Thursday, 27 January 2011

NC contractors embracing new technologies and buildling techniques

Despite the improving employment outlook, many NC contractors are embracing new technologies and techniques like Public Private Partnerships, BIM or lean construction concepts to cope with decreasing revenue and ever tighter margins.

In a recently released Associated General Contractor of America survey, contractors are most pessimistic about the private office market, where 56 percent expect activity to decline, followed by the retail, warehouse and lodging market, where 52 percent expect less activity. Contractors are most optimistic about the hospital & higher education market, where 32 percent expect growth and the power market, where 29 percent expect growth. However, even for those markets, 36 percent of contractors expect the hospital & higher education market to shrink and 32 percent expect the power market to contract. Read More.

The survey suggests contractors' low expectations may be driven by the fact most firms expect stimulus-funded construction activity will decline this year. Clear majorities of firms (ranging from 56 percent to 66 percent) expect stimulus spending in every market segment to decline in 2011. Meanwhile, only 30 percent of firms report they plan to perform stimulus-funded work this year, down from the 45 percent that reported performing stimulus-funded work in 2009 or 2010.

“The stimulus propped up many construction jobs during the past two years,” said Ken Simonson, the association's chief economist, noting that firms reported one-in-five employees were involved in stimulus-funded projects during the past 12 months. “The stimulus is already becoming a thing of the past in most contractors' minds.”

Bid levels will remain very competitive this year. According to the survey, 29 percent of firms report they plan to lower bid levels in 2011. That follows a year when 74 percent of firms reported lowering bid levels, including seven percent who reported lowering bid levels to the point they lost money performing the work.

“In the face of tough market conditions, many firms are focusing on operating efficiencies and expense reduction, positioning themselves well to take advantage of a resurgent construction market,” said Michael Feigin, Navigant’s managing director for construction. “Construction firms are doing this, in part, by adopting new technologies and new techniques like BIM and lean construction.”

Growing numbers of firms plan to embrace new construction modeling technology known as Building Information Modeling (BIM) this year, Feigin noted. While only 5.8% percent of construction firms in NC currently use the technology, 50 percent expect that number to increase in 2011. Demand for green construction also continues to grow, with 13 percent of NC firms reporting working on Leadership in Energy and Environmental Design (LEED) registered projects in 2010 and 30 percent expecting that number to grow this year.

Growing numbers of firms plan to work on public private partnerships (PPP), perhaps driven by tight public sector budgets. A number of NC construction firms report working on PPPs in 2010, and 38% of the NC firms surveyed expect that number to increase this year. Nearly half, 46 percent, of NC firms reporting, implemented lean construction concepts in 2010 as a way of minimizing waste of materials, time and effort. Read More.

Industry survey sees uptick in construction worker hiring anticipated this year

More construction firms are planning to hire workers this year than are planning to make layoffs, according to the results of an industry-wide survey released by the Associated General Contractors of America and Navigant. The survey, conducted as part of the Construction Industry Hiring and Business Outlook, shows the industry may finally be emerging from a severe downturn that has left millions of skilled workers unemployed.

“This won't be an easy year for most firms, but it will be better than last year,” said Stephen E. Sandherr, the association's chief executive officer. “If current trends continue, this industry will be in a much better position 12 months from now than it is today.”

Sandherr noted that while 55 percent of firms nationwide laid off staff and only 20 percent of firms added employees in 2010, the outlook is more positive for 2011. He said that 27 percent of construction firms report they plan to add staff in 2011 while only 20 percent report plan layoffs. Even more positive, expanding firms plan to hire an average of 23 employees, while contracting firms plan to lay off an average of 16 employees.

In North Carolina, 28 percent of the construction firms plan to hire an average of 24 employees each. However 25% percent of the NC construction firms surveyed plan layoffs for this year. Those firms plan to lay off an average of 9 employees each. The survey indicated 47 percent of NC construction firms either see no change or don't know what their hiring plans will be in 2011.

Despite the improving employment outlook, more contractors expect the construction market to shrink in 2011 than expect it to grow. Contractors are most pessimistic about the private office market, where 56 percent expect activity to decline, followed by the retail, warehouse and lodging market, where 52 percent expect less activity. Contractors are most optimistic about the hospital & higher education market, where 32 percent expect growth and the power market, where 29 percent expect growth. However, even for those markets, 36 percent of contractors expect the hospital & higher education market to shrink and 32 percent expect the power market to contract. Read More.

Charleston embarks on $500 million, 5-year school construction plan

ABC News4 reported some 30 schools across Charleston County will be getting major makeovers thanks to a school construction plan funded by a one percent sales tax passed last November.

"A key part is, as that revenue comes in over the next six years, we are trying to pace our cash requirements to stay within those revenue projections so we can execute this plan," explained Bill Lewis, Chief Operating Officer of Capital Programs with the Charleston County School District.

The half-billion dollar plan was approved to move forward Monday, January 24 by the Board of Trustees of the Charleston County School District. Construction will be completed in seven phases over the next five years. The first phase is expected to be done by the summer of 2013. The construction will begin first in downtown Charleston at seismically at-risk schools like Buist Academy later in the spring.

Lewis says that students will be relocated while their schools are work sites. "We'll move people to an alternative campus while we redevelop the schools," Lewis said. Lewis hopes the construction projects will pay off in the classroom.

