Tuesday, 31 August 2010

CHP investment tax credit available to NC businesses

Investments in Combined Heat and Power (CHP) systems are now eligible for North Carolina’s 35 percent renewable energy tax credit for the first time, thanks to House Bill 1829 which was signed into law this month. This new incentive will help North Carolina citizens and businesses invest in more efficient and sustainable energy sources.

In the United States, most electricity is generated at a central utility power plant, and separate heating and cooling equipment is used on-site in homes and buildings. In contrast, CHP (also known as cogeneration) systems generate electricity and thermal energy in a single, integrated system. Heat that would be otherwise be rejected in traditional separate generation of electric energy, is captured with CHP and used for heating or cooling processes in industry or buildings.

The total fuel efficiency of these integrated systems can reach 80 percent, much greater than the 35 percent average from separate systems. A CHP system can reduce the carbon emissions from power and heat generation over 50 percent, with significant NOx and SOx emission reductions as well.

CHP is a flexible technology that can be utilized in commercial, industrial, municipal, institutional, or residential facilities to lower costs and provide reliable heating, cooling, and power. CHP systems can run on cleaner conventional fossil fuels such as natural gas or renewable fuels, including landfill gas, biogas and biomass.

Businesses that install a CHP system can now receive a tax credit from the state equal to 35 percent of the cost of the equipment, construction, and installation, up to $2.5 million dollars. CHP systems for non-business use are eligible for a tax credit of up to $10,500. This credit was previously available only for solar, wind and other renewable technologies. North Carolina is the third state to offer a CHP tax credit to businesses, and the first to offer it to individuals. CHP is also eligible for a 10 percent federal business energy investment tax credit.

The United States currently supplies about 10 percent of our electricity using CHP. According to Oak Ridge National Lab, doubling this by 2030 would create one million new jobs and reduce carbon emissions equivalent to taking 154 million cars off the road.

“This tax credit was adopted thanks to the hard work of many groups, and the General Assembly’s recognition of the value that CHP can bring to our economy and environment,” says Keith McAllister, Director of the US DOE’s Southeast Clean Energy Application Center. Mr. McAllister anticipates the new incentive will significantly boost CHP installations in the state.“ People are looking for cleaner energy alternatives and policies such as this help our state move in that direction.”

Read More.

Monday, 30 August 2010

NC recovery slow, unsteady, but still a 'recovery'

Indicators from unemployment to home sales to commercial building permits paint a picture of an economy that began to bounce back this spring and then retreated again, the News & Observer reports.

Economists say the recovery appears to be slower, shakier and more challenging than many expected. Part of the reason for the dismal reports, some say, is government stimulus programs, which paved the way for big rebounds - and then big pullbacks when they ended.

Triangle homes sales slumped badly in July, for example. There were 1,366 homes sold during July in Durham, Johnston, Orange and Wake counties, down 33 percent from the same month a year earlier, Triangle Multiple Listing Services data show.

Unemployment, perhaps the most visible symbol of continued pain, fell to 7.5 percent in July for the Triangle, below the national rate of 9.5 percent and state rate of 9.8 percent, but still well above the level at the start of the recession. The drop does not necessarily indicate job growth, either, because many people are leaving the search altogether, skewing the numbers.

"It's hard to find what you would actually call a bright spot, considering the level of darkness we're in," said Rick Kaglic, an economist with the Federal Reserve in Charlotte.

"The latest economic indicators don't come as much of a surprise," Kaglic said. Early in the year, he warned the recovery would be characterized by a "low-trajectory climb out of the trough with undoubtedly some turbulence along the way."

Kaglic anticipated the most turbulence from May to September as government programs expired. But now, "we're probably a little lower in the sky than I thought we would have been in this point in time," he said.

Still, a double dip is unlikely, mainly because there isn't much excess left in the U.S. economy, he said. In addition, companies continue to add jobs, even though that growth is not very satisfying.

Unemployment will probably remain elevated for the rest of the year, even as job growth continues, Kaglic said.

"Since the recession ended, likely in June 2009, several factors have hindered the recovery," notes UNC Charlotte economics professor John Connaughton. The first is that the economy is not growing as rapidly as many had hoped. The second: job creation.

"OK, the economy stopped bleeding, the economy's turning around, we're getting a little bit of growth - why no jobs?" he said.

But the lag isn't unusual. After the 2001 recession, it took almost two years for employment to rebound. Most economists expect the jobs picture to remain bleak through spring 2011, Connaughton said.

The wild card in the latest recession, he said, was the banking crisis, which crippled many small businesses and made lenders more risk averse. The lack of credit has resulted in a "portion of the economy not behaving like it would at this stage in the recovery," Connaughton said.

Connaughton said he is hoping for significant changes, though, in nine months to a year as banks begin lending more money and companies begin to hire.

"We're just biding our time, so to speak," he said. Read More.

Friday, 27 August 2010

Construction fatality rate lowest in 18 years

The U.S. Department of Labor Bureau of Labor Statistics (BLS) Aug. 19 reported that construction fatalities in 2009 fell 16 percent to 816, making it the lowest fatality rate in 18 years, according to preliminary numbers.

“The BLS census of fatal occupational injuries once again reinforces how the construction industry continues to build upon and refine site safety practices to prevent injuries to our greatest assets – our employees,” said Chris Williams, Associated Builders & Contractors (ABC) director of safety. “The continued, long-term reduction in construction industry fatalities is proof that the industry commitment to proactive safety training and hazard identification is still the most effective method to prevent workplace injuries and illnesses.”

