 than they weathered in 2009, if predictions from AGC of America come true.
A recent survey of AGC-member firms revealed that nearly 9 out of 10 contractors say “there will be no recovery this year.”
The survey was conducted as part of a new national construction hiring and business outlook forecast released this week by AGC. More than 700 member-contractors responded to the survey.
The AGC outlook says that privately funded projects will likely decline even further this year, which will devastate the industry, because 70% of all construction projects in the U.S. are funded by the private sector.
Other details from the outlook:
• 64% of contractors see less demand for new manufacturing facilities;
• 71% of them expect demand for new retail, warehouse and lodging facilities will slip;
• 81% are cutting profit margins in their bids just to stay competitive;
• One in 10 are submitting bids so low that they are losing money on the projects.
“It’s devastating. The industry is experiencing Depression-like conditions,” said AGC CEO Steve Sandherr during a national media phone conference on Jan. 20.
The decline in construction is affecting other industries as well.
Only 46% of contractors plan to buy new equipment this year, down from 61% in 2009, and just one-third of them will buy any used equipment.
The construction jobs picture remains grim, with 1.6 million jobs lost, resulting in 22.7% unemployment across the industry. Sandherr said that many construction firms are uncertain that they’ll be able to add staff following a year of record layoffs.
In 2009, 73% of firms said they had to lay off employees, averaging 39 layoffs per firm. This year, 60% of firms doubt whether they will add new staff and say they may be forced to make further cuts. “Perhaps they can’t imagine who else to let go,” Sandherr said.
He credits the federal stimulus for helping the industry in 2009. The AGC survey reports that “31% of contractors were awarded stimulus-funded projects. Of those, 46% say the stimulus helped them retain an average of 24 employees each. Another 15% say the stimulus helped them add an average of 10 new employees per company, while 12% cite the stimulus as helping to drive new equipment purchases.”
Sandherr said that the stimulus is driving up expectations for publicly-funded construction activity in 2010. “But we never saw the stimulus as panacea for all the ills of the construction industry. It was just intended to prime the pump.”
AGC says that “62% of contractors expect the highway market to improve or remain stable this year; 61% say water and sewer construction will improve or remain stable. And 55% say work on public buildings will improve or remain stable in 2010.”
“The stimulus is finally beginning to have a measurable, but limited impact on the construction industry,” Sandherr said. “The full impact of those investments has sadly been tempered by the inability of Congress to put a host of multi-year infrastructure funding plans in place.”
He urged Congress and the Obama administration to act before things get worse. “We need a second stimulus bill and/or a highway reauthorization. The industry is in desperate need of additional federal investment,” he said.
The AGC outlook points to another difficult year for contractors, Sandherr said. “The only truly good news,” he added, “is that construction costs remain at multi-year lows, providing good deals for anyone willing to begin a construction project.”
Twitter
A recent survey of AGC-member firms revealed that nearly 9 out of 10 contractors say “there will be no recovery this year.”
The survey was conducted as part of a new national construction hiring and business outlook forecast released this week by AGC. More than 700 member-contractors responded to the survey.
The AGC outlook says that privately funded projects will likely decline even further this year, which will devastate the industry, because 70% of all construction projects in the U.S. are funded by the private sector.
Other details from the outlook:
• 64% of contractors see less demand for new manufacturing facilities;
• 71% of them expect demand for new retail, warehouse and lodging facilities will slip;
• 81% are cutting profit margins in their bids just to stay competitive;
• One in 10 are submitting bids so low that they are losing money on the projects.
“It’s devastating. The industry is experiencing Depression-like conditions,” said AGC CEO Steve Sandherr during a national media phone conference on Jan. 20.
The decline in construction is affecting other industries as well.
Only 46% of contractors plan to buy new equipment this year, down from 61% in 2009, and just one-third of them will buy any used equipment.
The construction jobs picture remains grim, with 1.6 million jobs lost, resulting in 22.7% unemployment across the industry. Sandherr said that many construction firms are uncertain that they’ll be able to add staff following a year of record layoffs.
In 2009, 73% of firms said they had to lay off employees, averaging 39 layoffs per firm. This year, 60% of firms doubt whether they will add new staff and say they may be forced to make further cuts. “Perhaps they can’t imagine who else to let go,” Sandherr said.
He credits the federal stimulus for helping the industry in 2009. The AGC survey reports that “31% of contractors were awarded stimulus-funded projects. Of those, 46% say the stimulus helped them retain an average of 24 employees each. Another 15% say the stimulus helped them add an average of 10 new employees per company, while 12% cite the stimulus as helping to drive new equipment purchases.”
Sandherr said that the stimulus is driving up expectations for publicly-funded construction activity in 2010. “But we never saw the stimulus as panacea for all the ills of the construction industry. It was just intended to prime the pump.”
AGC says that “62% of contractors expect the highway market to improve or remain stable this year; 61% say water and sewer construction will improve or remain stable. And 55% say work on public buildings will improve or remain stable in 2010.”
“The stimulus is finally beginning to have a measurable, but limited impact on the construction industry,” Sandherr said. “The full impact of those investments has sadly been tempered by the inability of Congress to put a host of multi-year infrastructure funding plans in place.”
He urged Congress and the Obama administration to act before things get worse. “We need a second stimulus bill and/or a highway reauthorization. The industry is in desperate need of additional federal investment,” he said.
The AGC outlook points to another difficult year for contractors, Sandherr said. “The only truly good news,” he added, “is that construction costs remain at multi-year lows, providing good deals for anyone willing to begin a construction project.”
