Associated Builders and Contractors of the Carolinas (ABC) yesterday opened the ABC Gaylor Training Center, a construction craft training and education facility in Charlotte. ABC Carolinas Chapter President and CEO Doug Carlson was joined at a ribbon cutting ceremony by North Carolina Commissioner of Labor Cherie Berry, State Senator Bob Rucho and Guy Chamberlain, associate superintendent with Charlotte Mecklenburg Schools.
“The ABC Gaylor Training Center will provide us with an opportunity to train our young people using a top notch facility and state-of-the-art equipment,” said Carlson. “In turn, the education our students receive will help them secure a lifelong career in the construction industry.”
The ABC Gaylor Training Center, named after Gaylor of North Carolina, Inc., an electrical contractor located in Mooresville, N.C., has over 10,000 square feet of space and includes five classrooms, laboratories, laydown work space, a conference room and a general office. The Training Center has received accreditation from the National Center for Construction Education and Research (NCCER) as a certified training unit and is an NCCER accredited assessment center.
The Training Center currently hosts the ABC Electrical Apprenticeship program. Future plans include adding plumbing, HVAC, carpentry, and other craft training courses. Apprentices will complete written and manual performance assessment, earning certifications from NCCER and the Department of Labor. The Center will also offer a variety of meetings and other activities, such as construction safety classes, continuing education courses, seminars and will be serve as base for school-to-career day activities and other events.
The U.S. Department of Labor announced recipients of nearly $190 million in training grants for green jobs, as authorized by the American Recovery and Reinvestment Act of 2009. North Carolina will receive $5,976,512 in green training grants.
The State Energy Sector Partnership and Training Grants are designed to teach workers the skills required in emerging industries, including energy efficiency and renewable energy.
Thirty-four awards ranging from approximately $2 million to $6 million each are being made to state workforce investment boards in partnership with their state workforce agencies, local workforce investment boards or regional consortia of boards, and career center delivery systems. Through these grant awards, program participants will receive the technical and occupational skills necessary to obtain industry recognized credentials, DOL said.
The grants are part of a larger Recovery Act initiative to fund workforce development projects that promote economic growth by preparing workers for careers in the energy efficiency industries.
NC participants include: North Carolina Department of Commerce, North Carolina Energy Office, Southern Energy Management, L.A. Downey & Son Inc., North Carolina State AFL-CIO, North Carolina Sustainable Energy Association, North Carolina Solar Center and University Representation, North Carolina Community College System, Department of Public Instruction, Weatherization, Energy and Solar Training Project, Future Forward Workforce Alliance, Lumbee River all About Green, and the Northeast North Carolina Green Initiative. Click Here for grant project descriptions.
For additional information contact Contact: Janice V. Ivey, NC Department of Commerce,313 Chapanoke Road, Suite 120, Raleigh, NC 27603, 919-329-5248, email@example.com.
The Winston-Salem News reports that there was a 40 percent decline in NC workplace fatalities in 2009 to 34, including five in the Triad and Northwest North Carolina.
The N.C. Labor Department said there were two fatalities in Rockingham County and one each in Guilford, Randolph and Yadkin counties. Two people each died from a fall or being hit by a vehicle, and there was one fatality from electrocution.
"The good news is fewer people died on the job in 2009 than at any other time in our state's history," said Cherie Berry, the state's Labor commissioner. "However, the only acceptable number is zero."
The News & Observer reports the fatality rate for construction per 100,000 workers over the past four years has decreased from nine in 2006 to 6.98 in 2009. Last year, 14 people died in construction-related accidents compared to 17 in 2008. Meanwhile, eight workers died in manufacturing accidents, compared with nine the previous year.
The Charlotte Business Journal reports North Carolina recently received $28.2 million through the American Recovery and Reinvestment Act to build a 480-mile fiber-optic network.
The N.C. Research and Education Network will link 37 counties in the state, including Mecklenburg, Gaston, Iredell, Catawba, Cleveland, Lincoln and Caldwell. The network has the potential to serve more than 1,500 schools and community institutions, 180,000 businesses and more than 300,000 underserved families.
Gov. Bev Perdue says the design, construction and operation of the network will create more than 230 engineering and construction jobs.
Over the next 60 days, the nonprofit Microelectronics Center of North Carolina expects to issue requests for proposals for the design, construction and operation of the network. Construction is expected to last up to three years.
MCNC raised $11.7 million in matching funds through private sources, including $4 million from the organization’s endowment, making the total project a $40 million investment.
The News Record reports companies in the Piedmont Triad may start hiring more workers this year, according to a new survey of corporate executives.
Nearly 30 percent of companies surveyed by The HR Group said they will be adding workers during the year, good news for a region ravaged by layoffs and growing unemployment.
The 49 companies surveyed employ thousands of Triad workers. Half said they employ more than 500 workers.
According to the findings:
Five of the companies — 10 percent — said they planned layoffs during the year; About 61 percent of those surveyed intend to keep their ranks the same size for the year.
That’s a sign to David Moff, CEO of The HR Group, that the worst bleeding might be over for the Triad economy.
But the stabilized patient is far from healed.
“What I got from it was we’re not going to change much,” Moff said. “I think most people said just sort of hold tight, keep on moving, not a lot of change until they can really see some improvement.”
With unemployment in the Greensboro-High Point metropolitan area sticking around 11 percent, it won’t be easy for workers here to hold tight.
And even those who are lucky enough to have jobs should not expect much in the way of raises.
According to the survey, which included a broad array of companies such as manufacturers and research companies, 50 percent of the companies said raises for workers would be less than 2 percent in 2010. And half of those won’t be giving raises at all.