"Improving the achievement gap for everyone, improving high school graduation and improving student achievement for everyone. We feel these schools are integral to all of those goals," Lewis said. Some say there may be better ways to reach those goals

The first wave of schools will be reopened after construction is finished during the summer of 2013. Read More.

Tuesday, 25 January 2011

Carolinas construction leaders receive top honors

The Carolinas Associated General Contractors (CAGC) announced the winners of the 2010 Carolinas AGC Pinnacle Awards recognizing outstanding performance by construction companies and outstanding construction projects.

BEST GENERAL CONTRACTOR AWARD: New Atlantic Contracting specializes in complex building construction and renovations, focusing on education, medical and other institutional work. An employee-owned firm founded in 2000, its 50 employees work on 16 to 20 construction projects each year. New Atlantic has had zero lost-time incidents in the history of the firm.

BEST SPECIALTY CONTRACTOR AWARD: W.B. Moore Company, established in 1989, is a commercial electrical contractor and full service design engineering firm. Its corporate headquarters earned the North Carolina's first LEED Platinum Designation Award for new building construction.

BEST BUILDING PROJECT AWARD: St. John the Baptist Cathedral Restoration; Contractor: Hightower Construction Co., Inc. This 100- year-old “mother church” of the Catholic diocese of South Carolina involved not only extensive exterior brownstone replacement but also fabricating and erecting an 85-foot steeple. The steeple and bell tower were built in separate pieces off-site using an innovative process borrowed from Hightower’s yacht-building experience, then transported through Charleston's narrow historic streets.

BEST HIGHWAY/TRANSPORTATION: US 17 Bypass at Washington, NC; Contractor: The Joint Venture of Flatiron-United. A design-build project, this 6.8-mile bypass on North Carolina’s coastal plain stretches over miles of environmentally sensitive wetlands, and features a 2.8-milestructure over the Tar River. The Flatiron/United team developed an innovative “top-down” approach—a unique overhead gantry system which resulted in both minimal impact to the wetlands and an accelerated construction schedule. The process, which resulted in a safer way to build a bridge, has since been patented.

BEST UTILITY PROJECT AWARD: Dempsey E. Benton Water Treatment Plant, Garner, NC; Contractor: Archer Western Contractors, Ltd. This project involved construction of a new 20 million-gallons-per-day water treatment plant, a 5 million-gallons-per-day water storage reservoir and water pumping station, a backwashstorage tank, and standby generator facilities. The project required the complete renovation of an existing raw water pump station built in the 1950’s, and modifications to an existing gate control structure. Archer Western performed 524,000 man-hours on this project without a single lost time incident, and brought the project in $7,000,000 under budget and on schedule.

“BUILD WITH THE BEST” AWARD: Honoring an individual outside the construction industry whose efforts have contributed to the betterment of the industry and the overall economic welfare of the Carolinas.Danny Shealy, SCDOT Director of Construction. Danny Shealy retired from SCDOT in August 2010 after 35 years of service to the state; in his last thirteen years he served as Director of Construction. Danny’s reputation for fairness and open communications between contractors and the state was legendary, and he was a thoughtful steward of SCDOT and the state’s money. Read More.

Sunday, 23 January 2011

Comments sought on proposed revisions to NC lien and bond laws

A Symposium on Proposed Revisions to North Carolina’s Lien and Bond Law was held on Friday, January 21 hosted by the NC Bar Association Construction Law Section and & United Minority Contractors of North Carolina Joint Committee. The special meeting was held on the campus of Wake Forest University.

Industry representatives discussed a preliminary draft of proposed revisions to the NC Lien and Bond Law drafted by the NCBA Construction Law Section. The drafting group is attempting to revise the lien law statutes to comport more closely with current industry practices and to address case law and economic conditions which have revealed deficiencies or troubling sections of the existing law.

Several decisions from the NC courts have resulted in harsh results due to uncertainty of the process. The purpose of the revisions is to bring more certainty to the process and better protect all parties involved.

The drafting committee hopes to come up with proposed legislation and a consensus by mid-February that could be introduced to the North Carolina General Assembly during the 2011 legislative session.

The protections afforded owners, banks, title companies, design professionals, contractors, subcontractors, and suppliers through mechanics’ and laborers’ liens impact all who participate in the NC construction industry. The NCBA section has created a gmail account lienlawnc@gmail.com where stakeholders can submit comments and suggestions through the close of business on January 31. The NCBA’s website has links to the draft and summary at www.ncbar.org. Read More.

December construction starts fall 23 percent from November

Reed Construction Data (RCD) announced that the year-to-date value of construction starts through December, excluding residential contracts, totaled $261.7 billion, 1.5% less than during the same months in 2009. Individual month of December starts were 23% below November, reversing a large starts increase in November from October.

Averaged together, November-December starts were higher than any month in 2010 except August. The average value of starts in the last two months was 15% higher than the average month in 2010, about 25% higher adjusting for the usual seasonal weakness at the end of the year. The year-end upturn in starts is consistent with three consecutive monthly gains in job-site construction spending through November.

The value of construction starts each month is summarized from RCD’s database of all active construction projects in the United States, excluding single-family homes. Missing project values are estimated using RSMeans’ building cost models.

The annual change in starts in 2010 was +1.1% for heavy construction, -12.9% for manufacturing, -7.8% for commercial buildings and -0.3% for institutional buildings. The annual change for all non-residential construction was -1.5%. Preliminary estimates show a 5.8% 2010 increase for single-family construction and a 17.7% rise for multi-family construction.

