Construction Firms Add 48,000 Jobs in December as Sector’s Unemployment Rate Drops to 8.3 Percent, Employment Hits Five-Year High
Construction employers added 48,000 jobs in December 2014 and 290,000 for the year, the largest annual increase since 2005, as the sector’s unemployment rate fell to 8.3 percent, according to an analysis by the Associated General Contractors of America. Association officials said many firms are expanding payrolls to keep pace with growing construction demand, but are having a hard time finding qualified workers to fill key positions.
"Construction firms are clearly ramping up their hiring to keep up with swelling demand for construction,” said Ken Simonson, the association’s chief economist. "Demand for workers to construct apartments, pipelines and huge industrial projects is likely to remain robust in 2015.”
Construction employment totaled 6,166,000 in December, the highest level since March 2009, with a 12-month gain of 290,000 jobs or 4.9 percent, Simonson noted. Residential building and specialty trade contractors added a combined 13,500 employees since November and 132,100 (6 percent) over 12 months. Nonresidential contractors hired a net of 34,400 workers for the month and 158,200 (4.3 percent) since December 2013. The heavy and civil engineering construction segment, which includes pipelines, petrochemical and power plants, and public works construction, added 11,600 jobs in December and 57,900 (6.6 percent) over the year.
The number of workers who said they looked for work in the past month and had last worked in construction fell to 680,000 from 958,000 a year earlier. The latest total was lower than in any December since 2000. In addition, the average workweek for craft workers ("production and nonsupervisory employees”) lengthened to 40.1 hours, the most since the series began in 1947, as firms ask employees to work more overtime to make up for the difficulty in finding additional workers.
Association officials said the construction employment gains come as more contractors report having a hard time finding enough qualified workers to fill available positions. They urged Congress to act quickly to reform and increase funding for the Perkins Act, which funds most career and technical education programs in the country.
"We need to make sure our education system is giving students an opportunity to qualify for the high paying opportunities that the construction industry is creating,” said Stephen E. Sandherr, the association’s chief executive officer. "The more paths to success we give students, the more likely they are to succeed.”
Dodge Momentum Index Increases in December
The Dodge Momentum Index rose in December (see chart, page 12), increasing 4.0 percent from a revised 123.8 in November to 128.7 in December according to Dodge Data & Analytics. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. The Index is currently at its highest reading since February 2009 and is 17 percent higher than one year ago. The increases seen in the Index in 2014 are a signal that the construction recovery will continue into 2015.
The December rise in the Momentum Index was the result of greater planning activity in both the commercial and institutional sectors. The commercial sector rose 4.1 percent, while the institutional sector increased 3.8 percent. There were nine commercial building projects exceeding $100 million that entered into planning during the month: the $150 million phase 1 of the Google campus in Boulder, Colo., a $150 million retail complex in New Brunswick, N.J., the $135 million Monarch Hotel in Black Hawk, Colo., a $100 million office tower in Chicago, a $100 million office tower in Sunnyvale, Calif., and the four phases of the Cannon House office renewal in Washington, D.C., each phase valued at $100 million.
FMI Evaluates Executive Pay Trends
In the Dec. 29 white paper released by FMI, author Mike Rose shares an analysis of executive pay trends for the engineering and construction industry from 2008 through 2013. Key takeaways include the following:
• Long-term compensation and total compensation are heavily influenced by profitability and have seen the sharpest declines for the executive officers (CEO, CFO, COO and CAO).
• Executive total compensation has declined about 8 percent.
• Financial executives and business unit executives have seen the steepest declines in bonuses, reflecting the consolidation of executive power into the corporate suite and away from the business unit.
• The largest gains in bonuses reflect an emphasis on cost control, as well as project management.
Annually, the firm conducts a series of compensation surveys covering approximately 280 positions for the engineering and construction industries. Go to http://info.fminet.com/acton/media/9013/executive-pay-trends to download a copy of the "Executive Pay Trends” white paper.
