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Report: Contractors Expect to Expand in 2018

Monday, January 8, 2018

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With 75 percent of construction firms planning to expand payrolls in 2018, reports indicate optimism for the industry, but concern over workforce shortages and infrastructure funding remains.

The anticipated payroll expansion can be attributed to forecasted strong economic conditions that result from “an increasingly business-friendly regulatory environment and expectations the Trump administration will boost infrastructure investments,” noted Stephen E. Sandherr, chief executive officer of the Associated General Contractors of America (AGC).

Industry Forecast for 2018

According to the AGC, the Expecting Growth to Continue: The 2018 Construction Industry Hiring and Business Outlook report (based on survey results from 1,000 firms in 49 states and the District of Columbia) indicates net positive reading for all types of construction is 44 percent—the highest recorded in the association’s Outlook survey series, which was started in 2009.

TonytheTiger, CC-BY-SA-3.0, via Wikimedia Commons

With 75 percent of construction firms planning to expand payrolls in 2018, reports indicate that things appear to be looking optimistic for the industry, but concern over workforce shortages and infrastructure funding remains.

Reported individual market segments are as follows:

  • Contractors across the nation remain most optimistic about the private office market segment, with a 22 percent net positive reading;
  • Transportation, retail, warehouse and lodging segments sit at a 21 percent net positive reading;
  • Water and sewer construction, at 20 percent;
  • K-12 construction, at 18 percent; and
  • Highway and hospitality construction both sitting at 17 percent net positive reading.

Other segments follow close behind, with multifamily residential and public building at 16 percent, and 13 percent net positive reading for power construction, 11 percent for higher education construction and 8 percent for federal construction.

Hiring Trends and Future Concerns

According to the AGC, 75 percent of firms plan to increase their headcounts in 2018, though the boost is slated to be 10 percent or less. Despite this optimism, 82 percent of firms anticipate recruiting and hiring qualified workers will remain difficult or become harder this year, with 78 percent of firms reporting current difficulties.

In order to attract new employees, 60 percent of firms indicated they had increased base pay rates, with 36 percent providing incentives and/or bonuses and 24 percent improving employee benefits/increased contributions. Otherwise, 56 percent of firms plan to further increase investment in training and development.

Ken Simonson, the association's chief economist, noted that 39 percent of firms said increased competition for projects was one of their biggest concerns, with 28 percent listing federal regulation growth as a top concern, and 24 percent also indicating they were concerned over lack of investments in infrastructure.

Information Technology Investments

In order to stay competitive and help with workforce shortages, firms also appear to be investing more in relevant information technology, with 50 percent indicating they spent 1 percent or more of revenue on it, and 43 percent reporting that they will increase their information technology investments in 2018.

“Increased competition for projects is driving contractors to advance their use of not only building information modeling, but cloud technologies,” noted Jon Witty, vice president and general manager for Sage Construction and Real Estate, North America.  

“This is particularly evident in the use of cloud-based mobile solutions on the job sites, where contractors are using mobile software for daily field reports, field access to customer and job information, employee time tracking and approval and the sharing of drawings, photos and documents.”

   

Tagged categories: Annual report; Associated General Contractors (AGC); Commercial contractors; Construction

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