The Building Tradesman Newspaper

Wednesday, February 04, 2015

Contractors 'extremely optimistic' for 2015 prospects

By The Building Tradesman

The nation’s building industry may be primed for a breakout year in 2015, with 80 percent of construction contractors planning to expand their payrolls.

That’s according to a survey called Ready to Hire Again, the 2015 Construction Industry Hiring and Business Outlook, released Jan. 21 by the Associated General Contractors.

“Contractors are extremely optimistic about the outlook for 2015,” said Stephen E. Sandherr, the AGC’s chief executive officer. “Indeed, if their predictions prove true, industry employment could expand this year by the most in a decade.” The Outlook was based on survey results from over 900 construction firms, both union and nonunion, from 48 states and the District of Columbia.

Sandherr noted that the number of firms planning to add employees – 80 percent – in 2015, is significantly higher than in 2014, when only 57 percent of firms report they added to their total headcount. However, many firms that plan to hire this year expect to make only modest increases, with 90 percent of the firms that expect to add employees reporting they will expand by one-quarter or less this year.

Among the 23 states with large enough survey sample sizes, 95 percent of firms in Virginia plan to expand their payrolls in 2015, more than in any other state. Meanwhile, 15 percent of firms in Utah report they plan to reduce headcount this year, more than in any other state.

Michigan did not have a large enough respondent sample size to be included in the individual states survey. But in the Midwest region, 63 percent of contractors surveyed expected to add employees, while 22 percent expected no change. Of those who expected to hire, 92 percent said they expected to hire 15 or fewer new workers.

Some other takes from the survey:

*Private sector growth, not public, is expected to drive the industry in 2015. Contractors are most optimistic about the retail/warehouse/lodging segment, as well as the manufacturing, private office and energy construction segments.

*Public contracting is expected to pick up, too, especially projects that aren’t dependent on a dysfunctional Congress. Contractors are also optimistic about some public sector construction segments, especially those segments that aren’t entirely dependent on federal funding. They gave a “net positive” outlook for water and sewer work by 24 percent, followed by 16 percent for highway work.

*Credit conditions appear to be less of a concern for contractors in 2015 as they were during the height of the downturn, association officials added. Only 7 percent of firms report having a hard time getting bank loans this year while only 24 percent report customers’ projects are being delayed or cancelled because of tight credit conditions.

*Seventy-nine percent of responding firms report they plan to purchase new construction equipment in 2015 and 81 percent plan to lease new equipment.

“Despite the overall optimism, some challenges remain for the industry,” said Ken Simonson, the association’s chief economist. “In particular, as construction firms continue to expand, they will continue to have a difficult time finding enough skilled construction workers.”

Among respondents who are trying to hire workers, 87 percent report having a hard time filling key professional and craft worker positions. In particular, 76 percent of firms that are hiring report having a hard time finding qualified craft workers while 62 percent say the same about professional positions such as project managers, supervisors and estimators.

Simonson noted that as the supply of construction workers tightens, compensation levels appear to be rising. Fifty-one percent of firms report they have increased base pay rates to retain construction professionals and 46 percent have done the same to retain skilled craft workers. A quarter of firms report they have improved their benefits packages to retain construction professionals and one-in-five firms has done the same to retain craft workers.