To support safety awareness on the jobsite, ABC offers the Safety Training and Evaluation Process (STEP) program to its members, which allows member contractors to regularly evaluate and strengthen their programs, yielding safety performance that is consistently better than the industry average. When compared with national construction average, ABC members that participate in STEP have fatality rates that are 58 percent lower, OSHA injury rates that are 30 percent lower, and 90 percent fewer OSHA citations.

“The construction industry continues to work towards our ultimate goal of sending every employee home safely every night,” Williams said. “Both employers and employees will continue to partner to develop new practices and procedures that will continue our march toward that goal.”

The BLS report indicates the number of fatalities in construction declined 16 percent in 2009 after a decline of 19 percent in 2008. With this decrease, private construction fatalities are down by more than a third since reaching a series high in 2006. Economic conditions may explain much of this decline with total hours worked having declined 17 percent in construction in 2009, after a decline of 10 percent the year before. Fatal injuries involving workers in the construction of buildings were down 27 percent from 2008, with most of the decrease occurring in nonresidential building construction (down 44 percent to 55 cases). Heavy and civil engineering construction was down 12 percent, and the subsector with the largest number of fatal work injuries, specialty trade contractors, had 16 percent fewer fatalities in 2009 than in 2008. Read More.

Thursday, 26 August 2010

Views differ on health of Carolinas’ construction industry

At least one economist sees the commercial construction industry in the Carolinas as recovering, reports The Mecklenburg Times. But many industry experts have a different view for the industry they see as just now hitting bottom.

Anirban Basu, chief economist for Arlington, Va.-based Associated Builders and Contractors, described the construction industry in North and South Carolina as being in “recovering” mode.

Among other things, Basu cited publicly financed construction activity stemming from the federal stimulus package..

Basu said that despite difficulty with bank lending and poor job creation, the Carolinas have weathered the worst of the recession.

Dave Simpson, North Carolina building director for the Carolinas AGC in Raleigh, agrees that lending is strict and jobs are scarce. People in the industry are scrambling to survive, he said.

“From everything I’m hearing, the situation in the construction industry is grim,” he said. “And there’s no immediate end in sight. Banks aren’t lending the money, and there’s just not much work out there. I was visiting with some contractors in the Triangle yesterday and they told me that in recent months everybody was complaining about having 30 to 40 different companies bidding on work as small as a $3 million job. Now they wish there was work out there for a $3 million job.”

Simpson said contractors are doing everything they can to cover payroll expenses and pay their bills.

“I always try to be as optimistic as possible, but in this case, I’ll believe it’s over when it’s over,” he said.

He said more work, such as road construction, and easier access to bank loans would give the construction industry a big economic boost.

Construction is one of the best ways to stimulate the economy, he said, adding that an extra $1 billion in nonresidential construction spending would create or sustain 28,500 jobs. It would add about $1.1 billion to personal earnings, according to the Associated General Contractors of America.

Residential construction is also struggling, in large part because of high unemployment, said Lisa Martin, director of government affairs for the Raleigh-based North Carolina Home Builders Association.

Martin said some of the members of the homebuilders association have struck an economical bottom.

“We’re starting to see some business coming back,” she said. “There is some optimism. Not that we are in a quick turnaround, but we might have inched up. But we’re not at a point where we’d say we’re recovering.”

In Charlotte, the home construction industry has not improved, according to Mark Baldwin, executive vice president of the Homebuilders Association of Charlotte.

“I don’t see new house prices going any lower,” Baldwin said. “We’re at the bottom. These are times we haven’t been through before and we really don’t know what to expect.” Read More.

Wednesday, 25 August 2010

$2 billion remaining from stimulus funds in NC

The federal stimulus program that began almost a year and a half ago still has a lot of money left to spend in the North Carolina, according to a recent article in the Triad Business Journal.

As politicians and economists debate the need for another round of government spending to make up for still-weak private sector demand and anemic job growth, state officials say they have about one-third of the roughly $6 billion they control still to disburse.

It’s not clear how much stimulus money is still working its way through various local governments and agencies in the Triad, but there are large pots of money yet to start flowing in key areas such as the city of Greensboro, The Business Journal reports.

For instance, this month the city awarded final contracts for $2.6 million of stimulus-funded work through the Neighborhood Stabilization Program, a part of the federal Department of Housing and Urban Development. That money is meant to acquire and rehabilitate blighted properties.

At the state level, about 62 percent of the $6 billion overseen directly by North Carolina has been disbursed, according to Dempsey Benton, who heads the Office of Economic Revovery and Investment. Distribution of about $600 milion in stimulus fuinding to local school districts is about halfway completed, he said.

The state is on pace with the rest of the country in spending its allocated stimulus fuinding. Read more.

Jobs created or saved

Congressional analysts released new figures Tuesday estimating that the stimulus measure law enacted in January of 2009 created or saved as many as 3.3 million jobs and continues to boost economic growth in the second half of 2010.

The analysis published by the New York Times credits the stimulus measure with increasing the number of people employed somewhere between 1.4 million and 3.3 million jobs between April and June -- and boosting the gross domestic product by as much as 4.5 percent.

In May, the nonpartisan office estimated the law had created or saved between 1.2 million and 2.8 million jobs during the first three months of the year, and increased GDP by up to 4.2 percent. The measure has lowered unemployment as much as 1.8 percent in the second quarter of the year, according to the report.