Only 10 percent of those surveyed said they would be giving raises above 3.4 percent.
In an economy where knowledge and productivity make an employee valuable, companies are not cutting back on ways to improve their workers, however.
Most of the workers for these companies will be able to continue upgrading their skills in company training programs.
About 12 percent of surveyed companies said they would be increasing their budgets for training this year. And more than 73 percent said their budgets for training would remain the same as last year.
And despite agitation over health care from Capitol Hill, 61 percent say their health care costs will remain the same in 2010.
Human resources directors were contacted for the survey, and many responses included anonymous thoughts about their plans for the year.
Training was a popular topic. Likewise, wellness programs designed to minimize employee injuries and illnesses, are also on the minds of these executives.
One manager wrote: “Lower medical claims through our new wellness program. Lower total number of smokers throughout the company.”
Moff said the economic waters might be quiet this year.
“They’re not looking for big reductions in staff, of course they’re not looking at big increases in pay,” Moff said. “Maybe 2010 is going to be a year of stability.”
"The worst is over for the construction industry as a whole; the recovery may not be a sustained one; and the United States is rebuilding infrastructure capacity,” -- Asociated Builders & Contractors (ABC) Chief Economist Anirban Basu.
New construction activity is down 18 percent compared to 2008 according to the most recent ABC Construction Backlog Index (CBI) report. On a yearly basis, the average backlog for all regions ABC monitors remained lower than November 2008.
On a monthly basis, average backlog for the South and Middle States grew while the West and Northwest declined – keeping in sync with the broader economic data that indicate the most forceful economic recoveries are taking place in commodity-intensive states such as Nebraska, South Dakota, Louisiana and Mississippi. The South has the longest backlog at 6.5 months while the Middle states have the shortest at 4.9 months.
“There is ample evidence that the worst period of decline for nonresidential construction across the United States is now behind us,” said Basu. “Though backlog remains well below levels from November 2008, backlog has bounced back from its cyclical low in each region of the nation. While this trend is encouraging, we cannot assume ongoing improvement will be sustained. Once stimulus monies begin to run out, backlog could begin to trend lower again.”
Of the three industry segments ABC monitors, the heavy industrial category saw the biggest rebound, reaching 7.53 months and the commercial and institutional category was the only segment that sustained a decline in backlog compared to last year. Infrastructure backlog rose to almost 11 months after a weak showing in the previous CBI.
“Improving confidence in the domestic and global economies, expanding exports, and rising inventory investment, as well as some thawing in credit markets, are likely responsible for the CBI’s increase,” said Basu. “America is rebuilding its capacity. Though the commercial and institutional category remains weak due to still sluggish labor markets, rising office vacancy rates and declining hotel occupancy rates, renewed investment in the heavy industrial and infrastructure categories indicates a brighter future for this sector.”
Companies in all size categories except those in the $50 to $75 million category saw backlogs lower than a year ago. Larger companies, which are often the most closely aligned to heavy industrial and infrastructure-related construction, continue to enjoy the longest average backlog at 8.5 months.
To view the complete CBI report including charts, graphs and methodology, click Here.
Construction contractors are being squeezed by rising materials costs and disappearing profit margins, based on analysis of the latest producer price index (PPI) conducted by the Associated General Contractors of America (AGC).
The new figures show finished prices of nonresidential buildings dropped last year even though a number of construction materials prices have begun to increase in price, noted Ken Simonson, the association’s chief economist.
A new 2010 construction hiring and business forecast released by the association found nearly 9 in 10 contractors do not expect the market to improve in 2010. As a result, overall economic and employment growth are likely to lag.
“Contractors have not been able to pass on cost increases, which is bad news for contractors but good news for anyone looking to build right away,” Simonson stated. “Pressure is building on contractors to raise costs, however, so anyone waiting to build will pay more.”
Simonson pointed to increased prices for a range of construction materials in the December PPI report. For example, copper and brass mill shapes are up 6.0 percent; prepared asphalt and tar roofing and siding products are up 5.2 percent; aluminum mill shapes up 2.1 percent; lumber and plywood up 2.0 percent; plastic construction products up 0.4 percent; and concrete products are up 0.3 percent
Simonson noted, however, that the price increases are not universal and some key material PPIs have recently dropped. For example, diesel fuel dropped 5.0 percent in December while steel mill products dropped 1.3 percent.
The PPIs for new nonresidential buildings, which includes overhead and profit as well as materials costs, were flat in December and fell between 2.4 percent and 4.3 percent for the year, depending on the type of building, Simonson noted. Meanwhile, the PPI for inputs to nonresidential building construction, a weighted average of the materials and diesel fuel used in construction, rose 0.2 percent and 0.4 percent, respectively.
“Contractors are swallowing the materials costs in order to stay busy,” Simonson noted. He said that if present conditions continued for much longer a number of firms were likely to close up shop, which would cut competition and potentially drive up the cost of construction services.
The association called on Congress and federal agencies to take advantage of relatively low construction prices by moving forward with new infrastructure investments.
“Waiting to make these vital investments will only force taxpayers to spend more for the kind of infrastructure projects our country needs to remain globally competitive,” said Stephen E. Sandherr, the AGC chief executive officer. He noted that county and local governments, including DC-area Montgomery County, Maryland, have already realized the need for timely infrastructure investments and increased their capital budgets. “Congress can boost our economy, add jobs and get an edge on our competitors by quickly taking advantage of near record low construction costs,” Sandherr added.
Click Here to view the the AGC 2010 National Construction Hiring and Business Forecast.
