2009 a difficult year but ‘devastating’ to the construction industry
Nearly nine-in-ten contractors say there will be no recovery in 2010, according to the AGC survey,
As a result, fewer contractors plan to purchase construction equipment and after a year of near-record industry layoffs, many doubt they’ll be able to hire new staff this year.
The number of firms expecting to buy new equipment is down to 46 percent this year from 61 percent in 2009. Meanwhile, 81 percent of firms report already having to cut profit margins in their bids just to stay competitive and another ten percent say they are now submitting bids so low they will actually lose money on the projects.
Sandherr added that many construction firms are uncertain that they’ll be able to add staff following a year of record layoffs. In 2009, 73 percent of firms said they laid off employees, averaging 39 layoffs per firm. For 2010, however, 60 percent of firms say they are unsure whether they will be able to add new staff, or be forced to make further cuts. “Perhaps they can’t imagine who else to let go,” Sandherr noted.
One of the relatively few bright spots for the industry was the federal stimulus. Thirty-one percent of contractors say they were awarded stimulus funded projects. Of these, 46 percent say the stimulus helped them retain an average of 24 employees each. Another 15 percent say the stimulus helped them to add an average of 10 new employees per company while 12 percent cite the stimulus as driving new equipment purchases.
Sandherr added that the stimulus is driving up expectations for publicly-funded construction activity in 2010. He noted that 62 percent of contractors expect the highway market to improve or remain stable, 61 percent say water and sewer construction will improve or remain stable. And 55 percent say work on public buildings will improve or remain stable in 2010.
“The stimulus is finally beginning to have a measurable, but limited, impacton the construction industry,”" Sandherr noted. “The full impact of those investments has sadly been tempered by the inability of Congress to put a host of multi-year infrastructure funding plans in place.”
However, Sandherr says that the stimulus isn’t a “panacea but a primer at the pump.”
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