The analysis also suggests, however, that most of the bang the still-lagging economy is going to get for its stimulus buck has already occurred. About 70 percent of the measure's cost will have been incurred by the end of next month, the report said, and its effects on jobs and economic growth are expected to dwindle in the second half of the year and gradually disappear starting in 2011. Read More.

Tuesday, 24 August 2010

Producer prices inch lower in July

Associated Builders and Contractors Chief Economist Anirban Basu reports, “Although prices for construction materials and supplies were 4.5 percent higher in July 2010 than July 2009, prices inched 0.2 percent lower on a monthly basis. The information came from the Aug. 17 producer price index (PPI)by the U.S. Labor Department.

Softwood lumber prices continued to decline, falling 3.3 percent for the month, although they are still up 10.1 percent from July 2009. Iron and steel prices were down 2.3 percent in July, but still 26 percent higher year over year. Similarly, steel mill product prices were down 1.4 percent in July, but remain 26.1 percent higher compared to July 2009. Nonferrous wire and cable prices slipped 0.8 percent for the month, but are up 11.4 percent year over year, while concrete product prices fell 0.1 percent in July, leaving them 1.9 percent lower than the same time last year.

Prepared asphalt, tar roofing and siding prices jumped 3.8 percent for the month and are 4.3 percent higher on a year-over-year basis. Fabricated ferrous wire prices increased 0.9 percent in July and 2.4 percent during the past 12 months. Plumbing fixtures and fittings prices inched up 0.2 percent for the month and are 0.9 percent higher compared to last year. Prices for fabricated structural metal products also increased 0.1 percent in July and are up 2.4 percent year over year.

Crude energy prices climbed 4.5 percent and natural gas prices jumped 11.7 percent for the month. After experiencing decreases during the previous two months, prices for wholesale finished goods increased 0.2 percent in July.


“Economists and others have been wrestling with the issue of deflation in recent months as economic momentum has continued to slow,” said Basu. “While economy-wide deflation remains unlikely in the minds of many, elements of the U.S. economy will experience a lack of pricing power, which will translate into falling prices. That may explain what is occurring now with construction materials prices, which experienced their second consecutive monthly decline.

Not surprisingly, items associated with residential construction have been impacted the strongest due to expiring tax credits. For instance, softwood lumber prices fell sharply in July.

“While it is true that certain producer prices rose for the month, those increases may be temporary,” said Basu. “For example, crude energy prices rose in July, but oil prices have been in decline for much of August.

“The expectation going forward is that construction materials prices will continue to be well behaved and may begin to decline more substantially as we approach the latter months of 2010,” said Basu.

Read more.

Monday, 23 August 2010

Corps of Engineers withdraws PLA requirement

Solicitations requiring bidders on certain U.S. Army Corps of Engineers (USACE) construction projects to submit an executed project labor agreement (PLA) prompted contractors to write and call agency officials expressing their concern. On August 18, the agency announced that it was withdrawing the PLA requirement.

The Associated General Contractors of America (AGC) sent a letter to the USACE's Mobile District demanding information about the agency's justification for including a PLA mandate in a solicitation for the construction of an Air Force Technical Applications Center at Patrick Air Force Base in Florida. The letter questioned how it determined that the conditions listed in President Obama's executive order on PLAs were present.

The requirement, along with similar mandates by other contracting agencies and information about pressure from higher in the Administration, also prompted AGC to send a letter calling on President Obama to protect contracting officers from such political pressure, and to send an "unmistakable and public" message that political appointees should not cross the line between politics and procurement.

AGC's letter to the USACE pointed out that the executive order leaves the agency free to refrain from requiring a PLA on the Patrick Air Force Base project and that it permits the agency to require a PLA only if the USACE has determined that all of the following conditions exist:

1. The project will cost the federal government $25 million or more;
2. Use of a PLA on the project will advance the federal government's interest in achieving economy and efficiency in federal procurement;
3. Use of a PLA on the project will advance the federal government's interest in producing labor-management stability;
4. Use of a PLA on the project will advance the federal government's interest in ensuring compliance with laws and regulations governing safety and health, equal employment opportunity, labor and employment standards, and other matters; and
5. Use of a PLA will be consistent with law.

While AGC neither supports nor opposes PLAs in general, AGC strongly opposes government mandates for PLAs on publicly funded construction projects. AGC is committed to free and open competition in all public construction markets and believes that publicly funded contracts should be awarded without regard to the lawful labor relations policies and practices of the government contractor. Read More.

The Associated Builders & Contractors (ABC) applauded the USACE for removing a proposed, mandatory project labor agreement. “Less than 2 percent of the construction workforce in Florida is affiliated with a labor organization, yet the federal government was willing to increase costs for all taxpayers and discriminate against 98 percent of the industry just to reward special interests,” said ABC President and CEO Kirk Pickerel. “ABC will continue to fight any attempt to impose PLAs on federal construction projects, as these special interest schemes violate competitive bidding laws, reduce competition, increase construction costs and needlessly inject political favoritism into the federal procurement process,” Pickerel added. Read More.

Friday, 20 August 2010

AIA a rchitectural index suggests shaky recovery

The American Institute of Architects (AIA) reports the Architecture Billings Index (ABI) rose almost two full points in July. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending.

The July ABI score was 47.9, up from a reading of 46.0 the previous month. This score reflects a continued decline in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index dropped substantially from 57.7 to 53.1.

“Business conditions at design firms remain quite volatile,” said AIA Chief Economist Kermit Baker. “While this recent uptick is encouraging, this state of the industry is likely to persist for a while as we continue to receive a mixed bag of feedback on the condition of the design market from improving to flat to being paralyzed by uncertainty.”