During the next few months the Internal Revenue Service (IRS) will begin an audit initiative that will eventually result in the Service auditing the tax returns of 6,000 companies. The purpose of the initiative is to look into company compliance in four areas: payroll tax, independent contractor (IC) status, fringe benefits, and executive compensation, reports the National Association of Insurance and Financial Advisors (NAIFA).
One of the primary goals of the audits appears to be to reduce the number of improperly classified ICs, (i.e., workers currently treated as ICs who should be classified as employees). The IRS effort is in part a response to a Government Accountability Office report which analyzes the issue of worker misclassification and which made certain recommendations to the IRS to address these issues.
Tax consequences flow from the independent contractor classification. Employees pay only half of their Social Security and Medicare taxes (their employer pays the other half), and employees qualify for employer provided benefits (which must be allocated, in most cases, under strict discrimination rules). Independent contractors, on the other hand, pay 100 percent of their Social Security and Medicare tax obligation, and must provide their own benefits (some of which qualify for tax advantages and some of which do not).
Generally, whether a worker is classified as an independent contractor (which is usually less costly to the employer) is determined by reference to a 20 point IRS test, which looks at such factors as the degree to which the payor controls the method, place and time worked by the worker, the number of payors that pay the worker, and general industry practices. Application of the test can be a significant administrative burden for payors. There is a “safe harbor” in the current law based on “recognized industry practice” that eliminates the need to apply the 20 point test to a payor’s work force.
Almost a quarter of construction workers and more than a quarter of teenagers are unemployed nationwide, reports The Business Journal.
December figures from the U.S. Bureau of Labor Statistics show the national unemployment rate held steady at 10 percent. But the jobless rates for the struggling construction industry, as well as for teenagers and minorities, outpaces the national average, according to BLS.
The jobless rates for various industries and demographics:
The high rate of out-of-work construction and Hispanic workers do not bode well for North Carolina. The state has consistently ranked at or near the top in terms of the rapid growth of its Hispanic population, with many local businesses, such as banks, targeting that demographic for services.
Meanwhile, the Triad has been hard hit by construction job losses. The Greensboro-High Point and Winston-Salem metropolitan areas lost a combined total of 4,300 construction jobs between November of 2008 and November of 2009, according to the latest survey of federal data by the Associated General Contractors of America.
The pace of job losses was greater in Greensboro-High Point, which lost 3,100, or 18 percent, of its construction jobs. Winston-Salem lost 1,200 jobs, or 13 percent. The fastest pace of job losses in the state was in Raleigh-Cary, which shed 8,800 jobs, or 24 percent of its total. Hickory had the least impact, losing 500 jobs, or 10 percent of its total. The Charlotte-Gastonia-Concord region lost 9,400 construction jobs, or 18.6 percent of its sector.
At the top of the market economy, managers and professional workers have a lower national jobless rate: 4.6 percent.
North Carolina's overall jobless rate was 11.1 percent in November, according to the most recent figures from the N.C. Employment Secuirty Commission.
Tune in Thursday, January 28 at 3:00 pm EST for the first webcast in the series, Economic Recovery: Under Construction as Jim Haughey, Ken Simonson and Kermit Baker discuss:
What to Watch in 2010 – key market indicators to watch to help guide you through the year.
Construction Hotspots – segments and geographic areas with the most promising signs of recovery.
Construction Employment – when will confidence return and hiring begin?
Analysis - why is the recovery in construction lagging behind?
Gain insight into the future of construction as expert economists provide an in-depth look at residential and nonresidential construction activity including the institutional, industrial and heavy engineering sectors. Learn more and register here!
Ken Simonson, Chief Economist, AGC of America Ken has 30 years of experience analyzing, advocating and communicating about economic and tax issues. He is interviewed and quoted almost daily by local and national media, including The Wall Street Journal, USA Today, Business Week, and CNBC. Ken has a BA in economics from the University of Chicago, an MA in economics from Northwestern University, and has taken advanced graduate economics courses at the Université de Paris, Johns Hopkins and Georgetown.
Kermit Baker, Chief Economist, AIA Kermit Baker is the Chief Economist for the American Institute of Architects in Washington, D.C. In this capacity, he analyzes business and construction trends in the U.S. economy and examines their impact on AIA members and the architectural profession. Kermit originated the AIA’s Architectural Billings Index as well as the AIA Consensus Construction Forecast Panel. Kermit received his Masters degree in Urban Planning from Harvard University and holds a Ph.D. from Massachusetts Institute of Technology in the same field. In 2002, Kermit was named honorary member of the AIA.
Jim Haughey, Chief Economist, Reed Construction Data Jim has over thirty years experience as a business economist, including twenty years monitoring the construction market. He has previously worked in government, corporate and consulting roles and has taught at the University of Michigan, Ohio University, Michigan State University and the University of Massachusetts. He has a Ph.D. degree in economics from the University of Michigan.
Demand for ConsensusDOCS standard contract documents grew by nearly 20 percent in 2009 compared to the previous year despite significant declines in construction activity, the organizations that developed the documents reported. The jump in users comes as private, public and not-for-profit owners have begun using the standard documents and getting positive results.
“Today’s market conditions are forcing people to reevaluate the outdated model of drafting documents from scratch for every construction project,” said Brian Perlberg, executive director of the ConsensusDOCS coalition. “These documents offer an easier, faster and more efficient way to go from concept to construction.”
The number of subscribers for ConsensusDOCS documents climbed from 3,291 at the beginning of 2009 to 3,895 at the end of the year, an increase of over 18 percent, Perlberg noted. He added that in December 2009 alone, the coalition saw a 28 percent increase in sales compared to the previous December.