Contractors started 43 projects in December valued at $50 million or more each. As small as this count is, it is larger than many months in the last year. Starts trends are expected to change in 2011. The pipeline of funding appropriated for heavy and institutional projects before the recession or included in stimulus programs is being used up and the pace of new funding is ebbing. By contrast, lending approval for commercial projects will improve significantly. This has already begun for apartments. Read More

Saturday, 22 January 2011

NCDOT hosts Transportation Conference in Raleigh

The North Carolina Department of Transportation (NCDOT) invites contractors to participate in the Annual Transportation Conference to be held at the McKimmon Center in Raleigh, from 8 am - 4 pm on Thursday, February 10.

The 2011 Transportation Conference offers business owners an excellent opportunity to network with representatives from NCDOT, other transportation agencies, state and local government, and private entities working in the state.

This year's conference theme is Beyond the Limits: Small Business in a New Era of Transportation and will explore the changing nature of the transportation industry and its effects on small business and transportation agencies. Panelists from various modes of transportation will discuss innovative approaches to transportation and infrastructure improvements.

Issues such as public/private partnerships, high-speed rail, toll roads, light rail, and aviation growth will be key conversation topics. The annual conference will have a a trade fair with exhibitors from over thirty public and private agencies. Minority business enterprises, women-owned enterprises and small businesses will be offered one-on-one matchmaking sessions with prime contracting firms, government organization purchasers and agency representatives. Refer questions regarding this event to Rodney Renix at 919-508-1796 or email at rdrenix@ncdot.gov. Read More

Updated ConsensusDOCS reflects latest industry practices

The ConsensusDOCS Coalition updated its core construction contracts to better reflect today’s construction industry, including the latest laws and best practices. All ConsensusDOCS users receive free access to the new documents within their subscription package.

These changes include a better incorporation of building information modeling (BIM), green construction considerations, and claims mitigation to encourage better project results.

In the three years since the initial release of ConsensusDOCS, the design and construction industry has changed dramatically. The ConsensusDOCS Coalition wanted to continue to lead rather than wait and react. ConsensusDOCS received extensive industry feedback and a wide range of experts’ most recent thinking to make the best standard construction contracts even better.

Click here for Frequently Asked Questions. ConsensusDOCS contracts are the first and only industry standard contracts written by 31 leading construction organizations. For more information or questions, click Here.

Friday, 21 January 2011

Architectural Billing Index continues positive momentum

On the heels of its highest mark since 2007, the Architecture Billings Index (ABI) jumped more than two points in December. 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 American Institute of Architects (AIA) reported the December ABI score was 54.2, up from a reading of 52.0 the previous month. This score reflects an increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 62.6, up slightly from a mark of 61.4 in November.

“This is more promising news that the design and construction industry is continuing to move toward a recovery,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. However, historically December is the most unpredictable month from a business standpoint, and therefore the most difficult month from which to interpret a trend. The coming quarter will give us a much better sense of the strength of the apparent upturn in design activity. ”

◦Regional averages: Northeast (55.3), South (54.8), Midwest (52.9), West (48.4)

◦Sector index breakdown: multi-family residential (60.1), commercial / industrial (52.7), institutional (50.6), mixed practice (47.8)

◦Project inquiries index: 62.6

More information on the ABI and the analysis of its relationship to construction activity can be found in the White Paper Architecture Billings as a Leading Indicator of Construction: Analysis of the Relationship Between a Billings Index and Construction Spending on the AIA web site.

Wednesday, 19 January 2011

Concrete economist gives somber forecast at WOC

A somber but resilient mood permeated World of Concrete’s opening in Las Vegas this week reports ENR.com. Recession-minded, budget conscious construction solutions dominated exhibitor offerings.

A reeling construction industry, which had a 20.7% jobless rate in December, faces fledgling growth through 2013 before recovery begins in earnest, said Skokie, Ill.-based Portland Cement Association chief economist Ed Sullivan. Excess homebuilder inventories, tight lending standards and state budget deficits, as well as high unemployment and capacity constraints are expected to dampen new construction investment in 2011 and 2012.

“Economic growth will not become strong enough to generate more robust job gains in the short-term, translating into a longer than expected recovery period,” Sullivan said during a January 18 forecast event. “This is a construction focused recession.”


Yet, future population growth and infrastructure investment, led by a renewed federal transportation bill, will fuel a 16.6-million and 18-million-tonne Portland cement consumption increase between 2013 and 2014, respectively, Sullivan said. The industry sank to a historic low point in 2009, with 26.9-million tonnes of negative cement absorption. Things have sluggishly improved since.

“The critical issue is confidence in lending and spending,” Sullivan said. “It takes time to push down the headwinds that still face our industry.” Read More.

Monday, 17 January 2011

NC gets $46 million for small business loans

The Winston-Salem Journal reports that North Carolina's small-business community has gained a $46.1 million economic shot-in-the-arm from the federal government. North Carolina and Michigan are the first states to qualify for $1.5 billion in federal money from the Small Business Jobs Act of 2010.

The program will provide loans to small businesses and manufacturers "that are creditworthy but are not getting the loans they need to expand and create jobs," the U.S. Treasury Department said. The funds will be channeled through the N.C. Capital Access program of the N.C. Rural Economic Development Center. It already has secured 30 lending participants.