Key July ABI highlights

◦Regional averages: South (47.9), Northeast (47.2), Midwest (46.7), West (45.2)

◦Sector index breakdown: commercial / industrial (50.4), institutional (47.9), multi-family residential (47.5), mixed practice (42.9)

◦Project inquiries index: 53.1

The Architecture Billings Index is derived from a monthly “Work-on-the-Boards” survey and produced by the AIA Economics & Market Research Group. Based on a comparison of data compiled since the survey’s inception in 1995 with figures from the Department of Commerce on Construction Put in Place, the findings amount to a leading economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction activity.

Read more Here.

Thursday, 19 August 2010

Federal grants to speed NC broadband growth, create new jobs

Gov. Bev Perdue and the U.S. Department of Commerce announced Wednesday that North Carolina has received $115 million in five federal recovery grants — money that will extend high-speed Internet service across much of the state, The Daily Advance reports. Some 69 counties statewide will benefit from the future broadband service.

“Increasing broadband access will create new jobs up front and provide a boost for local economies to create even more jobs and a better quality of life in the near future,” Perdue observed. “These improvements are especially important to rural and underserved areas of North Carolina.”

The grants are part of the second round of federal stimulus funding for broadband projects from the U.S. Departments of Commerce and Agriculture, Perdue said.

The high-speed broadband Internet network, which will stretchfrom the Albemarle in the northeast to southwestern North Carolina, will include 1,300 new miles of fiber optic cable and could create more than 1,000 engineering and construction jobs.

Perdue said the grant will benefit students as well.

“This investment provides North Carolina with a robust broadband infrastructure that will help deliver access to education, through (the North Carolina Research and Education Network) that is not defined geographically, but is equitable for every student at every level of education,” Perdue stated.

The governor also said the broadband infrastructure will help meet the health care needs of rural citizens and “levels the playing field in attracting high-paying jobs” to rural regions of the state.

The broadband network will cover more than 32,000 square miles, serve nearly 2.3 million households, 160,000 businesses and 4,000 institutions, representing about 67 percent of North Carolina’s population.

The funds announced Wednesday come from $7.2 billion in American Recovery and Reinvestment Act of 2009 funds approved by Congress to expand broadband access to unserved and underserved communities across the country.

Click Here to view the entire Daily Advance article.

Wednesday, 18 August 2010

Carolinas construction industry on the mend?

Is the Carolinas construction industry on its way to recovery? Both North and South Carolina have experienced some positives in the last year--including a major plant announcement for North Carolina earlier this month--and both states are experiencing improved contract activity so far in 2010, according to the editor-in-chief of Southeast Construction magazine.

In his latest blog, Southeast Construction's Scott Judy observes the latest anecdotal evidence of a market upturn came earlier this month, when Caterpillar Inc. announced it was selecting Winston-Salem, as the site of its new $426-million manufacturing plant, instead of sites in Montgomery, AL and Spartanburg, SC.

But the good news has been going on for awhile now says Scott Judy. It seemed to start in late 2009, when South Carolina beat out the state of Washington to land Boeing's new final assembly plant for its 787 Dreamliner. The $250-million contract was awarded to a joint venture of BE&K Building Group, Turner Construction Co. and designer BRPH Cos.

Together, these two projects represent some of the highest-profile, non-public contracts to move forward in the Southeast during the past year or so. Through the first half of 2010, the reported contract activity of both NC and SC outperformed, in percentage terms, the other two states in the region, FL and GA, which were down at the year's midpoint.

In NC, for example, through June, the value of new contracts for future construction activity is roughly 15% ahead of 2009's pace, according to McGraw-Hill Construction. Despite that overall improvement, however, there remains plenty of cause for concern. The category showing the greatest percentage gains has been the nonbuilding sector, which includes infrastructure contracts--such as "stimulus"-funded projects. This category is up 79% compared to a year ago. At the same time, the state's nonresidential category is down 17% compared to last year's pace through June.

The story is similar in SC, where the overall value of new contracts was 20% ahead of 2009's pace at midyear, according to McGraw-Hill Construction. Like its northern counterpart, however, the overall number is the result of up and down market sectors. The value of new nonbuilding contracts is estimated at more than twice last year's pace, and residential is up 20% overall. However, the critical nonresidential market remains in decline, at about 20% behind last year's pace.

So, as is the case with assessing the prospects for "recovery" on a national basis, it's equally hard to tell where the Carolinas stand. Are the negative numbers for nonresidential a prediction of continuing correction and pain for the Southeast's construction industry? Or are the promising residential figures a harbinger of better times to come? Or, is the answer to both of these questions "Yes"?

Click Here to view the Southeast Construction blog.

Tuesday, 17 August 2010

Triangle housing market still recovering

The Triangle housing market did not show much of an improvement in second quarter 2010 from the first quarter, reports the Durham Herald Sun.

While there were increases in the number of units closed, as well as increases in the number of building permits issued and lots closed, those familiar with the local housing market say it's still in recovery mode.

"What I see is confirmation that we're bumping along the bottom," said Nick Tennyson, executive vice president of the Home Builders Association of Durham, Orange and Chatham.

According to recent data released by Market Opportunity Research Enterprises, a real estate research firm in Rocky Mount, the number of homes sold increased by double-digit percentages in Durham, Wake and Orange counties, along with increases in median prices -- save for in Durham, where prices dropped slightly by 2.7 percent to $180,000.

