Good News Bad News. Again.

 

Construction firms added 14,000 new jobs in April, the second consecutive month of employment gains for the industry, according to an analysis of new federal figures released today by the Associated General Contractors of America. After more than two years of dramatic job losses, the construction industry is once again adding jobs, thanks primarily to the increasing number of stimulus-funded projects now underway, the association noted.

“As today’s report makes clear, the impacts of the stimulus are now being felt across a much broader section of the construction industry,” said Ken Simonson, the association’s chief economist. “The good news is the stimulus is for now turning the tide on construction employment; the bad news is the stimulus is temporary while the construction downturn will be protracted.”

The stimulus, acknowledged as a life vest for a ravaged industry that may well not have been able to stay afloat without it, is continuing to make a difference, albeit still a little unpredictably, but the end of it influence is at least in sight

Simonson still has that uncertainty about progress on any new six-year highway bill that might pick up where the stimulus leaves off. Both Simonson, and executives with construction companies around the country are well aware that without “something” reliable in place the construction industry cannot finally expect to reach safety.  

Simonson and six construction company executives were speaking today on a media conference call.

According to Simonson up until the spring of this year the stimulus was “too little too late” in helping the highway construction industry, and “too many projects just got bogged down in red tape.” Now, he says, more stimulus projects are being worked on than ever since the act was passed. But, he said, construction employment will face “significant declines once the stimulus runs out.” And as it begins to run out, states will continue to be hard pressed for funds. Simonson predicted that “state and local spending is unlikely to grow until 2012.”

The best way out, he said, was a six year bill. When and how? Well, that’s not something we can predict he conceded.

The contractors on the call, including Ted Aadland, CEO & President, Aadland Evans Constructors, Portland, OR;  David Howard, President & CEO, Koss Construction, Topeka, KS; Mark Hall, President, Hall Construction, Howell, NJ; Jamey Sanders, Vice President, Choctaw Transportation Company, Dyersburg, TN; and Marco Navlet, Senior Director, McKinstry Construction, Seattle, WA, painted an all too familiar picture of the world of the stimulus at work  and the dire situation so many contractors find themselves in.

Here’s a sample:

Ted Aadland reports a huge increase in bidders for jobs at the same time the value of jobs is dropping. Where once there were three bidders it is not uncommon to find 15. And bids are coming in 15 – to 30-percent below expectations. Bidders are often contractors taking on work out of their home regions, or in disciplines they haven’t bid on before. Most of the competition is for smaller jobs. Bonding is getting tighter and risk is being examined and estimated more closely

David Howard argues that while “the stimulus program has bailed us out…we need a long term investment program” to stay in business in a healthy way.

Mark Hall says in his region it is not uncommon to see 20 or 30 bidders below cost. “We bid at cost on one job and we were the ninth bidder.”

Jamey Sanders said it would have been “very difficult to keep the doors open… if not for the stimulus.”   A company division in highway and bridge construction is running only 2/6 asphalt plants and 2/5 paving crews. In that division where employment is normally 300-350 there are now 250 employees, 94 of which can be attributed to the stimulus. “There is not a bright long term outlook….Unless we get a multi year system of funding for our highways and waterways we have a very bleak outlook.”