Businesses with 500 or fewer employees are eligible for loans, with a maximum loan amount of $5 million. The loans may be used to finance the buying of land, the construction or renovation of buildings, the purchase of equipment, and working capital. The goal is providing loans with flexible terms, minimal additional paperwork and quick turnaround, with money expected to be available by Jan. 31. For more information, call (800) 228-8443.

The loans are likely to be generated primarily through community banks, according to the N.C. governor's office.

"Everywhere I go, I talk to small-business owners that are concerned about the access to credit," said Keith Crisco, the state's commerce secretary. "From my own experience, I know that for small businesses, credit is the key to sustainability, growth and profits."

North Carolina qualified early in part because it was able to prove it could leverage the $46.1 million by at least a 10-to-1 ratio in private lending. Between 1994 and 2008, the N.C. Capital Access program helped lending institutions make 1,850 small-business loans totaling more than $103 million. It is credited for helping save or create more than 27,000 jobs.

Tony Plath, a finance professor at UNC Charlotte, said he believes the program will draw applications from borrowers with "reasonable, but not pristine, levels of credit risk. It's not the absence of funds for loans in the banks that's missing in this market — the banks have plenty of money to lend," Plath said. "It's the unwillingness of lenders to accept anything other than the highest-quality borrowers. "Given its federal guarantee of small-business credit risk, this will stimulate both borrower-loan applications and lender-approval rates to help get credit and jobs flowing again." Read More.

Sunday, 16 January 2011

NC construction workplace deaths up in 2010

After reaching an all-time low in 2009, workplace deaths in North Carolina jumped more than 40 percent last year reports the Charlotte Observer. There were 48 on-the-job deaths statewide in 2010, compared with 34 the previous year, according to data released Friday by the N.C. Department of Labor.

As in past years, the most deadly industry was construction, where there were 15 fatalities statewide - one more than last year. The number of NC construction deaths has fallen about 40 percent since 2006 - about the same rate at which construction activity declined.

Despite the rise in workplace deaths, last year's toll was lower than average. From 2005 through 2009, an average of 53 N.C. workers died on the job each year. "Any workplace death is a tragedy and of great concern because it affects so many people - the family, co-workers, the community and our department," said N.C. Labor Commissioner Cherie Berry. "We'll redouble our efforts and work even harder to prevent these accidents from happening, and we'll call on employers and employees across the state to recommit themselves to workplace safety and health in 2011."

Why deaths rose last year is unclear. Some safety experts have speculated that a sagging economy may play a role if companies scrimp on safety to make ends meet. The two leading causes of death last year were falls and accidents in which workers were struck by vehicles or objects.

Berry pointed to what she says is an encouraging sign: a decline in reported workplace injuries. There were 3.1 reported workplace injuries in the state for every 100 full-time workers in 2009, an all-time low. Injury figures for 2010 have not yet been released. Read More.

Contractor's personal assets at risk despite corporate formalities

Many people establish business entities to protect themselves from personal liability. In a ruling this month, the Construction Law in NC blog reports, the NC Court of Appeals held that despite such corporate formalities, contractors can be personally liable for their own negligence.

The case, White v. Collins Building, Inc., __ N.C. App. __ (January 4, 2011), involves a new home constructed by developer AEA and purchased by the Whites. AEA contracted with Collins Building, Inc. to build the residence. Collins Building is a one-member company owned by Edwin Collins, president, sole-shareholder, and qualifier for the company. When the Whites began to experience alleged construction defects, they sued all involved, including both Collins Building Inc. and Edwin Collins, individually.

Edwin Collins moved to dismiss the lawsuit against him individually, and his motion was granted. On appeal, the Court held that the dismissal was in error, and that Edwin Collins could be found individually liable to the Whites because the alleged negligence was his own action. While noting that it was a case of first impression for the construction context, the Court pointed out that “It is well settled that an individual member of a limited liability company or an officer of a corporation may be individually liable for his or her own torts, including negligence.”

The Court stated that a properly formed and maintained business entity may provide a shield or “veil” of protection from personal liability, but that the protection was not absolute. The Court also contrasted this situation to one in which the parties had contracted with each other; there the claim is usually a contractual one only, so if the Whites had contracted directly with Collins Building, Inc. to build their residence, they likely would not have a cause of action against Edwin Collins individually.

This case shows that, while corporate formalities are important to protecting yourself from individual liability, they are not a guaranty. Read More.

Saturday, 15 January 2011

Contractors: Time to prepare and post your OSHA 300A

It's that time of year again, the OSHA Law Blog reminds us. Contractors covered by OSHA's recordkeeping rule must prepare and post the OSHA Form 300A "Summary of Work-Related Injuries and Illnesses" by February 1 and keep the form posted until April 30. The form must be posted at each establishment covered, in a conspicuous place where notices to employees are customarily posted.

After the form is completed, but before posting, a company executive must also certify that "he or she has examined the OSHA 300 Log and that he or she reasonably believes, based on his or her knoweldge of the process by which the information was recorded, that the annual summary is correct and complete."

Under OSHA's rule, a company executive can be one of the following:

•an owner of the company (only if the company is a sole proprietorship or partnership);

•an officer of the corporation;

•the highest ranking company official working at the establishment; or

•the immediate supervisor of the highest ranking company official working at the establishment.

This obligation is important and employers can be cited for failure to post. Employers should take steps now to make sure they are fully compliant. Read more.

