Experts Weigh in on the Construction Market Post Election
November 9, 2012

by Tarra Taffera, ttaffera@glass.com and Megan Headley, mheadley@glass.com

However glass industry professionals ultimately voted in the presidential election, one reaction has been near unanimous: relief that the campaigning has come to a close.

Mark Silverberg, president of Technoform North America Inc. in Twinsburg, Ohio, summed up that reaction when he told USGNN.com™, "I'm glad the election is over. Hopefully we can get back to the job of governing and solving real problems that people, businesses and society faces."

Leading up to the November 6 announcement that President Barack Obama had been reelected to a second term in the White House, the glass industry had cast its own vote. In a poll conducted by USGNN.com, 30 percent of respondents voted for President Obama's reelection, versus 67.5 percent of glass industry professionals who voted for Governor Romney (2.5 percent responded that they did not vote). In the aftermath, industry professionals are looking forward to the improvements they hope to see for small businesses, construction and manufacturing in the next four years.

"With funding for public construction projects seemingly have run its course, the need to ease lending requirements for both private commercial construction projects and residential home construction will play a much larger role in how the architecture, engineering and construction [industry's] economy will look over the next 18 to 24 months," predicts John Rovi, business development manager of Sapa Extrusions North America and blogger for USGNN.com. "Statistics indicate that the large pent-up market in both commercial and residential are in need of help with lending regulations."

So, what can the industry expect these next four years? Two days after the presidential election, Reed Construction Data hosted a webinar in which economic and housing experts discussed the impact President Obama's reelection will have on the construction industry. What's the overall impact: not a drastic one, agreed the experts.

"It is incredibly modest," said Kermit Baker, chief economist for the American Institute of Architects. "Things look the same now as they did on November 5. There are no dramatic changes as to what we can expect."

"The election doesn't affect our forecast as much as you would think; it affects it as far as the impact on the economy but there is a lot that is baked in the pie already," said Bernard Markstein, chief economist for Reed.

Baker did, however, say that one thing has changed: "We can't use the election excuse anymore for delaying decisions," he said.

He added that during the election many serious issues were put off such as the fiscal cliff, tax issues and these now must be made a priority.

"Quite dramatic spending cuts will be made but they won't come until the eleventh hour," said Baker.

Ken Simonson, chief economist, Associated General Contractors of America agreed that a decision won't come soon.

"We are getting ever closer to that cliff," he said. "We won't know if we are going over the cliff until New Year's Eve and that is very worrisome. That will affect investment decisions by companies, stock market, etc."

Another issue President Obama will have to contend with is implementation of the new health care law. "With the election settling we now know we won't repeal ObamaCare though we still don't know how we will fund it," said Markstein. "Whatever it is there has got to be problems in it and future legislation will deal with that."

He ended with some dismal news telling attendees they need to stop thinking there will be major additions of manufacturing jobs.

"The idea that there will be tons of employees in manufacturing is a dream we have to let go," he said.

When attendees were able to ask questions, many wondered if the outlook would still be the same if Romney was elected.

"We would have seen gridlock with either candidate," said Markstein.

"The differences are really more long term, shaping fiscal policy, etc.," added Baker. "In the short run it's hard to make an argument that there would have been significant differences [if Romney was elected]."

Moving past the election, the experts also made predictions for the construction industry moving forward. Speaking of non-residential construction, Simonson said there will be a general improvement led by the power and energy sectors, and with some improvements in warehouse and distribution sectors and higher education. "Multifamily could be strongest of any sector next year," he said.

"Office and retail are going to remain in the doldrums," said Simonson. "Companies are shrinking the amount of space they require as they get rid of computer rooms and move to cloud based systems, etc., and as employees work remotely."
Another major challenge is labor markets as workers are leaving for other industries such as oil and pipe fitters. "Subcontractors are having problems finding employees," he said.

Overall, Simonson predicts total construction spending will be up 6-10 percent in 2013. "After that we will have upper digit increases," he said.