Like in the first quarter, building permits issued and lots closed increased significantly when compared with the same period in 2009.

In Durham, building permits issued increased by 24.7 percent to 237. The number of lots closed more than doubled to 239 in 2010, on top of a slight 3 percent increase in price as well, to $34,000.

Orange and Wake both saw decreases in building permits, by 26.9 percent and by 5.5 percent, respectively. In Wake, the number of lots closed more than tripled to 712. Orange saw a comparatively modest increase of 23.7 percent in lots closed.

"It's so easy for a swing to look big against the background of this activity," Tennyson said. "It's amazing to me how many lots have closed this year. That's clearly a statement on somebody's part that we're at the bottom and it was time to buy some lots."

Bernard Helm, president of MORE, said the second round of homebuyers tax credits, which ended in June, took a lot of buyers out of the market for July.

"Forward visibility is extremely murky," he said. "Normally, July sells about 1 percent fewer homes than June. But July sales this year are down about 35 percent from June [in the Triangle]. That reflects directly on the tax credit intervention."

"I think the second quarter numbers are very misleadingly optimistic about the conditions of the market, and that July's numbers are just the reverse," he added.

Tennyson said that remodelers are getting more work this year, but custom builders are working with a shorter backlog, but doing better than in 2009. As far as bigger builders, Tennyson said, they have been consolidating.

"We've seen an increase in market share for the production builders, but it's on such a low base," he said. "There just aren't a lot of folks who are able to get financing now to build that are the small volume guys.

"Until we can get more job growth in the area and get people confident about the employment picture, I think we're going to be fighting along this bottom," Tennyson said.

The National Assoication of Home Builders reported builder confidence in the market for newly built, single-family homes edged down for a third consecutive month in August, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released yesterday. The HMI declined one point to 13, its lowest level since March of 2009. Click Here to view the HMI report.

Click Here to read the Herald Sun article.

Monday, 16 August 2010

ABC chief economist says Carolinas construction industry ‘recovering’

The Associated Builders & Contractors chief economist, Anirban Basu, provided a look at the past, present and future of the economy during the opening session at the Carolinas Construction Conference last week. In a state-by-state analysis, Basu sees NC and SC in a “recovering” mode. Click Here to view his presentation.

“For the 15th consecutive month, private nonresidential construction spending in the U.S. has fallen, slipping 0.5 percent in June,” Basu said. From June 2009, private nonresidential construction spending is down 24.1 percent. In contrast, total nonresidential construction spending – which includes both private and public construction – was up 0.4 percent from May. “But this is 15.2 percent lower from the same time last year, Basu added.

“The explanation behind the ongoing decline in construction spending continues to follow the same story line – tightened credit lending standards, elevated vacancy rates and generally insufficient levels of job creation,” said Basu. “With the momentum of the U.S. recovery now waning, it will be many more months, if not years, before privately financed activities begin to recover in earnest. “Recovery for office, retail and other construction components being stimulated indirectly is probably at least two years away,” he said.

Carolinas Analysis

NC lost 20,300 jobs during the period between June 2009 and June 2010. SC lost 8,700 construction jobs during the same period. Currently the overall unemployment rate in NC stands at 10 percent. According to the BLS, the SC unemployment rate stands at 10.7 percent.

“From a broad economic perspective,” Basu reported, the Carolinas have weathered the worst of it.” Publicly financed activities continue to expand, particularly those most closely aligned with the stimulus package passed in February 2009,” Basu said. “For many contractors, the stimulus has ushered in a reasonably busy period. However, even these contractors have reason to be nervous since the stimulus money will eventually run out.”

Friday, 13 August 2010

Caterpillar compiles short list of GCs for Winston-Salem plant

The Winston-Salem Journal reports Caterpillar Inc. has compiled a short list of companies that are in the running to be chosen as the general contractor for its planned $426 million manufacturing plant in Forsyth County.

Caterpillar declined to identify any of the companies or say how many are on the list, but several companies have confirmed that they are in contention.

"We have selected a limited number of finalists," said Lyle Fricke, a project team leader for Caterpillar. The general contractor for the Caterpillar plant would be responsible for designing and building the 850,000-square-foot plant, which is expected to create about 500 jobs in the area. Only specifically invited companies are eligible to bid.

The BE&K Building Group of Charlotte, Gray Construction of Lexington, Ky., and Walbridge of Detroit, Mich., have confirmed that they are competing for the general contractor position.

Others said to be competing include Chicago-based Graycor Construction Co., Rhode Island-based Gilbane Building Co., Mississippi-based JESCO Inc., and a joint venture of Michigan-based Barton Malow and Greensboro-based Samet Corp.

Although many of these companies have North Carolina offices, none is in Forsyth County.

"I'm disappointed that none of our local general contractors seem to have been invited to bid," said Bob Leak, the president of Winston-Salem Business Inc.

Although Caterpillar has not disclosed much about its plans, it's clear that the company is moving quickly.

Caterpillar wants companies to submit plans by Aug. 30, said Steve Helms, the general manager of Walbridge Southeast in Charlotte. Construction is expected to begin in November.

City and county officials had encouraged Caterpillar to consider local contractors for the project, especially in light of the $23.5 million in incentives that they are offering the company. When Dell built its plant, it chose Baltimore-based Whiting-Turner Contracting Co., which disappointed many.

Local companies, however, will still be considered for subcontractor work on the Caterpillar plant, including grading, utilities, electrical work, masonry, heating and ventilation. For these smaller positions, factors such as transportation costs are more important, and Leak said it was likely that many of these positions would go to Triad companies.

