Tribune file/Debra Reid - A continuing decline in the construction industry may lead to more lay-offs in the building trades both locally and across the nation.
“I think we’re going to be slow to return to the same workforce levels and employers will be slow to hire these folks back right away,” said Mike Dillon, executive director at BANN. “Everyone is being fairly cautious and until there’s a demand and we get through this inventory due to foreclosures and bank-owned properties, you’re not going to see major housing growth.”
The Associated General Contractors of America, a national group that represents the interests of its member commercial contractors, released a survey this week that predicts a drop in private-sector work, fewer equipment purchases amid widespread uncertainty about 2010 hiring and layoff plans.
Right now there is about 80 percent unemployment among those in the home-building industry, according to Dillon.
“It’s pretty bad,” he said.
Local contractors agree.
“2010 will be a challenging year for the construction industry in Nevada,” said Jim Grogan, business manager for Granite Construction Company. “As the National AGC has reported, Nevada’s construction industry has been one of the hardest hit states in the nation if not the hardest.”
Grogan added that Granite can only hire staff if there is work for them to do.
“Unfortunately for the industry and for our economy, this year’s construction outlook is far from positive,” said Stephen E. Sandherr, the AGC’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 2009 and early January, shows that privately funded construction activity is likely to decline even further this year. Sixty-four percent of responding contractors expect that demand for new manufacturing facilities will decline, while 71 percent expect demand for new retail, warehouse and lodging facilities will drop.
As a result, 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 10 percent say they are now submitting bids so low they will actually lose money on the projects. But they do it anyway just to stay in business.
Sandherr added that many construction firms are uncertain that they’ll be able to add staff following a year of record layoffs. In 2009, 73 percent of firms said they laid off employees, averaging 39 layoffs per firm. For 2010, however, 60 percent of firms say they are unsure whether they will be able to add new staff or be forced to make further cuts.
“Perhaps they can’t imagine who else to let go,” Sandherr added.
Nevada’s portion of the survey indicates that all of the responding contractors laid off employees in 2009 while only 30 percent added employees. Nevada contractors’ outlook for 2010 indicate that 30 percent of contractors expect to both add staff and lay off this year.
All is not bleak, Dillon added. He pointed to lower market prices and mortgage interest rates and the extension of the federal tax credit for home purchases as contributing to an uptick in home sales. The numbers for November 2009, the most recent data available, showed existing home sales down slightly from the previous month but up 91 percent from the same month in 2008, according to the Reno/Sparks Association of Realtors.
The national association also mentioned the federal stimulus as being “one of the relatively few bright spots for the industry.” Thirty-one percent of contractors responding to the survey say they were awarded stimulus funded projects. Of these, 46 percent say the stimulus helped them retain an average of 24 employees each. Another 15 percent say the stimulus helped them to add an average of 10 new employees per company while 12 percent cite the stimulus as driving new equipment purchases.
In Nevada, however, stimulus funds helped half of responding contractors retain staff that otherwise would have been laid off. No one in Nevada said the stimulus helped them add staff or buy new equipment.
Rounding out the survey was a question about when contractors expect the construction market to grow again. Half of Nevada contractors said 2011, 40 percent said 2012 and 10 percent said 2013. None expect growth this year.
“We do not expect to see much improvement in 2010 but we are hopeful to see improvement in 2011,” Grogan said. “With respect to layoffs, they are a part of our industry because of the seasonality of our work.”
Of the 700 contractors who participated in the association’s survey, 37 were from Nevada.
Even before the "crash", if you didn't speak Spanish, it was hard to get a job.
These Contractors are not working cheaper, but they are paying about 1/3rd of what the wages should be, these illegals are making what I was making in 1982 for the same work.
Can't get more anti-American than that, they are helping to destroy our economy by pure greed, just like the bankers.