Demand Softens, but Outlook for ABI Remains Positive
Buoyed by sustained demand for apartments and condominiums, coupled with state and local governments moving ahead with delayed public projects, the Architecture Billings Index has been positive for seven consecutive months. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to 12 month lead time between architecture billings and construction spending. The American Institute of Architects reported the November ABI score was 50.9, down from a mark of 53.7 in October. This score reflects a slight increase in design activity (any score above 50 indicates an increase in billings). The new projects inquiry index was 58.8, following a mark of 62.7 the previous month.
The AIA has added a new indicator measuring the trends in new design contracts at architecture firms that can provide a strong signal of the direction of future architecture billings. The score for design contracts in November was 54.9.
"Demand for design services has slowed somewhat from the torrid pace of the summer, but all project sectors are seeing at least modest growth,” said AIA Chief Economist Kermit Baker, Hon. AIA, Ph.D. "Architecture firms are expecting solid mid-single digit gains in revenue for 2014, but heading into 2015, they are concerned with finding quality contractors for projects, coping with volatile construction materials costs and with finding qualified architecture staff for their firms.”
Key November ABI highlights include the following:
• Regional averages: South (57.9), West (52.7), Midwest (49.8), Northeast (46.7).
• Sector index breakdown: multifamily residential (56.8), mixed practice (52.6), institutional (51.3), commercial/industrial (50.6).
• Project inquiries index: 58.8.
• Design contracts index: 54.9.
OSHA, Laser Institute of America Renew Alliance to Protect Workers from Laser Hazards
The Occupational Safety and Health Administration has renewed an alliance with the Laser Institute of America to help protect workers from exposure to beam and non-beam laser hazards in industrial, construction, medical and research workplaces.
"Workers unprotected from laser exposure can suffer serious eye and skin injuries including permanent blindness and tissue damage,” said Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels. "We will continue to work together to produce valuable safety and health information and training to protect workers using laser technology.”
During the five-year alliance, participants will provide annual training on the Best Practices Seminar on Laser Safety and develop a webinar training program based on the seminar, and distribute laser safety guidance products at safety conferences and exhibits. OSHA and LIA previously developed fact sheets on the effects of lasers on the eye and skin, hazards associated with using high-power welders and cutters, and materials for use during hazard analysis of workplaces with lasers. The alliance also developed a guidance document outlining 10 steps necessary to begin a laser safety program in the health industry, and conducted 18 Laser Safety Best Practices seminars that trained more than 500 OSHA compliance personnel on what to look for and ask when entering facilities that use lasers.
For more information, visit www.osha.gov.
2015 Demand for Cold Formed Steel and Construction Products Forecast to Be the Strongest Since the Downturn
Following seven years of slow and uneven growth in demand and pricing, 2015 will be the strongest year yet for cold-formed steel and related products, according to Kathryn Thompson, CEO of the Thompson Research Group and industry observer. In a forecast prepared for the Steel Framing Industry Association, Thompson notes that although the overall picture is improving there also are markets and segments that will be clear winners, as well as structural changes that will require companies to adjust.
"The main economic indicators certainly point to better days ahead, but the improved outlook or cold-formed steel framing really began in 2014 when there was a significant change in the pricing trends,” Thompson says. "Since 2009, every attempted price increase was followed by an equal or greater pricing decline. Pricing stabilized in 2014, and increased production volumes have established a platform for growth in 2015.”
Thompson says that these market conditions have created a sense of optimism among many who manufacture, distribute and install cold-formed steel framing. The monthly TRG Building Products Survey, which is a finger on the pulse of the industry, finds that contacts are confident that steel stud manufacturing and demand for construction products will be up nearly 10 percent for the year.
Looking at 2015, Thompson says that demand will be the strongest in markets that felt the worst effects of the Great Recession, states where energy is a key economic component, and coastal areas that can benefit from major projects outside the United States, like the Panama Canal expansion. New construction will be the key driver in both residential and non-residential construction markets, with growth between 5 and 10 percent. She also expects that the strong showing in multi-family that started in recent years will continue.
