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Jan 13, 2017

Contractors Across Country Feeling Bullish About Projects, Economy for 2017

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An overwhelming percentage of contractors nationally are positively looking forward to what they believe will be more work in an expanding 2017 economy.

That is among the impressions revealed in a survey by the Arlington, Virginia-based Associated General Contractors of America (AGC) showing an impressive 73% of construction firms nationally making plans to expand their payrolls in anticipation of more public and private sector work.

“Each year we survey our member firms on their expectations for the labor and market conditions for the coming business year, we then closely analyze those survey results and prepare our annual construction hiring and business outlook,” explained Stephen Sandherr, the chief executive officer of the AGC, in a media conference.

Sandherr said that this year nearly 1300 construction firms participated in the survey between early November and mid-December. Those firms, he added, represented “a broad range of firms in terms of size, business volume, and geographic distribution.”

The results of that survey show a construction industry with “relatively high expectations for 2017.”

Some of that optimism is based on an assumption that the national economy will continue to grow throughout the year.

But contractors also expressed hopes that the incoming Trump administration will push for “significant new investments in a range of public works projects, especially for highways and public buildings, as well as removing regulatory impediments to economic growth.”

Despite such optimism, however, contractors say the building industry in 2017 will continue to be challenged by “growing workforce shortages, and increasing costs for healthcare and regulatory compliance,” said Sandherr.

The AGC survey also showed, observed Kenneth Simonson, chief economist with the group, that contractors “expect every segment of the construction market will drive demand for construction services in 2017.”

“In fact,” continued Simonson, “five times as many respondents in our survey - 46% - expect the overall construction market to grow as opposed to those who expect it to shrink, just 9%.”

Simonson additionally noted that survey respondents were particularly positive about the “private office, manufacturing, highway, and public building market segments.”

“Notably, respondents are more optimistic about public sector markets than they were a year ago,” he observed.

In addition to being upbeat about highway and public building construction, those respondents indicated that they are today also more optimistic about seeing an increase in the higher education, K-12 school, water and sewer, and other transportation building projects.

“The only market segment our contractors are less optimistic about this year than they were last year is the multi-family residential sector,” noted Simonson, who added “This result is consistent with recent declines in multi-family construction starts and permits.”

In order to accommodate an expanding workload, at least three out of four construction firms in the survey indicated that they will hire more workers this year.

“That hiring, however, will likely only lead to modest increases in the overall size of most firms,” said Simonson, “indeed, only 6% of firms report that they will expand their headcount by more than one quarter.”

At the same time, only 6% of contractor respondents said they plan to reduce their total headcounts in 2017.

“It is possible one reason firms expect to make only slight increases in their headcounts in 2017 is that they appreciate how difficult it will be to find enough qualified workers to hire,” continued Simonson.

 In fact, up to 73% of the firms surveyed indicated that they have been having a difficult time trying to find qualified workers, including both salaried and craft professionals, to meet the workload demand.

An even higher 76% of respondents said that they expect labor conditions will “remain tight or get even worse during the next 12 months.”

In an attempt to attract more workers, firms across the country revealed that they are increasing pay or benefits.

“More than half of the firms report that they have increased base pay rates,” added Simonson, while “more than a third, 35%, are providing incentives or bonuses.”

The AGC survey also shows that 52% of the responding companies say they expect to increase their investments in worker training and development in 2017, over last year.

 

By Garry Boulard

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