The growth occurred even though construction spending hit a six-year low in 2009. Perlberg noted that the jump in users was impressive given that demand for competing standard contract documents was down significantly during 2009.
One factor driving growing demand for the documents is that public and not-for-profits groups increasingly allow the use of ConsensusDOCS documents. The federal government recently authorized the use of ConsensusDOCS documents for up to $20 billion worth of Agriculture Department projects. States like South Dakota, Michigan and North Carolina have all recently allowed the documents as well. And not-for-profits, including Florida Habitat for Humanity chapters, now routinely use ConsensusDOCS contracts for key projects.
“In a year of little good news for the construction industry, it is encouraging to be the exception instead of the rule,” said Perlberg. “Using these documents will make it easier for owners and contractors to survive and thrive during these difficult days.’
Offering a comprehensive catalog of more than 100 contract documents covering all project delivery methods, ConsensusDOCS contracts are the first and only industry standard contract documents written and endorsed by 23 leading construction organizations. For more information, visit www.ConsensusDOCS.org.
The days of "less bad is good" are nearing an end for the economies of the Triad and North Carolina, a senior economist with Wells Fargo Securities LLC was quoted in a Winston-Salem Journal article.
Job creation, however, is likely to lag significantly behind any economic recovery this year, the economist, Mark Vitner, said during the annual economic-forecast luncheon of the Greater Winston-Salem Chamber of Commerce.
Vitner said that growth, both nationally and locally, will come primarily from businesses adding inventory after one or more years of reducing it to balance lower customer demand.
That should be good news for the Triad, considering the significant distribution and logistics presence here, including the FedEx Corp. cargo hub at Piedmont Triad International Airport and several prominent trucking companies.
Still, that doesn't mean that companies who have been operating on a lean, if not bare-bones, level will be expanding their work force anytime soon.
"Some economists believe employers will have to add jobs quickly because the job cuts were so deep," Vitner said. "I don't buy that argument.
"I haven't talked to many businesses that are itching to add workers, or say, ‘We can't keep up with demand because we lack workers,'" he said.
Vitner said that the state unemployment rate will peak by mid-summer around 11.5 percent as more people either enter or re-enter the work force.
"We think the unemployment rate will begin to decline on a consistent basis around the middle of 2010 and move back below 10 percent around the middle of 2011," he said.
Vitner said he believes that the recession ended in the state and nationally on July 1 when two federal-stimulus programs -- Cash for Clunkers and the first-time homebuyer tax credit -- shifted into high gear.
Although Vitner doesn't believe that the economy is headed for a "double-dip recession" as stimulus programs expire, he said that it isn't likely that there will be a smooth transition to a recovery built upon private-sector demand.
Since the Civil War, the U.S. economy has spent 85 percent of the time in growth mode and 15 percent in recession or depression, he said.
"Conditions do not have to be perfect for the economy to grow," Vitner said.
Still, he said that any economic recovery will be sluggish because the country and consumers have to wean themselves off "the excess availability and use of low-cost credit."
David Price, a project manager with Conservation Pros, shows an insulation system to keep air conditioned air from escaping through can lights in homes. Photo by the Citizen-Times.
As the national and regional economies struggle through the worst downturn since the Great Depression, western North Carolina hopes to see green jobs sprouting up in the coming year, reports the Citizen-Times
“There is a lot of promise, but the green jobs seem to be slow to take root,” said Carl Donovan of Conservation Pros, an Asheville-based company specializing in making homes more energy efficient. “The business is certainly picking up, but I don’t see the jobs yet.”
That could change soon.
The federal stimulus package could provide $4.2 million to weatherize homes in four local counties over the next two years.
Another $1 million in stimulus has been awarded to Asheville and Buncombe County for weatherization and other energy efficiency efforts, but that money has yet to be spent as federal guidelines were worked out, said Maggie Ullman, the city’s energy coordinator.
In addition to weatherization, the region also hopes to build on strengths in solar energy and biofuels. The result could be the creation of more jobs in a much-touted but so far relatively small sector of the local economy.
A place to start
Western North Carolina has seen brutal declines in the number of manufacturing jobs since the 1990s, and that drop has continued during the current recession. The number of manufacturing jobs in the Asheville metropolitan statistical area — Buncombe, Haywood, Henderson and Madison counties — dropped from 20,600 in January 2008 to 18,000 in October, according to the N.C. Employment Security Commission.
And that’s just part of the region’s struggling employment situation. In November, the unemployment rate for the Asheville MSA was 8.6 percent, which meant that nearly 18,000 people were actively looking for jobs.
“I don’t know that we can say that green is the magic solution to bring back those jobs,” said Matt Raker, the new senior director of AdvantageGreen, an initiative to promote green industry from economic development group AdvantageWest. “But we do have a lot of opportunity to bring solar panel manufacturing and other components here.”
AdvantageWest sees potential in the Asheville area not only in local solar companies, but also in biofuel and weatherization. There’s also a potential workforce developing through Asheville-Buncombe Technical Community College, which offers courses in green jobs.
The first step, though, is deciding which jobs count as green.
“A green job doesn’t mean we go out and hug trees every day,” Donovan said. As for the weatherization work his company does, Donovan said, “It’s hard work. It’s filthy stripping out old insulation from houses. It’s like any other construction job.”
Depending on which study you pay attention to, North Carolina already has somewhere between 6,500 and 63,000 green jobs, Raker said.