Thursday, 13 January 2011

Construction material prices higher in December

“For three consecutive months, construction materials prices have been surging,” announced Associated Builders and Contractors Chief Economist Anirban Basu. The latest numbers from the Labor Department come from December when materials prices rose another 0.9 percent for the month.

“Over the past three months, the monthly increases have been 0.6 percent, 0.5 percent, and 0.9 percent. These increases appear to be in conjunction with broader increases in import prices, which have also risen substantially over the past three months, largely due to rising energy prices,” said Basu.

The gains in materials prices were broad based, including in the softwood lumber, iron and steel, and nonferrous wire and cable categories. These increases are occurring despite the fact that construction levels remain suppressed in both residential and nonresidential categories. Likely explanations for the rise in materials prices include a shift of investors’ money from bond funds into the commodities market, and the rapid expansion of a number of large emerging countries where construction is vibrant.

“For contractors in the U.S., this cannot be viewed positively. Rising materials prices put even more downward pressure on already slender profit margins,” said Basu. “Moreover, the increase in project costs associated with rising materials prices makes it more likely that certain projects will remain on hold. However, given recent stability in the U.S. dollar, it may be that materials prices will not increase as forcefully as in the past months.” Read more.

Wednesday, 12 January 2011

NC Bar Lien/Bond Law Revision Committee updates industry representatives on proposed changes

On Tuesday, January 4, the Construction Law Section of the North Carolina Bar Association held a “summit” for its members and members of the construction industry. The purpose of the meeting was to bring together lawyers and non-lawyers, along with the leadership of the NCBA’s other sections and industry lobbyists, to hear a report by the Lien/Bond Law Revision Committee on the progress of efforts to draft proposed legislation to update Articles 2 and 3 of Chapter 44A of the North Carolina General Statutes.

The meeting involved lively dialogue as the members of the drafting committee shared their ideas and proposals and received constructive feedback from industry representatives in attendance. Click here for complete video coverage of the program. Additional comments and suggestions are welcome at lienlawnc@gmail.com.

Click here to access the proposed lien revision. Click here to access the lien revision summary.

The NC Bar Association Construction Law Section and United Minority Contractors of North Carolina Joint Committee will hold a "symposium" on the proposed legislative changes to North Carolina lien and bond law. The special meeting is scheduled for Friday, January 21, from 1:00 to 4:00 p.m., at the Benson Center, Room 400, on the campus of Wake Forest University. Respond to the Joint Committee Chair Bonnie Keith Green at bgreen@slk-law.com by Friday, January 14 if you plan to attend.

Tuesday, 11 January 2011

Top ten most frequently cited OSHA standards

The OSHA Law blog recently published OSHA's Top 10 Frequently Cited Standards for fiscal year 2010. OSHA publishes this list to alert employers about these commonly cited standards so they can take steps to find and fix recognized hazards addressed in these and other standards before OSHA shows up. The Top Ten are:

•1926.451 - Scaffolds
•1926.501 - Fall Protection
•1910.1200 - Hazard Communication
•1910.134 - Respiratory Protection
•1926.1053 - Ladders
•1910.147 - Lockout/Tagout
•1910.305 - Electrical, Wiring Methods
•1910.178 - Powered Industrial Trucks
•1910.303 - Electrical, General Requirements
•1910.212 - Machine Guarding

Contractors are encouraged to take note of this list. These standards relate to commonly found hazards and also point to those hazards that compliance officers focus on in the course of regular inspections. While each worksite is different, employers should make sure that their safety programs related to these hazards (and standards) are reviewed and fully compliant. Read More

Construction employment declines in December as industry unemployment rate hits 20.7 percent

Employment in construction declined by 16,000 during the month of December 2010 as the industry’s unemployment rate hit 20.7 percent, according to analysis of federal employment figures released by the Associated General Contractors of America.

Even as the industry continues to suffer from weak private sector demand, the benefits of the temporary stimulus program appear to be winding down, association officials noted. “At this point, it doesn’t look like there’s anything to replace the temporary help that the stimulus has been providing for the construction industry,” said Ken Simonson, the association’s chief economist. “Today’s figures offer yet another reminder that the construction industry remains, and is likely to remain, the hardest-hit industry in the economy.”

Construction employment declined by 0.3 percent during the month, leaving only 5.6 million people employed in the industry, a 27 percent decline since employment in the industry peaked in August 2006 at 7.7 million, Simonson noted. During the past twelve months the construction industry has lost 93,000 jobs, he added. Meanwhile, the industry’s unemployment rate is more than double the overall, not seasonally adjusted, national unemployment rate of 9.1 percent.

Heavy and civil engineering construction, the category most likely to be affected by the stimulus and other temporary federal programs like base realignment, experienced the largest decline within the construction sector, dropping by 12,700 for the month. Before December and November, that segment of the construction industry had been adding jobs for much of 2010.

The decline indicates that stimulus and other temporary federal projects, especially in transportation, have begun winding down, Simonson suggested. He added that unseasonably harsh weather during December probably exacerbated the job decline in heavy construction, which is far more vulnerable than most industries to outdoor conditions.

Noting that there are now over 1.7 million unemployed construction workers in the U.S., association officials urged Congress and the Administration to act quickly to pass several long-stalled infrastructure bills. They said that further delays would not only hurt construction employment, but would lead to increased costs for taxpayers.

