Michigan's statewide construction employment is projected to remain about the same from 2006 to 2007 - but it will still be down about 10.5 percent from the peak level of 2000.

That work outlook for the near-term future of Michigan's construction industry may be the most significant tidbit of information to Michigan's Hardhats. But it wasn't the only one: earlier this month an industry leader offered one of the most comprehensive updates of the state of the state's construction industry in recent memory.

Ron Hausmann, president of Walbridge-Aldinger's Heavy, Civil and Special Construction Group, 2007 chairman of the Michigan Association of Constructors, and vice chair AGC-Greater Detroit Chapter, on Dec. 4 made a presentation at the annual Economic Outlook luncheon for the Economic Club of Detroit. He used information gathered from the Construction Association of Michigan, Associated General Contractors of America, McGraw-Hill Publishers, Ferris State University, the University of Michigan and the Engineering News Record.

Such a high-resolution snapshot of Michigan's construction industry has probably never been taken in recent years. Here are some highlights of Hausmann's speech:

• Michigan's eight-year-long economic downturn, according to the University of Michigan, is the longest such stretch since the Great Depression of the 1930's.
  However, Hausmann pointed out, "in spite of our recent Michigan economy, our construction workforce employment picture appears pretty positive. In fact we will need to develop more tradesmen and women, and engineers and architects to fill the gaps that are certain to hit us as 'boomers' move on.
  "Overall, our employment needs will remain strong and healthy as an industry, but different markets will have varying project needs. Skilled crafts in particular will continue to be needed to execute complex projects, which will continue in Michigan."
• Michigan's construction industry costs for 2006 will be about $15 billion, of which $11 billion dollars is wages. Michigan's construction industry employs 193,000. About 87,000 of these workers are employed in Southeast Michigan. The Michigan construction Industry contains about 26,600 construction companies, of which 10,600 are in seven counties in Southeast Michigan.
• Our state's construction industry probably generates $36 billion in overall Michigan economic activity. That is nearly 10 percent of the State of Michigan's $376 billion gross-state-product.
• According to one recent industry study, a majority of Michigan's construction companies are reporting increased sales in 2006 and a majority (60%) are projecting that their annual sales will increase.
• The 2007 construction outlook for Michigan offers good news for unionized construction sector - simply because union trades are not heavily employed in the troubled housing market. Hausmann said residential construction in Michigan dropped 40 percent in 2006, and will stay at that level in 2007. Other sectors are expected to stay the same or improve.
• In other building sectors in Michigan, according to Hausmann:
  • Office construction will be flat. So will retail.
  • Medical and hospital construction had strong starts in 2006, which will increase in 2007
  • Manufacturing & maintenance were up 10% in 2006, and will stay strong into 2007.
  • Educational enjoyed a very strong market in 2006, which will continue into next year.
  • Highways increased in 2006 by 25% and should jump another 12% into 2007
  • Waste and water will continue with 7-8 percent growth for several years.

Hausmann included national construction trends, also.

• Construction is the only segment of the U.S. economy projected to see increased labor growth between now and 2015. Projections show that the need for workers nationally will be 15% beyond current replacement availability. Nationally, the construction industry employs more than seven million workers.
• The U.S. construction industry represents about $1.2 trillion, or about 9 percent of our Gross Domestic Product.
• Most projections show that nationally, 2007 construction starts should be about the same as 2006, for the non-residential sectors.
• Looking into 2007, both nationally and in Michigan, the market sectors which have the worst outlook are a) motor vehicle-related construction b) homebuilding, and c) energy.
• The homebuilding slump nationally started in 2005 and will continue through 2007 and into 2008. There were over 2 million new home starts in 2005, but that rate is expected to steadily decrease to 1.6 million in 2007.That would be a 20 percent drop. Some experts, Hausmann said, indicate that in Michigan, new home construction is currently down by 62% measured over the last few years.
• The dramatic slippage in residential construction nationally masks an otherwise robust nationwide construction industry. Every non-residential segment of construction is not expected to decline in 2007.
• The worst of construction material price spikes (steel and metals) in 2005 and 2007 appear to be over, mitigated to some degree by the downturn in residential construction.