The North Carolina Employment Security Commission has gotten $1 million in grants to inventory the number of green jobs statewide. Similar efforts are under way locally through Land of Sky Regional Council, another regional economic development group.
Success to date
Western North Carolina can point to progress in the past year. FLS Energy, for example, has grown from three employees to 45, providing solar hot water systems for area businesses and hotels. FLS is also working on a solar farm on the old Canton landfill, which will generate enough electricity for about 1,100 homes.
Sundance Power Systems, based in Weaverville, saw a 50 percent increase in business with solar photovoltaic systems as well as wind turbines, said company founder Dave Hollister. Sundance hired about eight more full-time workers, boosting the staff to about 30.
“And I’d say we put about 50 to 60 people to work this year, when you count the electrical contractors and engineers and others,” Hollister said.
As the company begins to work on projects that will use federal stimulus money in 2010, Hollister expects that trend to continue. “This is a whole industry that we’re trying to create,” he said.
The year ahead
The $4.2 million in stimulus money will be used to weatherize homes in Buncombe, Madison, Transylvania and Henderson counties.
Community Action Opportunities, the local nonprofit that administers federal weatherization funds, will coordinate efforts to update homes with insulation, more efficient furnaces and other upgrades.
The group generally takes applications from elderly and disabled residents and families who make up to 150 percent of the federal poverty level, or about $16,000 a year for an individual or $33,000 for a family of four.
In addition, the city of Asheville has received $804,700 from an Energy Efficiency Conservation block grant, to be spent in the next year, Ullman said. Buncombe County received about $124,000 in stimulus money for energy efficiency.
Under federal guidelines, that money could generate 15 or so new jobs. Local officials and people in the industry hope that’s just the start.
In the coming year, Raker sees the potential for a few hundred green jobs in weatherization, solar and wind power and other energy efficiency sectors across North Carolina’s 23 western counties.
Weatherization efforts financed with federal stimulus funds are still expected to pump new energy into the economy in 2010 while saving energy costs for a number of residents.
Community Action Opportunities has already completed 50 homes this year, with 83 in progress and 250 more on the list, said Ben Watts, the nonprofit’s director of economic development.
By the end of next year, 459 homes could be weatherized in Buncombe, Madison, Henderson and Transylvania counties, up from the 100 or so the nonprofit typically renovates in most years, Watts said.
“We’ve added about 12 jobs and there are more to come,” Watts said. “We’re also contracting with more electricians and plumbers, and buying Energy-Star appliances at the local Home Depot, Lowe’s and Sears — so all that money trickles into the economy.”
Ken Simonson, chief economist for the Associated General Contractors of America issued the following statement in response to an Associated Press story yesterday looking at the impact of stimulus-funded highway projects on overall construction employment:
“While highway construction plays a significant role in shaping the nation’s economic fortunes, it only accounts for five percent of the total domestic construction workforce. And because of declines in the amount of state and local funds invested in road work in 2009, the roughly $20 billion in federal stimulus highway funds obligated in 2009 only contributed to a $4 billion net increase in highway construction activity last year. Meanwhile, total construction spending declined by $137 billion between November 2008 and 2009 to a six-year low of $900 billion.
“As we cautioned the story’s authors in advance, the fundamental assumptions in the Associated Press story are flawed. It is virtually impossible to measure the impact of $4 billion by looking at overall employment figures for an industry experiencing a $137 billion drop in activity – especially when only one in twenty construction workers stand to benefit from those stimulus funds.”
Story from the Associated Press:
Ten months into President Barack Obama's first economic stimulus plan, a surge in spending on roads and bridges has had no effect on local unemployment and only barely helped the beleaguered construction industry, an Associated Press analysis has found.
Spend a lot or spend nothing at all, it didn't matter, the AP analysis showed: Local unemployment rates rose and fell regardless of how much stimulus money Washington poured out for transportation, raising questions about Obama's argument that more road money would address an "urgent need to accelerate job growth."
Obama wants a second stimulus bill from Congress that relies in part on more road and bridge spending, projects the president said are "at the heart of our effort to accelerate job growth."
Construction spending would be a key part of the Jobs for Main Street Act, a $75 billion second stimulus to revive the nation's lethargic unemployment rate and improve the dismal job market for construction workers. The House approved the bill 217-212 last month after House Speaker Nancy Pelosi, D-Calif., worked the floor for an hour; the Senate is expected to consider it later in January.
AP's analysis, which was reviewed by independent economists at five universities, showed that strategy hasn't affected unemployment rates so far. And there's concern it won't work the second time. For its analysis, the AP examined the effects of road and bridge spending in communities on local unemployment; it did not try to measure results of the broader aid that also was in the first stimulus like tax cuts, unemployment benefits or money for states.
"My bottom line is, I'd be skeptical about putting too much more money into a second stimulus until we've seen broader effects from the first stimulus," said Aaron Jackson, a Bentley University economist who reviewed AP's analysis.
Even within the construction industry, which stood to benefit most from transportation money, the AP's analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.
"As a policy tool for creating jobs, this doesn't seem to have much bite," said Emory University economist Thomas Smith, who supported the stimulus and reviewed AP's analysis. "In terms of creating jobs, it doesn't seem like it's created very many. It may well be employing lots of people but those two things are very different."
Transportation spending is too small of a pebble to quickly create waves in the nation's $14 trillion economy. And starting a road project, even one considered "shovel ready," can take many months, meaning any modest effects of a second burst of transportation spending are unlikely to be felt for some time.
The Obama administration has argued that it's unfair to count construction jobs in any one county because workers travel between counties for jobs. So, the AP looked at a much larger universe: The more than 700 counties that got the most stimulus money per capita for road construction, and the more than 700 counties that received no money at all...