“You can pay relatively little to maintain aging roads, water systems and locks now, or you can pay a lot to repair them later,” said Stephen E. Sandherr, the association’s chief executive officer. “The best way to boost the economy and save taxpayers money is to act now to address our growing infrastructure debt.”
Read More.

Sunday, 9 January 2011

Stimulus loans bypass Cape Fear area military contractors

The nearly 2-year-old American Recovery and Reinvestment Act has pumped $585 million into the Cape Fear regional economy so far. But few defense contractors around Fort Bragg appear to have benefited directly from federal economic stimulus through big loans or loan guarantees.

The Fayetteville Observer reports small defense contractors, some founded by military veterans, have been touted as a generator of high-wage jobs in the 10-county region for years to come, as Fort Bragg expands through base realignment. Like all small businesses, however, the military suppliers have struggled to find capital to acquire equipment and inventory and hire workers, said Scott Dorney, executive director of the North Carolina Military Business Center.

Stimulus loans could help local defense contractors secure credit in a deep recession. But an analysis of stimulus award data from the federal government, provided to The Fayetteville Observer by the nonprofit news organization Pro Publica, shows big loans or guarantees largely bypassing the area's fledgling defense industry.

Of the 14 nongovernmental entities that received a minimum of $1 million in loans or guarantees from stimulus funds, just one appears to fit the conventional definition of a defense contractor. K3 Enterprises Inc., a veteran-owned provider of communications and information technology, was awarded about $1 million in Small Business Administration long-term financing to acquire major fixed assets for expansion or modernization in 2009. The 6-year-old company bought a Cumberland Street property in 2008 as part of an expansion that K3 Enterprises expected would bring 25 to 50 high-paying jobs to Fayetteville.

Jim Arp, a vice president of K3 Enterprises, said he doesn't know why other defense contractors haven't gone after or succeeded in getting stimulus funds. But Arp said the Small Business Administration has programs to help startups get off the ground. Along with direct financial assistance to businesses, the state also sent stimulus money to local governments to support entrepreneurial activity in economically depressed areas, noted Cathy Akroyd, a spokeswoman for the North Carolina Office of Economic Recovery & Investment...

Some small businesses received stimulus funds indirectly as subcontractors at Fort Bragg construction sites, said Dorney, whose Fayetteville center has tracked local stimulus projects. "The bases got money," Dorney said. "But it was a very small part of the stimulus money." The Defense Department's slice of the $787 billion stimulus package amounted to $7.4 billion, according to the Pentagon. "Most of the money did not go to federal agencies to use on federal projects," Dorney said. "Most of it went to states to use on state projects funded with federal money."

A Fayetteville example was the $52.5 million stimulus-funded state contract awarded to R.E. Goodson Construction Co. Inc. of South Carolina to grade and build bridges for a planned segment of Interstate 295 connecting Bragg Boulevard and Murchison Road.

Defense-related small enterprises, especially startups, could use a federal boost in trying to line up working capital, Dorney said. He noted about 20 lenders and four of the area's most credit-worthy defense contractors got together last spring at Fayetteville Technical Community College. "Access to capital is a real issue," Dorney said of the new military contractors. Dorney said Gov. Bev Perdue has enlisted the state's small business and banking commissioners to prod lenders to approve more loan applications from small defense contractors with reliable cash flows. Read More.

Friday, 7 January 2011

Charlotte commercial builders busier, but earn less

The number of commercial building permits issued in Mecklenburg County last year rose over 2009. But the value of construction continued to drop and remains dramatically off its 2008 peak, reports the Charlotte Observer.

The sharp drop illustrates that while more construction work may be planned or under way, clients are choosing smaller jobs, such as renovations versus building new, or paying lower prices. Developers expect this trend to continue, particularly for as long as financing remains tight. Mecklenburg County issued 5,517 commercial building permits during 2010, up 2.5 percent over the previous year. The value of construction, however, dropped 16 percent to $647 million, or less than one-third of the work permitted just two years ago.

Developers say they expect to see the number of permits stay flat in upcoming years. They also say they're not surprised to see construction values stay low, given how most real estate companies have scaled back on projects designed before the recession. And while the number of permits issued in 2010 is half that seen during the boom days, real estate analysts say that could be good because it shows supply is adjusting to meet demand. '"There's some excess supply that needs to be absorbed before they start going gangbusters on building properties," said Andrew Jenkins, a managing partner with Karnes Research Co. "You should see a lower level of new supply."

Vacancy rates for commercial properties have risen sharply in recent years as new buildings planned in better times became available. The Charlotte office market, for example, hit 18.1 percent vacancy in the third quarter, the highest reported rate in eight years.

A few developers forged ahead in 2010. The Bissell Cos. in south Charlotte bucked trends by announcing two speculative buildings. Developer Chad Hagler with Woodfield Investments continued with an apartment complex in Elizabeth. But most permits - roughly two-thirds - were issued for renovations, continuing a shift that emerged last year. Hospitals, hotels and office upfits dominated the permits granted last year, with Carolinas Medical Center receiving the largest permit for $83.5 million worth of work on its Pineville campus.

Permits issued ranged from work on a new multimillion-dollar worship center for Elevation Church in south Charlotte to upfits being done at the Duke Energy Center, which opened to tenants early this year, and from a new pool at a hotel on Independence Boulevard to insulation upgrades in an attic space.

