Say Stimulus May Help in Economic Turnaround; AGC Survey Predicts
Two-thirds of Nation's Construction Companies to Make Layoffs in
According to new employment and business forecast figures released
yesterday by the Associated General Contractors of America (AGC),
an estimated two-thirds of the nation's non-residential construction
companies are planning layoffs this year. The layoffs are expected
to result in a 30-percent decline in the number of people working
on construction projects.
"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," said AGC
chief executive officer Stephen Sandherr during a press conference
call yesterday afternoon.
Sandherr, along with Ken Simonson, AGC chief economist, and a number
of construction contractors, discussed the AGC's construction employment
and business forecast for 2009. They also talked about how planned
stimulus investments could improve the business and employment outlook
for this year.
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. According to the
forecast figures, contractors have seen or are planning for declining
activity in every type of construction market, with 92 percent of
building contractors expecting or experiencing declining activity.
"Nobody would be happier to be wrong about these estimates
for 2009 than our member firms," said Sandherr, who added that
with a stimulus, construction companies would be able to get more
people back to work and more money into the economy.
"Without a stimulus, construction companies will cut jobs,
slash spending and continue to be among the hardest hit," Sandherr
said. He added that his group is calling for $2.2 billion to help
renovate hundreds of federal facilities, as well as additional funding
to repair schools. They are also working with different groups to
call for tax incentives in areas such as energy-efficient buildings
and renewable energy facilities. In addition, it is calling for
the establishment of an economic "crisis zone" that would
provide tax exemptions and private activity bonding authority to
finance construction projects in areas where there has been double-digit
unemployment two months in a row.
With regard to green building and the stimulus package, Sandherr
said that there likely would be a significant amount devoted to
providing tax incentives for energy-efficient buildings as well
as funding at the government level to allow schools to increase
their levels of energy efficiency. However, if asked that question
by the policy makers Sandherr said that he would "caution
that if the objective is to get [money out and projects started]
quickly it would be counterproductive to add smart growth requirements."
He added that a number of groups already have shovel-ready projects;
those projects that can get people to work and immediately generate
some economic activity. The Government Services Administration,
for example, has identified $2.2 billion worth of government building
projects that are ready to go.
"The National Education Association has identified $300 billion
worth of school projects that they think could be funded, but clearly,
that's not the number that will be in the stimulus package,"
In terms of how the construction industry is responding to green
technologies, many contractors are embracing these building practices.
Doug Pruitt, chairman and chief executive officer of Sundt Construction
in Tucson, Ariz., said a lot of agencies
have adopted some
level of green principles for their facilities and they want them
to be LEED certified on some level.
"Companies all across the country have done a good job of
getting their employees LEED AP certified so that they can provide
a certain level of expertise to their customers and I think the
industry has been very responsive to that," said Pruitt.
Tracy Hart, president of Tartlon Corp. in St. Louis, Mo., added
that a down market is an opportunity where "we all have time
to learn about green, because when [the market] comes back chances
are it's going to be green construction."
The issue of labor and the immigrant workforce was also discussed.
Pruitt said several states, such as Arizona and Florida, have seen
incredible growth over the years and at one point were faced with
a shortage of skilled workers.
"I think because of 1), the economy and 2), because we are
building a fence between us and our neighbors and 3), because of
the strict immigration law that was passed, we've had a lot of immigrants
leave [these states]," said Pruitt. "We now have a shortfall
of workers. So the stimulus package would help put some portion
of [those people] back to work. Short term, we can get the U.S.
citizens who are in construction and need work back to work. In
the long term the labor problem will return. We do have a shortage
of people in this country to do skilled work and it is a problem.
Ultimately, as the economy recovers, and it will, we will have another
problem-we won't have enough workers to do the work that we will
have in front of us two, three, four years from now. So I don't
think we can take the ball off the immigration in the workforce
issue right now just because we have an excess of workers."
HERE to read the AGC's survey results.
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