....For its analysis, the AP reviewed Transportation Department data on more than $21 billion in stimulus projects in every state and Washington, D.C., and the Labor Department's monthly unemployment data. Working with economists and statisticians, the AP performed statistical tests to gauge the effect of transportation spending on employment activity.
There was no difference in unemployment trends between the group of counties that received the most stimulus money and the group that received none, the analysis found.
Despite the disconnect, Congress is moving quickly to give Obama the road money he requested. The Senate will soon consider a proposal that would direct nearly $28 billion more on roads and bridges, programs that are popular with politicians, lobbyists and voters. The overall price tag on the bill, which also would pay for water projects, school repairs and jobs for teachers, firefighters and police officers, would be $75 billion.
"We have a ton of need for repairing our national infrastructure and a ton of unemployed workers to do it. Marrying those two concepts strikes me as good stimulus and good policy," White House economic adviser Jared Bernstein said. "When you invest in this kind of infrastructure, you're creating good jobs for people who need them."
Highway projects have been the public face of the president's recovery efforts, providing the backdrop for news conferences with workers who owe their paychecks to the stimulus. But those anecdotes have not added up to a national trend and have not markedly improved the country's broad employment picture.
The stimulus has produced jobs. A growing body of economic evidence suggests that government programs, including Obama's $700 billion bank bailout program and his $787 billion stimulus, have helped ease the recession. A Rutgers University study on Friday, for instance, found that all stimulus efforts have slowed the rise in unemployment in many states.
But the 400-page stimulus law contains so many provisions - tax cuts, unemployment benefits, food stamps, state aid, military spending - economists agree that it's nearly impossible to determine what worked best and replicate it. It's also impossible to quantify exactly what effect the stimulus has had on job creation, although Obama points to estimates that credit the recovery program for creating or saving 1.6 million jobs.
Politically, singling out transportation for another round of spending is an easier sell than many of the other programs in the stimulus. The money can be spent quickly and provides a tangible payoff. Even some Republicans who have criticized the stimulus have said they want more transportation spending.
Spending money on roads also ripples through the economy better than other spending because it improves the nation's infrastructure, said Bernstein, the White House economist.
But that's a policy argument, not a stimulus argument, said Daniel Seiver, an economist at San Diego State University who reviewed AP's analysis.
"Infrastructure spending does have a long-term payoff, but in terms of an immediate impact on construction jobs it doesn't seem to be showing up," Seiver said. "A program like this may be justified but it's not going to have an immediate effect of putting people back to work."
Not everybody who works in the building business is cashing in on base realignment action, reports the Fayetteville Observer.
The number of construction jobs in Fayetteville has dropped by 14 percent over roughly the past year - a larger drop than in four other North Carolina metro areas, according to an analysis of federal figures by the Associated General Contractors of America.
That's a loss of 800 construction jobs for Fayetteville. The Asheville, Durham, Hickory and Winston-Salem saw drops of 10 percent to 13 percent over the period, from November 2008 to November 2009, according to AGC.
But seven NC metros saw steeper drops in construction jobs than Fayetteville. Raleigh-Cary was the most severe at 24 percent.
The figures came as a bit of a surprise to Greg West, chief of staff at Fayetteville's H&H Homes. He said H&H hired 13 or 14 people last year, bringing its total to about 54 employees.
"And the good news was that some of those were people who were laid off in '07 and '08. We were able to bring them back," West said.
Residential construction has been hotter than commercial as of late, said Richard Player III, who has the helm at Fayetteville's Player Inc. He deals primarily in the latter.
"I've seen a dramatic pickup since October. And actually we're getting to the point where we may be doing a little hiring," Player said. "But we'd cut back. Business has been lean. So the job drop is not shocking."
In November 2008, there were 5,700 jobs in the Fayetteville area that fell into the construction sector, which also includes mining or logging. In November 2009, the tally was 4,900, according to AGC.
Across the U.S., construction employment declined in 234 of 337 metro areas over the past year, reports AGC. Only two markets had gains of more than 100 jobs - Harrisburg-Carlisle, Pa., and Tulsa, Okla.
Green buildings will make up about half of the non-residential building stock by 2015, up from about 15% currently, according to a new study from venture capital firm Good Energies Inc.
The Wall Street Journal reports this projected rapid growth would represent a surprising change as green building was considered a small niche market only 10 years ago. Both new construction and renovation projects include green building practices, with many developers starting to realize the costs are not as high as they expected.
Greg Kats, senior director and director of climate change for New York-based Good Energies, said he used the U.S. Green Building Council’s Leadership in Energy Environmental Design standards - which include categories such as energy and water use, site location, landscaping and proximity to mass-transit and shopping centers - to define what qualified for a green building in the study. To be counted as a green building, LEED certification wasn’t required, but the building had to adhere to LEED standards.
In November, Kats released the results of his two-year independently funded study in a book called “Greening Our Built World.”
Kats and his partners interviewed 100 architects working on 170 green non-residential buildings, mostly located throughout the U.S. He also obtained information from the USGBC, the American Institute of Architects, the American Public Health Association, the National Association of Realtors, BOMA International, the Federation of American Scientists, the Real Estate Roundtable, the National Association of State Energy Officials, Enterprise Community Partners and the World Green Building Council.
Using the interviews, he estimated green building’s pace of growth over the next five years, as well as other green building information, Kats said.