Click Here for complete Winston-Salem Journal article.

Walbridge held an informational session Thursday at the Marriott Hotel in Winston-Salem for companies interested in bidding for subcontractor positions. About 100 people, most representing local companies, attended.

Walbridge World Headquarters is located in Detroit, MI. Walbridge has been recognized on a national basis for the quality and effectiveness of its safety efforts. The company was awarded first place in the Associated General Contractors of America’s 2009 Construction Safety and Excellence Awards competition. Walbridge’s safety performance was ranked best in the nation in the Building Division (1 million – 4 million hours worked category.) For Walbridge contact information visit www.walbridge.com or call 313-963-8000.

AGC launches new green construction education program

The Associated General Contractors of America this week unveiled a new green construction education program designed to make it easier to build and renovate green, LEED-certified buildings. The new program, called Building to LEED® for New Construction, Second Edition is designed to help contractors, designers and developers successfully navigate the green building certification process and keep their green accreditations current.

“Green building is rapidly changing from a niche market to the industry norm,” said Stephen E. Sandherr, the association’s chief executive officer. “Within a short time, the ability to master the complexities of green construction and certification will be essential to succeeding as a building contractor.”

Sandherr said the association developed Building to LEED to meet the growing demand for green construction and design experts. He noted that the number of green buildings under construction is expected to grow by an estimated 25 percent by 2013. As a result, anyone involved in building construction will need to complete a course like the association’s new program to be successful, the association head added.

Next week the association will begin taking orders for the Building to LEED program, which includes Instructor’s Guides and Participants Manuals to be used during the program’s one-day class. In addition to learning invaluable green construction and design skills, anyone taking the class will earn 7.5 continuing education credits that can apply to maintaining LEED certification.

Anyone interested in learning more about Building to LEED, ordering the program or finding out where the new education program is being offered should visit www.agc.org/green. Anyone can order the program, which is designed to be used by construction firms, community colleges, joint-apprenticeship training programs and construction association chapters, among other groups.

Thursday, 12 August 2010

Subsurface utility engineering creates safer work sites

Knowing the location of your underground utilities before beginning any construction project can create safer work sites. That's why the Major Projects group at Progress Energy's Brunswick Nuclear Plant in Southport, NC, incorporates subsurface utility engineering (SUE) in its construction projects.

McKim & Creed's SUE technicians used vacuum excavation to expose underground utilities at Progress Energy's Brunswick Nuclear Facility.The Brunswick facility is one of four nuclear power sites operated by Progress Energy. According to a company news release, in 2008 the four nuclear plants generated 46 percent of the energy provided to customers in the Carolinas service territory and 18 percent of the energy provided to Florida customers.

Progress Energy is committed to operating safe and secure nuclear facilities. By using SUE, construction managers can pinpoint under-ground structures, prevent damage to utilities and help keep the facility operating safely and securely during construction.

SUE incorporates nondestructive, geophysical investigating techniques that enable engineers and surveyors to verify the existence, condition and exact location of underground utilities. SUE services include four different quality levels, ranging from gathering information solely from existing utility records (Quality Level D) to vacuum excavation (Quality Level A), in which test holes are dug to determine the precise horizontal and vertical position, as well as size and type, of underground utilities.

McKim & Creed conducts Quality Level A SUE (utility mapping) services at the Brunswick facility. So far, SUE has been used to locate utility lines within the critical areas of a proposed Variable Frequency Drive foundation project, a Security building, and a Dry Fuel Storage facility.

"Progress Energy has seen the usefulness of SUE," says SUE manager Sean Patterson, CST IV. "It's turned into a big damage prevention movement."

Click Here to view the Summer 2010 McKim & Creed E-News article on subsurface utility engineering.

Wednesday, 11 August 2010

Miller surety bond threshold to increas on DOD work

Effective Oct. 1, 2010, the threshold increases to $150,000, up from $100,000, on Department of Defense construction contracts for which Miller Act surety bonds are required.

Federal law requires regulators to adjust acquisition-related thresholds for inflation every five years. The final rule was published on Aug. 2, 2010. For more information see Federal Register Here. Additional discussion found at www.fedgovcontracts.com.

Tuesday, 10 August 2010

Time to act on infrastructure funding

Construction employment decreased by 11,000 between June and July 2010 while the industry's unemployment rate fell to 17.3 percent, according to a new analysis by the Associated General Contractors of America of federal employment data released today. The third month of construction employment declines, despite the stimulus, reflects overall weak demand for private, local and state funded construction, association officials noted.

"The fact that this industry continues to suffer from unemployment rates nearly double the national average is a reflection of how much demand for construction has cratered in little more than two years," said Stephen E. Sandherr, the association's chief executive officer. "Worse yet, there's every indication that as the benefits of the stimulus fade the industry's employment picture will get even worse."

Sandherr noted that since July 2008, construction employment has declined by a total of 1,591,000 jobs, a 22 percent decline. He added that even though the industry accounts for four percent of the non-farm workforce, it has experienced 23 percent of the total job losses over the past two years. "The sad fact is that construction workers have been forced to endure depression-like conditions for far too long."

Noting continued high retail, commercial and manufacturing vacancy rates and depressed state and local tax revenues, association officials said overall construction demand was unlikely to increase until at least 2011 and likely much later in many areas of the industry. Given the fact that many stimulus-funded construction projects were likely to end later this year, they urged Congress and the Administration to act now to pass a host of long-delayed infrastructure bills to finance new highway, transit, water and utility projects that are crucial to America's global economic competitiveness.

