Nearly 90 Percent of Contractors Say Industry Will Not Recover in 2010

Nearly nine-in-ten contractors say there will be no recovery in 2010 as part of a new national construction hiring and business outlook forecast released by AGC of America. As a result fewer contractors plan to purchase construction equipment and after a year of near-record industry layoffs many doubt they’ll be able to hire new staff this year.

“Unfortunately for the industry and for our economy this year’s construction outlook is far from positive” said Stephen E. Sandherr the association’s chief executive officer. “As long as the construction industry remains mired in its own depression broader economic and employment growth will continue to lag.”

The outlook which is based in part on survey responses from nearly 700 construction firms submitted in late December and earlier this month shows that privately-funded construction activity is likely to decline even further this year. Indeed 64 percent of responding contractors expect demand for new manufacturing facilities will decline while 71 percent expect demand for new retail warehouse and lodging facilities will drop.

Survey data is broken down by state and among the Washington State-specific findings are:

  • WA contractors see upticks in 2010 for only the “Highway” and “Other Transportation” categories of construction.
  • 77% of WA contractor respondents laid off employees in 2009; 47% expect to lay off employees in 2010 (29% expect to add employees).
  • 80% say stimulus funding has helped them retain staff that would otherwise be laid off.
  • 17% of WA respondents say they have bid projects at a loss (nationally 11%).

Nationally the number of firms expecting to buy new equipment is down to 46 percent this year from 61 percent in 2009. Meanwhile 81 percent of firms report already having to cut profit margins in their bids just to stay competitive and another ten percent say they are now submitting bids so low they will actually lose money on the projects.

Citing examples like a DC-area county that is increasing its capital budget in light of the “limited time sale” Sandherr said the association was contacting Congressional and Administration leaders to urge them to invest in new construction activity. “If they act now they can save taxpayers millions on construction costs while immediately boosting employment and economic activity” Sandherr said.

Click here for the 2010 National Construction Hiring and Business Forecast.

Click here for state-by-state Construction Hiring and Business Forecasts for 29 states.

Click here for Steve Sandherr’s comments on the 2010 Construction Forecast.