In October last year, McGraw-Hill Construction released a study saying that the share of green building in the retrofit market could grow to 20% to 30% in the next five years, with the market opportunity for major projects growing to $10.1 billion to $15.1 billion. Currently, green building practices are used in 5% to 9% of the building retrofits currently completed, with the market opportunity for major projects - those more than $1 million in value - at $2.1 billion to $3.7 billion annually, it said.
Eric Glover, a green building market analyst for Canaccord Adams Inc., said in an interview that he sees Kats’ 50% by 2015 estimate as reasonable.
“One key area of growth is the green retrofit market,” Glover said. “I think it’s possible that if green retrofits/renovations represent 20% to 25% of the market by value by 2015, new green building construction could represent the other 20% to 30%. I believe new non-residential green construction represents about 10% to 12% of the market now.”
Kats also concluded that builders and building owners are starting to realize that green building isn’t as expensive as they may have thought, which will boost green building numbers.
Based on his studies, Kats concluded that non-residential green building costs about 2% more than a traditional comparable building, although the public thinks on average that the premium is 17%, based on a 2007 survey by the World Business Council.
Kats said the payback time for a green building is about three to four years, and over a 20-year period, the payback is four to six times the investment cost.
“We now have a large enough, detailed enough body of data to say that the presumption is ‘why wouldn’t you do a green building?’” Kats said. “It’s very cost-effective and it reduces risk in a number of areas including health, exposure to energy and water prices and obsolescence.”
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The American Institute of Architects' Architecture Billings Index (ABI) dropped more than three points in November, proving itself unable to sustain the positive momentum it generated the previous month, when it reached its highest mark since August 2008.
The November rating of 42.8 fell from its October rating of 46.1 and was the lowest rating since 41.7 in August (September's rating was 43.1). That August 2008 watermark came just before the fall 2008 credit crunch affected not only the AEC industry, but the entire economy.
As a leading indicator of construction activity, the ABI reflects the approximate 9- to 12-month lag time between architecture billings and construction spending.
What this means
According to PSMJ Resourses blog, the 42.8 mark indicates a continued decline in the demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry score was 58.5, the same mark as in October.
"There continues to be a lot of uncertainty in the construction industry that likely will delay new projects in the near future," said AIA Chief Economist Kermit Baker. "Perhaps the President's plan calling for loans for small business, funding for instructure projects, and rebates for homeowners making energy-efficient improvements will help speed a recovery in the construction industry."
Anything that would bring a measure of stability to the AEC industry, let alone growth, would be a welcome sign these days. The index was 42.9 in May, dipped to 37.7 in June, increased to 43.1 in July, dipped to 41.7 in August, climbed to 43.1 in September and 46.1 in October, and fell to 42.8 in November.
Numbers that constantly move up and down make it difficult for architecture firms to make strategic decisions with any certainty that their fortunes are turning for the better.
Regional averages were as follows: South (46.4, up from 46.1 in October, 42.7 in September, 44.1 in August, 43.4 in July, and 40.5 in June), Northeast (45.0, up from 44.3 in October, but down from 47.4 in September and 45.2 in August and up from 37.8 in July and 42.8 in June), Midwest (43.7, up from the 43.0 mark where it stayed the previous three months), and West (41.1, down from 42.8 in October, but still up from 36.0 in September, 37.5 in August, 39.7 in July, 39.9 in June, 39.4 in May, and 39.2 in April).
The November ABI breaks down by sector as follows: institutional (47.0, down from 48.7 in October, but up from 43.9 in September and 37.5 in August), multi-family residential (45.8, showing the continued uptick from 45.4 in October, 45.1 in September, 43.4 in August, 40.7 in July, and 42.7 in June), mixed practice (42.8, the highest it has been since July and up from 39.1 in October, 36.3 in September, 41.4 in August, but down from 42.9 in July, 43.5 in June, 44.5 in May, 44.2 in April, and 44.0 in March), and commercial/industrial (40.7, down from 41.7 in October, but up from 39.0 in September, and down from 45.6 in August and 42.9 in July).
Amid constant reminders of the recession's lingering effects, a new hopefulness has emerged. Job-seekers, though still reeling from widespread cuts and prolonged economic pain, have begun to see more job postings, fewer layoffs, slowly improving numbers. They've cheered small changes, small steps forward.
The News & Observer reported the Triangle's jobless rate dropped slightly in November to 8.7 percent, but economists expect it to continue rising well into 2010.
The latest rate was based on county-level data released by the N.C. Employment Security Commission and adjusted for seasonal effects by Wells Fargo Securities economists in Charlotte.
The November rate was a small improvement from October's adjusted rate for the Triangle of 8.9 percent. And it was still stronger than November's state rate of 10.8 percent and national rate of 10 percent.
Wells Fargo senior economist Mark Vitner expects the Triangle rate to top out at 9.5percent this summer.
"We expect around 9,000 jobs to be created over the coming year," he said. "But the labor force will grow even faster than that as folks who dropped out of the work force over the past two years re-enter the work force and push unemployment higher."
Employers remain reluctant to hire across the country, as the economy begins a slow recovery.
Still, by later this year, the Triangle's unemployment rate will fall as employers create jobs in professional and technical services, health care and construction, said Michael Walden, an N.C. State University economist. He expects that the Triangle jobless rate will decline to 7.7 percent by year end and continue dropping in 2011.
"Recovery in the job market will proceed at a slower rate than after previous recessions," Walden wrote in his annual outlook on the state's economy.
The Charlotte Observer reported figures released by the N.C. Employment Security Commission show the Charlotte area's jobless rate fell slightly in November, the latest positive sign.