"Anyone who thinks we are going to outcompete China and India with old roads, unsafe bridges and outdated power grids is either sadly wrong or woefully ill-informed," Sandherr said. "The choice ought to be clear: put Americans to work today rebuilding our economy, or be prepared for our economy to drown in traffic, brownouts and water shortages."

Click Here to view the AGC Economic Analysis.

Monday, 9 August 2010

Construction unemployment falls to 17% in July

Despite being in the height of the construction season, the nation’s nonresidential building construction sector shed 1,800 jobs in July, according to the August employment report by the Department of Labor. Since July 2009, 38,700 nonresidential construction jobs, or 5.4 percent, have been lost. Nonresidential construction employment now stands at 680,100.

July’s construction unemployment rate declined to 17.3 percent, down from 18.2 percent last year. Total U.S. employment – which includes both private and public – fell 131,000 for the month of July.

“The employment data was disappointing,” said Associated Building and Contractors' Chief Economist Anirban Basu. “The expectation among economists was that the numbers would have revealed that the nation shed just 65,000 jobs last month." Total U.S. employment – which includes both private and public – fell 131,000 for the month of July. The implication is that the economy is recovering more slowly than expected.

In contrast, nonresidential specialty trade contractors gained 8,000 jobs in July. Still, the sector’s job force is smaller by 183,500, or 8.5 percent, from a year ago. The heavy and civil engineering sector saw a loss of 700 jobs last month after gaining 1,300 jobs in June.

The residential building construction sector lost 9,900 jobs last month, and has lost 55,500 jobs since July 2009. Overall, the construction industry shed 11,000 jobs in July and has lost 376,000 jobs over the past 12 months. Since the beginning of the recession, the industry has lost 1,918,000 jobs, a drop of 25.6 percent. The national unemployment rate remained unchanged at 9.5 percent in July.


“The data indicate that construction job losses have slowed dramatically, particularly in those segments powered by the stimulus package passed in February 2009,” said Basu. “Still, this news provides stakeholders little comfort since the eventual exhaustion of stimulus support will become increasingly apparent in construction employment data next year."

“There are at least two major implications associated with this. First, at some point jobs associated with privately-financed activities must begin to expand. Second, state and local government support for capital spending and projects must also begin to reemerge if the nonresidential construction sector of the U.S. economy is to avoid another downturn within the next 18 months,” Basu said.

Click Here to view the latest ABC Construction Economic Update.

Friday, 6 August 2010

Price pressure on construction materials subside-for now

The Associated General Contractors (AGC) reported construction materials costs have retreated after a yearlong advance.

The producer price index (PPI) for inputs to construction-a weighted average of the prices of materials used in all types of construction, plus items consumed by contractors, such as diesel fuel-tumbled 0.9 percent, seasonally adjusted, in June. That was the largest one-month drop since February 2009 and followed a run of 10 price increases in the previous 14 months.

It appears likely that prices will continue to moderate for the next few months. In the weeks since the data for the PPI was collected in mid-June, diesel and steel prices have fallen further. Weak demand for housing and nonresidential building suggests that lumber prices will continue to retreat and wallboard prices will reverse their recent increases.

Unfortunately, the decreases may not be enough to make contractors whole. The PPI for finished buildings has remained negative, meaning that contractors are offering to build new warehouse, school, industrial and office buildings for less than a year ago.

Moreover, material costs are likely to start rising again by early next year. While the U.S. economy has slowed, it is still growing, as are most other countries. Ongoing growth means upward pressure on materials, such as copper, for which supply expands irregularly. Therefore, owners who hope for further price declines before committing to projects are likely to miss out on bargains that will last only for the next few months.

Click Here to view the recent AGC DataDigest news.

Wednesday, 4 August 2010

Stimulus helps NC contractors post gains in public works

Total construction spending eked out a small rise in June as gains in stimulus-aided public categories offset decreases in homebuilding and private nonresidential spending, the Associated General Contractors of America said in an analysis of new Census Bureau data. “Stimulus dollars are supporting construction jobs, but the pain is continuing for most contractors and their workers who depend on private projects or school construction,” said Ken Simonson, the association’s chief economist.

Among public categories, Simonson remarked that highway and wastewater construction each rose for the fourth consecutive month; other public transportation facilities—transit, rail and airports—jumped 20 percent from a year earlier; and public housing soared 31 percent compared to June 2009. “All of these categories have benefited from stimulus funds.

Stephen Sandherr, chief executive officer of the construction association, called on Congress and the White House to quickly enact legislation to provide long-term funding for public infrastructure spending and certainty for private construction. “It is deplorable that the airport trust fund is now on its 14th short-term extension, the highway and transit trust fund is in danger of shutting down on December 31, and there is no trust fund to sustain vitally needed water infrastructure upgrades,” Sandherr said.

90,000 jobs created or saved in NC

In July the Council of Economic Advisers released a report that the the federal stimulus bill passed in early 2009 has created or saved 90,000 jobs in North Carolina. The report did not break the gains down by metro areas.

The statewide job total was arrived at by looking at the results of three measurements and then averaging the findings. Those three approaches considered the percentage of all non-farm jobs in North Carolina, the percentage of stimulus dollars the state has received and the parceling out of job growth among 42 industries according to how concentrated they are in each state.

Nationally, the report says, 3.05 million jobs have been created or saved.

