The beleaguered construction industry has begun to stabilize and is poised to rebound, but not noticeably until next year, according to a new survey by the Associated General Contractors of America.
“There are some promising signs, especially with employment,” said Stephen Sandherr, CEO of the association. “But we don’t expect a broad-based recovery until 2013.”
Fewer construction companies plan to shed jobs in 2012, according to the poll of 1,300 released yesterday.
Only 9 percent said they plan layoffs this year, and 32 percent plan to add jobs.
According to the survey, 37 percent of the companies laid off workers last year, 34 percent added employees, and 29 percent kept their employee count steady.
The economic-stimulus package that President Barack Obama signed in February 2009 helped many construction companies survive, said Kenneth Simonson, chief economist of the Associated General Contractors of America.
“Research has found a correlation between the stimulus and increased employment,” Simonson said. “The flip side is, the money has largely been appropriated or canceled and we’re not seeing any additional benefits. The highway contractors are really scrambling to fill their order books.”
Passage of the long-delayed federal highway transportation bill, which funds road, bridge and rail construction projects, could help construction companies that specialize in these areas.
“There’s a lot of talk in Washington about infrastructure and how important it is,” said Chris Runyan, president of the Ohio Contractors Association, which has headquarters in Columbus.
Congress, he added, can’t seem to find enough money for infrastructure construction, and an increase in the gas tax will be a hard sell, given the current economic outlook.
“Nobody wants to see the gas tax increase, but at the same time, for the sake of the construction business and our society, we need good infrastructure,” Runyan said.
Areas where contractors see the most growth potential this year: power-related projects, hospitals and colleges.
Simonson said projects at hospitals and colleges were delayed when the tanking of the stock market hurt endowment funds and donations. Many hospital and college projects are back on track because the stock market recovered.
“I am a little less confident that the higher-education side will rebound because so many are publically funded,” Simonson said. “Many have substantial endowments, but most depend on their state legislatures for funding, and I only see modest improvement.”
The contractors were less optimistic about the market for public buildings and public schools, and for green construction projects.
The cost of employee health care is also a concern; 81 percent said they paid more in that area in 2011 than in 2010.
Contractors also have focused on cutting costs and increasing efficiency, and they have “learned how to do more with less,” Sandherr said.