Construction Employment Edges Up as Stimulus
Funds Begin to Reach Nonresidential Construction
May 10, 2010
Employment in construction and manufacturing sectors edged up in
April, according to the employment report released by the U.S. Bureau
of Labor Statistics on May 7.
Ken Simonson, chief economist with the Associated General Contractors
of America (AGC), attributes such increases to, among other things,
the fact that the impacts of the stimulus [act] are now being
felt across a much broader section of the construction industry.
BLS reported that the number of unemployed persons in April was
15.3 million, and the unemployment rate edged up to 9.9 percent.
The rate had been 9.7 percent for the first three months of 2010.
Manufacturing sectors added 44,000 jobs in April. Since December
2009, factory employment has risen by 101,000. Over the month, gains
occurred in several durable goods industries, including fabricated
metals (9,000) and machinery (7,000). Construction employment likewise
edged up (14,000), following an increase of 26,000 in March. Over
the month, nonresidential building and heavy construction added
9,000 jobs each.
The dramatic construction job losses have stopped and our
industry is, at least temporarily, again adding jobs, commented
Simonson during a conference call on the report.
Simonson pointed to the stimulus act and its estimated $135
billion in construction and infrastructure investments as
one of the reasons construction contractors are seeing more work
this spring. Although he said the impact of the stimulus until now
largely has been too limited and, frankly, too little,
Simonson added, Starting this spring, however, things have
begun to change
Indeed, nonresidential construction
the area most likely to be impacted by stimulus spending
added 24,600 jobs in April and 36,500 jobs in March, the first two
gains since the beginning of 2008.
He added, Nonresidential building and specialty trade contractors
the other nonresidential categories have also added
Despite the positive news, many general contractors continue to
face increased competition, unemployment and dry commercial
We have a lot of contractors searching for anything and everything
they can find to stay busy, said Ted Aadland, chief executive
officer (CEO) and president of Aadland Evans Constructors in Portland,
Aadland also noted that, in his area, the potentially promising
markets for alternative energy projects arent seeing the hoped-for
financial incentives. Weve had some changes in the tax
credits that finance both wind and solar and its had a large
effect on start-up projects, he said. Weve had
two or three projects get put off indefinitely because we cant
find companies that are willing to buy tax credits with the new
changes in the tax credit business. Now theyre requiring that
companies pay minimum tax and the difference that they have in tax
is not great enough to finance some of these alternative projects
so were seeing some of that work disappear.
Mark Hall, president of Hall Construction, a general contractor
in Howell, N.J., specializing in historic restoration and school
construction projects, noted, We here in New Jersey now have
29 percent unemployment. Its not unlikely to see 20 to 30
bidders on every project that we bid. Jobs are going not only at-cost
but below-cost in some cases, Hall said. He offered an example
of a high school in the Atlantic City school district put out to
bid as a $40 million project on which they had a referendum. The
bids came in at $26.4 million. We bid the job at cost and we were
the ninth bidder, Hall said.
Still, he turned that dour scenario into a call for encouraging
quick allocations of stimulus funding.
Today is the best time for the U.S. governmentfederal,
local and state governmentsto put work out on the street because
theyre going to get the best value for their money right now,
Marco Navlet, senior director of McKinstry Construction in Seattle,
noted that McKinstry had at one time worked solely on private projects,
never federal, but that changed quite a bit here in 2009
the commercial sector truly has dried up.
He explained that several factors moved his company toward federal
projects to educate other contractors who may be considering such
We were very successful in changing our thoughts about federal
contracting, he said, explaining the several factors that
prompted this change. First, the private sector didnt
have project financing and developers were pulling back and on the
sidelines, whereas the stimulus and recovery act projects were fully
financed. Second, the type of projects that were funded were pretty
much what we were doing--these were major facility renovations and
rehabs, high-performance, green buildings, projects that were going
to reduce energy cost, improve lighting and ventilation. Third
of the five major projects that we chased we were successful in
getting an award on four of them, and it was under a different procurement
model that the federals had not really done for these types of buildings:
design-build. Selection was based on best value. So there was limited
competition because the risk was pretty high.
The contractors on the AGC conference call noted that stimulus
funding is still available for nonresidential construction projects.
According to Simonson, GSA is one federal agency that has only in
recent months begun putting projects out to bid. He further explained
that while highway funding already has been obligated and many of
those jobs are underway or nearing completion, the federal government
is far from having allocated all of the available funding.
He offered an example from another industry, saying, For
instance, with the so-called high speed rail funding, the president
announced the projects that were to be funded on January 29 but
in many cases the awards were far less than the states had proposed
so even when a state apparently won a project it had to re-tool
the design in order to fit the available state and federal funds,
so I think it will be many months before that category of money
turns into actual construction projects.
According to Simonson, The good news is the stimulus has
stemmed the losses in construction employment for now. The bad news
is that the stimulus is temporary, while the construction downturn
will be protracted. I dont expect demand for new office, condo
or manufacturing construction to begin to grow until later in 2011.
And state and local construction spending is unlikely to grow until
at least 2012. At the federal level, it looks increasingly likely
that the sequel to the stimulus will be the kind of deferred investments
that were all too common before last year.
Adding forty thousand new jobs in two months is encouraging
news. But with nearly 2 million construction workers still unemployed
our industrys recovery is far from certain, Simonson
HERE to read the full April 2010 employment report.
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