"There's still work occurring and each permit carries a separate set of architectural and engineering plans," said Ned Curran, Bissell Cos. president and CEO. The Bissell Cos. spent $50 million last year on new construction and interior upfits. "Somebody's got to build it. Somebody's got to inspect it. It's good for the economy," he said of the smaller jobs expected to dominate the industry.

Real estate experts don't expect to see much of the speculative construction that fueled Charlotte's development spurt in the mid-2000s. Future projects are more likely to resemble one finished this year by Beacon Partners in north Charlotte. Last June, the Charlotte firm finished a $1.1 million, 93,000-square-foot distribution facility it built for WESCO Distribution Inc., which distributes electrical construction products and electrical and industrial maintenance, repair and operating supplies.

The industrial building features energy-efficient light fixtures and low-flow toilets. The aisles where products are stacked have motion sensors, which turn lights on and off as people and forklifts pass by. In November, the building received a gold-level LEED certification for meeting national environmental-design and energy standards.

Beacon Properties, which once focused on speculative development, has switched gears and plans to partner with cities and counties this year to build projects and offer property management and other services. Beacon Partners' senior construction manager Matt Lucarelli said that last year his firm focused on finding tenants for buildings the company constructed in 2009. The firm completed 14 upfits and built three buildings combined worth $9 million last 2010. It worked on 16 upfits and two speculative industrial buildings worth $7.4 million in 2009.

"There's still mixed signals out there," Lucarelli said of development prospects. But, he added, more companies are telling him they are open to constructing a new building because they're finding existing properties old and technologically outdated. "There's a lot of inventory out there, " he said. "But people are coming in asking for newer buildings."

Of the permits granted last year, 281 were granted for offices and retail buildings, 22 for industrial buildings, 90 for multifamily complexes and 124 for institutional. Illustrating the weak Charlotte condo market, 63 permits were issued for condominiums, down from a high of 2,472 in 2006, when the national housing market started to slow.

Jenkins, the analyst, said it will be good for the market if new supply of commercial buildings is depressed for at least another year because it will help lower vacancy rates and boost falling rents. "Everyone's still nervous... and there's always worry the other shoe could drop," he said of the commercial real estate market. "Still, I'm more optimistic that 2011 will be lackluster but not completely bad." Read More.

Triad business activity waned in November

The level of economic activity in the Piedmont Triad dropped in November by 0.3 percent, according to a new survey from UNC-Greensboro.

The News-Record reports The Triad Business Index, produced by G. Donald Jud, professor emeritus and research fellow in the Center for Business and Economic Research, measures a variety of indicators including employment, retail sales and home sales.

Although the region’s overall business activity has increased by 1.3 percent in the past year, it has dropped by 0.6 percent since July, suggesting that this region is still struggling to recover from the recession.

An example is that unemployment figures for November, which were not adjusted for possible seasonal variations, increased in the Greensboro-High Point region from 9.7 percent to 10.5 percent, which shows that workers here are not finding jobs.

Another key indicator for spending and employment, residential building permits, was up 1 percent in November, but that doesn’t come close to erasing the 23 percent decline in housing construction in the past year. Construction employment is down 5.8 percent in the past year. Read More.

Wednesday, 5 January 2011

NCBA - UMCNC host joint meeting on proposed changes to lien and bond laws

The NC Bar Association Construction Law Section and United Minority Contractors of North Carolina Joint Committee announced a symposium on the proposed legislative changes to North Carolina lien and bond law. The special meeting is scheduled for Friday, January 21, from 1:00 to 4:00 p.m., at the Benson Center, Room 400, on the campus of Wake Forest University.

The Committee serves as a forum for sharing information about legal and legislative developments affecting minority, women, veteran and disabled veteran contractors, subcontractors, suppliers and materialmen, and the construction industry as a whole. The Committee seeks to foster relationships between the minority, women, veteran and disabled veteran contractor community and NC Bar Association construction lawyers.

Due to the number of attendees and the space, there will not be an option to participate via conference call. Please respond to the Joint Committee Chair Bonnie Keith Green at bgreen@slk-law.com by Friday, January 14 if you plan to attend. An agenda will be circulated prior to the meeting.

The North Carolina Bar Association's Construction Law Section Lien and Bond Law Revision Committee hosted a public meeting on January 4 in Cary for the purpose of explaining and discussing a preliminary draft of proposed revisions to the NC Lien and Bond Law. The drafting committee is attempting to revise the statutes to comport more closely with current industry practices and to address case law and economic conditions which have revealed deficiencies or troubling sections of the existing law.

Nexsen Pruet attorneys Eric Biesecker, Richard Wilson, and David Luzum recently filed an amicus curiae, or friend of the court, Brief for the American Subcontractors Association and ASA of the Carolinas in the North Carolina Court of Appeals. The case was Wachovia Bank v. Superior Construction, involving the effect of interim lien waivers on the relation back of lien rights. “The protections afforded contractors, subcontractors, and suppliers through mechanics’ and laborers’ liens are essential to the survival of the construction industry,” according to the brief. Read More.

State Economic Forecast Forum offers sobering predictions for coming year

North Carolina business leaders heard Monday from lawmakers, an economist and others about the grim picture for the state and national economies in the coming year.

The Herald-Sun reported economist Mark Vitner and former UNC System President Erskine Bowles had some sobering news on Monday for those who were hoping the new year -- and new decade -- would lead to a way out of the economic doldrums.