In the region, the stimulus has created or saved 41,000 jobs in South Carolina, the report says. The impact in Virginia was 41,000 jobs, and in Georgia the total was 91,000.

Some 618,000, or 20 percent, of the jobs created or saved nationwide were in various forms of construction; 292,000 in health care and health-care information technology; 254,000 in environmental cleanup; and 827,000 in clean energy.
The report did not specify the impact in North Carolina by industry category.

The report comes as the the Tar Heel State jobless rate dipped to 10 percent in June — the lowest month rate of the year. The N.C. Employment Security Commission said the unemployment rate declined from 10.4 percent in May.

Click Here to view the AGC press release.

Details on OSHA's new cranes and derricks rule

The Occupational Safety & Health Administration (OSHA) has released a major new rule for cranes and derricks in the construction safety standards Subpart N. The standard will be officially published in the Federal Register on August 9, 2010 and will take effect on November 9, 2010.

In a news release the Steel Erectors Association of America(SEAA) offered the following the link to the new Crane and Derrick Standard.

According to the SEAA, the significant number of fatalities associated with the use of cranes and derricks in construction and the considerable technological advances in equipment since the 1971 publication of the old rule led the U.S. Department of Labor to undertake this rulemaking, which was performed using the negotiated rulemaking process. SEAA was represented on the Negotiated Rulemaking Committee as one of 21 affected parties. SEAA supports the negotiated rulemaking process and this new standard.

Background on the Rule Development

In 1998, OSHA's expert Advisory Committee on Construction Safety and Health (ACCSH) established a workgroup to develop recommended changes to the current standard for cranes and derricks. SEAA participated in the workgroup at that time. In December 1999, ACCSH recommended that the Agency use negotiated rulemaking to develop the rule. The Cranes and Derricks Negotiated Rulemaking Committee (C-DAC) was convened in July 2003 and reached consensus on its draft document in July 2004. In 2006, ACCSH recommended that OSHA use the C-DAC consensus document as a basis for OSHA's proposed rule, which was published in 2008. Public hearings were held in March 2009, and the public comment period on those proceedings closed in June 2009.

Unfortunately, under the new administration, OSHA, although represented and participatory on the negotiated rulemaking committee, has made 17 significant changes to the consensus standard originally developed and agreed upon by the C-DAC Committee in 2004. These 17 changes (available at www.SEAA.net) include a requirement for employers to pay for both training and certification of any uncertified operators in their employment as of the effective date of the rule--November 9, 2010.

Also, not originally included in the consensus document but now a requirement is certification for qualified riggers for certain tasks such as Assembly/ Disassembly. The standard also requires certification of training for signal persons.

SEAA’s training programs for both Rigger Safety and Signal Person Training modules are available to assist contractors in their compliance efforts. Both programs are available at www.SEAA.net or by calling 336.294.8880.

SEAA encourages contractors who own and operate cranes to become familiar with the requirements of this standard. If you have questions about the standard, please direct inquiries to info@seaa.net.

Tuesday, 3 August 2010

Private nonresidential construction spending continues to drag

“Stakeholders in privately financed nonresidential construction continue to look for signs of recovery,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “However, today's report from the U.S. Census Bureau shows that the resurgence of this important construction industry sector has yet to begin."

For the 15th consecutive month, private nonresidential construction spending has fallen, slipping 0.5 percent in June, according to the August 2 report by the U.S. Census Bureau. From June 2009, private nonresidential construction spending is down 24.1 percent. In contrast, total nonresidential construction spending – which includes both private and public construction – was up 0.4 percent from May and now stands at $567.5 billion in June but is 15.2 percent lower from the same time last year.

Eleven of the sixteen subsectors of nonresidential construction posted increases for the month including conservation and development, up 7.6 percent, power-related, up 5.7 percent and sewage and waste disposal-related construction, up 3.5 percent. However, only three subsectors reported higher spending on a year-over-year basis including transportation, up 13 percent, sewage and waste disposal, up 9.1 percent, and highway and street construction, up 1.7 percent.

Of the subsectors that had decreases in construction spending, manufacturing was down 4.1 percent, communication, down 3.7 percent and educational-related construction spending, down 2.9 percent. Compared to June 2009, lodging is down 57.7 percent and continues to be the worst performer. Manufacturing is down 32.9 percent and office construction is down 30.5 percent.

Meanwhile, public nonresidential construction spending was up 1.2 percent for the month, but down 5 percent on a year-over-year basis. Residential construction spending was down 0.4 percent from May, but up 12.4 percent from June 2009. Overall, total construction spending – which includes both residential and nonresidential – was $836 billion in June, up 0.1 percent for the month, but down 7.9percent from the same time last year.


“The explanation behind the ongoing decline in construction spending continues to follow the same story line – tightened credit lending standards, elevated vacancy rates and generally insufficient levels of job creation,” said Basu. “With the momentum of the U.S. recovery now waning, it will be many more months, if not years, before privately financed activities begin to recover in earnest.

“At the same time, publicly financed activities continue to expand, particularly those most closely aligned with the stimulus package passed in February 2009,” Basu said. “For many contractors, the stimulus has ushered in a reasonably busy period. However, even these operators have reason to be nervous since the stimulus money will eventually run out.

“Signs of the future can be also observed in today’s report. For example, spending related to education, which declined significantly last month, is at least partly a reflection of the diminished financial health among state and local governments, and corresponding downsizing in capital budgets,” said Basu.

Click Here to view the ABC Construction Economics Update.