Constructor - November/December 2015 - (Page 29)

SIMONSON SAYS Will Contractors Celebrate a Sweet '16? BY KEN SIMONSON AGC CHIEF ECONOMIST CONSTRUCTION ACTIVITY HAS ACCELERATED through much of 2015. Large numbers of recent project announcements and other indicators suggest many contractors will enter 2016 with ample backlogs. But there are also worries about worker availability, government gridlock, and impacts on specific regions and project types from the oil price slump and international economic weakness. Construction spending in July jumped nearly 14 percent from a year earlier to $1.08 trillion, the fastest growth since 2006 and the highest level since 2008. The growth rate has accelerated steadily since last winter, when harsh weather and sluggish economic growth temporarily slowed construction. Construction employment rose 3.6 percent from August 2014 to August 2015, substantially faster than the 2.1 percent increase for employment in the overall economy. In contrast to the acceleration in spending, employment growth has slowed markedly since February. Construction employment rose by 3,000 for the month of August and by 41,000 (6,800 per month) over the past six months, far below the average monthly gain of 29,700 in the previous six months. Employment continues to expand across the country but in fewer states and localities than before. Construction employment increased in 36 states from August 2014 to August 2015, down from a nearly universal 46 states in the previous 12 months. Similarly, fewer than half of the 358 metro areas for which the government posts construction employment data (163, or 46 percent) added construction jobs in the most recent 12 months, compared with nearly threequarters of all metros (262, or 73 percent) a year earlier. Why do the state and especially metro data appear to be pointing to a @Constr uctor Ma g AGC of America has updated its Preparing the Next Generation of Skilled Construction Workers: A Workforce Development Plan to address the growing worker shortages. The plan outlines steps such as increasing funding for vocational education and making it easier to establish constructionfocused schools, to reinvigorate the pipeline for new construction workers. For details of AGC's plan, visit slowdown while the spending figures and reports from many contractors and owners indicate the project pipeline remains full? Quite likely, the employment pause reflects a lack of workers in many areas rather than a lack of present work or confidence about future orders. In other words, if there were more qualified workers available, the employment count would be rising in more cities. Contractors themselves overwhelmingly report difficulty finding skilled hourly craft and salaried professional workers in a recent AGC survey, as detailed by CEO Steve Sandherr in his CEO's message on Page 13. Another sign of tightness is the number of unemployed, experienced construction workers. In August, the government's monthly survey of labor market participation estimated that only 525,000 people who had worked in construction unsuccessfully sought work (in any industry). That was the lowest August total since 2001 and represented a decrease of more than a million experienced construction workers available for hire in the past six years. Heading toward 2016, it appears demand will remain strong for apartments, warehouses, hotels and data centers. Construction of new offices in selected markets, and renovation of older buildings in many areas, should continue and perhaps accelerate. Contractors with the expertise to build pipelines, petrochemical or transportation equipment plants and solar "farms" will be as busy as their workforce permits. Hospital construction, which has recently begun to expand after a long slump, should gain steam. However, contractors and metro areas that are tied to oil and gas drilling or supply businesses will have a tough year. Companies that have thrived on foreign, especially Asian, investors or visitors, are likely to face slow going as China's growth rate cools and other developing countries feel the chill. Construction firms that depended on agricultural or exportrelated businesses also should expect a slower year ahead. And public dollars for infrastructure, schools and other public buildings are likely to grow little, if at all. Overall, contractors should expect another positive year ahead, if they can find the right workers-or the right workaround. But there will be sour patches in an otherwise sweet '16. ◆ NO V E MB E R / D E C E MB E R 2 0 1 5 | 29

Table of Contents for the Digital Edition of Constructor - November/December 2015

Editor’s Note
President’s Message
CEO’s Letter
Play It Safe With BIM
Workforce Shortage Report: Western Region
Taking Off: The Unique Nature of Airport Construction
Pack Your Boots and Don Your Hat
Simonson Says
Shape Up and Ship Out
AGC San Diego Opens Fall Protection Campus
Inside AGC
Beyond Insulation
Member and Chapter News
Technology Toolbox
2015 Software Services Guide
Index to Advertisers
Final Inspection

Constructor - November/December 2015