The days of the kind of economic expansion the state saw in previous decades are gone, Vitner said at the 9th Annual Economic Forecast Forum hosted by the N.C. Bankers Association and N.C. Chamber of Commerce. Projected economic and job growth are not keeping up with population growth, and the state actually has less non-farm employment than a decade ago, according to Vitner. Moreover, the picture for this decade doesn't look much better. "I don't know that we'll see a 4.6-percent unemployment rate this decade," said Vitner, chief economist of Wells Fargo Securities.

The state's unemployment rate increased slightly to 9.7 percent in November, but according to Vitner's economic forecast, improvements in the unemployment rate have been mainly a result of a decline in the labor force. Employment has increased only modestly.

As for the housing market, Vitner projected that it will keep struggling as prices continue to fall and the market absorbs foreclosed properties. "It's going to be tough for the next few months," Vitner said.

Bowles, who retired at the end of 2010 as president of the UNC System, also spoke at Economic Forecast Forum on the need to cut the federal budget. Currently, Bowles said, mandatory spending like Medicare and Social Security comprise the total of the federal budget, and spending for infrastructure and education has had to come from debt. "This buildup in debt is our biggest national security problem," Bowles said. "We can't grow out way out of this problem."

Bowles, who is co-chairman of a presidentially appointed deficit reduction commission with Wyoming Sen. Alan Simpson, has proposed a plan to cut the budget deficit by nearly $4 trillion through 2020, reducing the deficit to 2.3 percent of GDP by 2015. Bowles said balancing the federal budget will require a mix of growth, cuts and tax increases, but he said the General Assembly should be able to handle its deficit through cuts alone.

State Budget Director Charlie Perusse, Sen. Peter Brunstetter, R-Forsyth, and Rep. Harold Brubaker, R-Randolph, provided an overview of the state budget picture during the forum.

According to a WRAL.com analysis, the lawmakers and Perusse said the 2011-12 state budget would include $3.7 billion in cuts to erase a growing deficit. No new taxes would be included to close the budget gap, they said. Read More.

Tuesday, 4 January 2011

Construction spending rises 0.4 percent in November for third straight gain

Construction spending increased by 0.4 percent in November, the third straight rise in the total, the Associated General Contractors of America noted in an analysis of new Census Bureau data. Private residential and public construction each gained 0.7 percent compared with October’s totals, while private nonresidential construction edged down 0.1 percent.

“It is heartening to see three increases in a row for the total,” said Ken Simonson, the association’s chief economist. “But most categories showed more of a seesaw pattern over the past three months, indicating that construction spending remains fragile at best.”

Simonson noted that the strongest category appears to be power construction, which has climbed for four consecutive months from a seasonally adjusted annual rate of $75.7 billion in July to $85.7 billion in November. He added that power construction will be helped in 2011 by extension of tax credits for building wind and other renewable power facilities. Residential improvements appear to have rebounded for the past three months also, up $15 billion since August. Simonson cautioned, however, that the Census Bureau often makes large revisions—down or up—to this estimate.

Public construction reached a 16-month high of $318.5 billion, but is likely to decrease in 2011, Simonson observed. Major federal funding for military base realignment, Gulf Coast hurricane work and stimulus projects is expected to taper off in the second half of the year. Meanwhile, the new Congress and many governors have signaled that they intend to hold down spending on infrastructure among other categories, the economist noted.

Association officials urged leaders of the 112th Congress, which will be sworn in on Wednesday, to maintain a commitment to transportation and water infrastructure. Stephen E. Sandherr, the association’s chief executive officer, noted that proposed rule changes being considered by the incoming Congress jeopardize highway, bridge and transit investments. “Deferring needed improvements to our aging transportation network will undermine business activity today while saddling future taxpayers with ever-larger maintenance and repair costs,” Sandherr said. View Census Bureau data here.

Saturday, 1 January 2011

NC Bar Association invites construction industry input on lien law revisions

The North Carolina Bar Association's Construction Law Section Lien and Bond Law Revision Committee will host a "summit" of construction industry leaders at 2:00 pm, Tuesday, January 4 at the NC Bar Center in Cary. The NC Bar Center is located at 8000 Weston Parkway.

The Committee invites industry leaders and association representatives to attend the public meeting for the purpose of explaining and discussing proposed revisions to the NC Lien and Bond Law (Chapter 44A, Articles 2 and 3). The current Draft of the proposed legislation and Summary (12/28 Draft) is available by clicking on the following links:

Lien Revision

Lien Revision Summary

The drafting committee has worked to revise the statutes to comport more closely with current industry practices and to address case law and economic conditions which have revealed deficiencies or troubling sections of the existing law.

The Draft represents a snapshot of where the drafting committee is in its efforts to craft legislation that hopefully will gain general approval by all industry groups. It should not be considered a final Draft nor even a preliminary Draft fully endorsed by the Drafting Subcommittee or the Committee. Nor should it be considered a draft endorsed by the Construction Law Section or the NC Bar Association. The association realize that substance aside, there are probably numerous formatting issues to be addressed as well. With that lengthy disclaimer, the association looks forward to having as many industry leaders attend as are able to receive comments and input.

NC Bar Association Section Chairs, Section Legislative Chairs, members of the Construction Law Section, executive directors, and governmental affairs advisors for industry groups have been invited. If you plan to attend, RSVP to sections@ncbar.org. Should you have questions, email keith.coltrain@elmorewall.com or nehannah@vannattorneys.com.