In the Charlotte metropolitan region, unemployment fell to 11.8 percent from 12 percent the month before. In Mecklenburg, the rate dropped to 11 percent from 11.1 percent in October, and around the region, many counties reported small declines.
The most striking thing about Tuesday's jobless data, East Carolina University economist James Kleckley said, was the fact that the Charlotte area's numbers remained so much higher than other parts of the state.
"When I think back through time, and you talked about the strength of the state's economy, you tended to talk about the Research Triangle and Charlotte in the same breath," he said.
As the economy improves, more people could re-enter the job search, driving the rate higher, Kleckley said. A recent survey of national economists found many expect the national rate to edge up to 10.1 percent when the government releases its December jobs report.
But Kleckley thinks the N.C. rate has already peaked, meaning some improvement in the near future.
"A lot is going to be told over the next couple months," Kleckley said. "The sooner we see a turnaround (in the national rate), that's going to bring a lot more confidence to everyone."
News that Durham, NC saved $1.2 million by putting three recreation center renovations out to bid has people involved in the local development and construction trade wondering what the figure portends for their business.
The Herald Sun reports one observer, Durham landscape architect George Stanziale, responded by writing city officials to urge them to send as many projects as they can out to bids while prices are still favorable.
He warned that as the recession eases, construction prices could spike sharply upward, reversing the downward trend that has prevailed since the third quarter of 2008.
"From here on out, it's not going to get cheaper," Stanziale said in a subsequent interview. "I think everybody feels like things have bottomed out. It's only going get better, I think, I hope anyway, and now is the time to be looking at this stuff."
Stanziale added that the general contractors he deals with are worried about a price spike because many of the subcontractors they rely on to complete their projects have gone out of business.
The lack of subcontractors could put a squeeze on projects as the recovery takes hold, he said.
That drew a dissenting opinion from Dave Anna, the owner of Chapel Hill-based Resolute Building Co.
He agreed subcontractors have been hit hard, but predicted that prices will "creep back" more gradually.
Many of the subcontractors who've gone out of business -- especially in easy-entry trades like drywall and framing -- will be able to get back in action quickly once an economic turnaround takes hold, Anna said.
What pressure might be forthcoming on that front is more likely to affect specialty trades like electrical and plumbing, he said.
He added that his company and others like it have been accepting smaller profit margins and taking the risk of having to complete subcontractors' work to make sure their own core employee groups stay busy and intact.
Stanziale said some clients and contractors are making deals for projects that aren't scheduled to reach the construction stage for a year or so. The deals include price-escalator clauses intended to protect contractors if material and labor costs start rising again.
The city government's recent cost-savings success came because the General Services Department decided to send the three rec-center renovations out to bid, instead of relying on an outside construction-management firm to assemble a team of subcontractors.
The use of construction managers like Skanska USA Building Inc. has been the city's general practice for bond-funded projects since 2006. But key administrators, including General Services Director Joel Reitzer, aren't sold on the idea that that's the best approach to small projects.
Nor has that strategy been popular with some local contractors.
Until Reitzer recommended sending the rec centers out to bid, "the city [had] turned its back on long-tenured, local contractors ... that have proven track records to advise and manage this type of work," said Tom Bordeaux Jr., president of Bordeaux Construction Co. Inc.
He lamented the 2006 turn to so-called "construction managers at risk" even for small projects rewarded "those that had the best marketing departments in lieu of competition."
How three industries behave “will largely determine whether North Carolina’s recovery leads or lags the rest of the nation,” says Rick Kaglic, an economist at the Charlotte office of the Federal Reserve Bank of Richmond.
Those are: construction, manufacturing, and banking/financial services, he said in an interview reported by the Wilmington Star News.
“Manufacturing output appears to be coming back already and financial services appear to be stabilizing,” Kaglich said.
“The housing market is perhaps the biggest wild card and has the most uncertainty surrounding it,” he explained. “There are parts of the state that were overbuilt more than others and still seem to be searching for a bottom. In those areas, the recovery will be slower to come around.”
North Carolina “showed bigger declines than the national average in some key metrics, such as employment, for a number of reasons,” he said. “First, we saw much stronger growth druing the expansion, so the bigger decline in jobs was somewhat of a payback for that.
“But then there is our industry structure: North Carolina has a heavier concentration in construction and manufacturing, two industries that were ravaged during this downturn.”
One of the positives Kaglich spoke of in a recovering national economy could bode well for the state and the Wilmington area — exports. “We are seeing the resumption of strong growth in some key emerging markets such as China, India and Brazil as well as a modest recovery in Western Europe. Exports are a major support for growth in the U.S. economy and even more so for North Carolina because of it proximity to shipping channels.”
Scott Dorney, executive director of the North Carolina Business and Military Center, expects construction, manufacturing and services ranging from maintenance to information technology to grow in 2010 as soldiers continue to move to Fort Bragg and fight in Afghanistan.
"There's a lot of opportunity for construction, engineering," he said in a recent Fayetteville Observer article.
Fort Bragg has $1.2 billion worth of projects under construction, Dorney said. Another $1.7 billion has been budgeted through 2015, and an additional $2.5 billion in construction needs have not been addressed, he said.
"All the factors driving construction - including BRAC and improved quality of life and quality of life for families, plus the growth and commitment in Afghanistan and the growth of our installation - is really going to drive a lot of opportunities for businesses in this state," he said.
To learn more about the Richmond Fed’s survey of business activity for the Carolinas, click Here.
North Carolina Construction News provides news updates and online resources in co-operation with Triangle/Triad Construction News and Charlotte Construction News. You can reach publisher Bob Kruhm by email firstname.lastname@example.org