Durability + Design
Follow us on Twitter Follow us on LinkedIn Like us on Facebook Follow us on Instagram Visit the TPC Store
Search the site

 

D+D News

Main News Page


Construction Outlook Positive for 2017

Friday, January 13, 2017

More items for Good Technical Practice

Comment | More

Nearly three quarters of American construction companies plan to increase headcounts in 2017, according to a survey released this week.

The Associated General Contractors of America and Sage Construction and Real Estate said in a survey announced Tuesday (Jan. 10) that 73 percent of contractors expect their 2017 payrolls to expand, citing growth in private and public sector demand in all segments. Massachusetts leads the market in hiring optimism, the survey said.

However, the downside of the news is that many firms remain worried about the availability of qualified workers and rising health and regulatory costs, according to AGC and Sage.

The figures were among the results of the joint survey, Expecting a Post-Election Bump: The 2017 Construction Industry Hiring and Business Outlook.

“Contractors have relatively high expectations for 2017 as they predict the economy and demands for all types of construction will grow,” said Stephen E. Sandherr, the association's CEO. “As a result of this optimism, many firms expect to expand their headcount next year.”

Job Outlook

While the association notes that 73 percent of firms say they will increase their headcount in 2017, it warns that the hiring will only lead to modest increases in the overall size of firms, however.

Sixty-six percent of firms report their planned hiring will increase total headcount between 1 and 25 percent, while only 6 percent report they will expand their headcount by more than 25 percent this year.

Among the 28 states with large enough survey sample sizes, 94 percent of firms in Massachusetts plan to expand their payrolls in 2017, more than in any other state.

However, in Illinois, 45 percent of firms report they plan to reduce headcount this year, more than in any other state.

Click here for a state-by-state survey results.

Optimism by Segment

All but a handful of contractors expect the overall construction market to expand or remain roughly the same in 2017 compared to 2016, the survey noted. A total of 46 percent of respondents said they expect a higher dollar volume of projects in 2017 than in 2016, versus just 9 percent who expect a lower volume, for a net positive reading (based on unrounded numbers) of 36 percent. The remaining 45 percent expect volumes to remain more or less constant.

Contractors had a positive outlook, on net, for all 13 market segments included in the survey.

AGC
AGC

The 2017 outlook was based on survey results from nearly 1,300 construction firms from all states and the District of Columbia.

Respondents are most optimistic about the outlook for both the hospital market and the retail, warehouse and lodging market, with 23 percent net positive response for both. Private offices—at 20 percent net positive results—came in second, followed by manufacturing, highway and public building construction.

Higher-education construction, K-12 schools and water and sewer construction all came in at 14 percent.

The only market segment where contractors are less optimistic this year than they were last year is the multifamily residential sector, where there is an 11 percent net positive for the year compared to a 14 percent net positive last year. It is important to note, however, that most respondents completed this survey in the days and weeks following the elections and may have based some of their optimism on the recent growth in stock market values and the fact the President-elect Donald J. Trump has repeatedly promised to make new investments in infrastructure, association officials said.

Worker Shortages Loom

One reason many firms expect to make only slight increases to their headcounts is that they anticipate difficulty finding enough qualified workers to hire. Indeed, 73 percent of firms report they are having a hard time finding qualified workers. And 76 percent of respondents predict that labor conditions will remain tight, or get worse, during the next 12 months.

To offset the projected worker shortages, most firms report they are increasing pay and/or benefits to retain or recruit qualified staff.

Fifty-two percent report they have increased base pay rates, 35 percent report they are providing incentives and/or bonuses and 28 percent report they have increased contributions to employee benefits. Even as firms increase compensation, 52 percent report they plan to increase their investments in training and development in 2017 compared to 2016.

“Contractors remain quite concerned about labor shortages, tight margins and growing costs,” said Ken Simonson, the association's chief economist. “In particular, as additional older workers reach retirement age, firms will struggle to find qualified workers to replace them.”

Concerning Costs

In addition to coping with worker shortages, builders are also worried about the continued increase in health care and regulatory compliance costs, according to the survey.

Eighty-four percent of firms report the cost of providing healthcare for their employees increased in 2016, while 82 percent expect their healthcare costs will increase in 2017. And 41 percent of firms report they are worried about the growth in federal regulations.

architect of the capitol
Architect of the Capitol

Forty-one percent of firms report they are worried about the growth in federal regulations.

Even as firms spend more on health care and regulatory compliance, they are prepared to increase investments in information technology (IT). According to the survey, 35 percent of firms report they invested at least 1 percent of their revenue in IT last year. In addition, 40 percent say that their IT investments will increase in 2017. 

Contractors are also waking up to the fact that they need to better protect their data. Seventy-seven percent of respondents report they currently have an overall IT plan in place to prevent against hacking.

“With competition heating up for both projects and qualified staff, construction companies are relooking at how technology can help them meet these challenges head on,” said Jon Witty, vice president and general manager for Sage Construction and Real Estate, North America. “Contractors are not only increasing their investment in IT, they are becoming more strategic about securely applying information technology to all aspects of their business.”

Overall Takeaway

Association officials noted that overall economic conditions indicate 2017 should continue to be positive for the construction industry. But they added that it appears the survey responses are based as much in high expectations for the incoming administration and the President-elect’s commitment to investing in infrastructure, improving federal health care laws and reducing regulatory burdens.

“While the new administration and its stated policy objectives offer many reasons for optimism, there is a significant risk to the industry if the new Congress and administration under-deliver,” Sandherr said, referring to policy proposals the association is making.

“If plans to invest in infrastructure, reform healthcare laws and roll back regulations are delayed, many contractors will likely scale back their plans to expand headcounts.”

Sandherr added that the AGC has crafted two plans to help guide the administration and Congress and ensure they act quickly to deliver on their election pledges. The first plan is the association’s Agenda to Rebuild Infrastructure and the Construction Workforce, which outlines a series of steps federal officials should take to finance and fund new infrastructure investments and accelerate federal reviews. The second plan identifies regulations and executive orders that new administration should cancel, improve or reconsider.

The 2017 outlook was based on survey results from nearly 1,300 construction firms from all states and the District of Columbia.

   

Tagged categories: Associated General Contractors (AGC); Associations; Business conditions; Business management; Business matters; Construction; Jobs; Regulations; Trends; Workers

Comment Join the Conversation:

Sign in to our community to add your comments.

Advertisements
 
Novatek Corporation
 
Novatek Portable Air Filtration Systems
 
Air Scrubbers/Negative Air machines for restoration, abatement, dust & odor control, hazardous contaminant removal from job sites to clean rooms and hospitals. Portable, affordable!
 

 
Keim Mineral Coatings
 
Mineral Silicate Paints + Stains Fuse to Concrete
 
• Forms permanent chemical bonds
• Becomes part of the concrete
• Will never peel
• Looks completely natural
 

 
Shield Industries, Inc
 
FireGuard® E-84 Intumescent Coating - Shield Industries, Inc
 
Trust the certified protection of the industry’s most innovative intumescent coating FireGuard® E-84 to provide you with the 1 and 2 hour fire ratings you need.
 

 
 
 

Technology Publishing Co., 1501 Reedsdale Street, Suite 2008, Pittsburgh, PA 15233

TEL 1-412-431-8300  • FAX  1-412-431-5428  •  EMAIL webmaster@durabilityanddesign.com


The Technology Publishing Network

Durability + Design PaintSquare the Journal of Protective Coatings & Linings Paint BidTracker

 

© Copyright 2012-2018, Technology Publishing Co., All rights reserved