It all makes perfect sense: when construction spending is strong, contractors spend the bucks for new or new-to-them equipment. But now construction spending is mired in a triple whammy — the much-ballyhooed stimulus money has not lived up to its promise, housing remains mired and now highway reauthorization funding is in extension limbo.
As a result, says a new study by IHI Global, the Association of Equipment Manufacturers and Associated Equipment Distributors, “the construction equipment industry is in the midst of a contraction unprecedented in the post-war era.” This year “will be one of the most challending years that the construction industry has faced,” says the report, with spending on construction equipment falling 50 percent from its peak value in 2006.
The direct and indirect impacts of the current recession on construction will be approximately 550,000 jobs on a peak-to-trough basis, says the study. The country has lost 6.9 million jobs in this recession, and “of that total, 8 percent can be linked the downturn in construction equipment purchasing. The study points out this loss is much deeper than the jobs lost in the finance and insurance industries, industries that received government bailouts.
The study was released as part of the “Start Us Up USA!” campaign that will be launched by the associations in Las Vegas today.