One of the most important trends that Thompson forecasts will gather steam in the coming year is a shift in corporate cost structures. "With the great recession and the uneven recovery still fresh in managers’ consciousness, companies are reluctant to load up on fixed costs, opting to rent rather than own and outsource work rather than expand staff,” she says. "Look for companies to also keep the focus on lowering costs through production and energy efficiencies, as well as shifting operations to states where the tax and labor laws are more favorable.”
"While we don’t see explosive growth in 2015, it should be a year when everyone finally has reason to believe that the recovery from the Great Recession is under way,” Thompson says.
To access the 2015 Market Forecast for Cold-Formed Steel Framing webinar, which was hosted by the Steel Framing Industry Association, contact email@example.com.
November Construction Starts Jump 13 Percent
At a seasonally adjusted annual rate of $677.8 billion, new construction starts in November climbed 13 percent from the previous month, according to Dodge Data & Analytics (formerly McGraw Hill Construction). Nonresidential building had a particularly strong month, lifted by the start of several unusually large projects, including two massive manufacturing plants and an airport terminal redevelopment. Meanwhile, residential building retreated in November, as multifamily housing settled back from its brisk pace in October. For the first 11 months of 2014, new construction starts (including non-building) on an unadjusted basis were $530.8 billion, up 7 percent from the same period a year ago.
The November statistics raised the Dodge Index to 143 (2000=100), up from a revised 127 for October and marking the strongest month so far in 2014.
Nonresidential building in November soared 32 percent to $256.7 billion (annual rate). A substantial boost came from a 253 percent increase for the manufacturing plant category, maintaining the often volatile behavior that’s been present this year. If the manufacturing plant category is excluded, nonresidential building in November would have still shown a moderate gain, rising 10 percent. The commercial building group in November grew 7 percent, resuming its upward track after easing back in the previous two months. Hotel construction posted a 15 percent November gain; office construction advanced 7 percent; and both stores and warehouses lost momentum in November, slipping 5 percent and 7 percent, respectively.
The institutional building group in November increased 12 percent, aided by a healthy gain for transportation terminal work, up 221 percent. Also showing growth was the public buildings category, improving 12 percent. On the negative side, educational facilities slipped 6 percent, and weaker activity was also registered by churches, down 18 percent, and amusement-related facilities, down 36 percent.
During the first 11 months of 2014, nonresidential building climbed 17 percent relative to the same period a year ago. Manufacturing plant construction surged 82 percent year-to-date, and the commercial building group increased 13 percent year-to-date, featuring gains for hotels, up 28 percent; office buildings, up 24 percent; and warehouses, up 15 percent; while store construction lagged behind with a 1 percent decline. The institutional building group grew 6 percent year-to-date, lifted by an 11 percent increase for educational facilities, which is the largest nonresidential building category by dollar volume. Other gains were reported for amusement-related facilities, up 10 percent; transportation terminals, up 8 percent, and public buildings, up 2 percent. Declines were reported for healthcare facilities, down 3 percent; and churches, down 12 percent.
Residential building in November fell 6 percent to $238.5 billion (annual rate). Multifamily housing retreated after its strong October performance, sliding 21 percent. Despite the decline, there were still a substantial number of large multifamily projects that reached groundbreaking in November, including 11 projects valued at $100 million or more. Single-family housing in November edged up a slight 1 percent, essentially holding steady with the flat activity that’s been present since the end of last year.
During the first 11 months of 2014, residential building grew 7 percent compared to a year ago, a much smaller increase than the 26 percent gain reported for full year 2013. Single-family housing was up only 2 percent year-to-date. Multifamily housing revealed a much stronger year-to-date performance, climbing 25 percent.
People in the News
NCI Building Systems, Inc., Houston, has named Don Riley president of group business segments. In this newly created position, Riley will join the senior leadership team reporting to the chairman, president and CEO of NCI. Riley will be responsible for driving profitable growth for NCI’s three business segments: metal coil coating, metal components and engineered building systems. He will oversee implementation of specific brand strategies, further development of shared services to reduce costs and collaboration to optimize solutions for NCI’s varied customer segments.
Riley brings more than 20 years of diverse experience to the role, and is known for delivering meaningful improvement through strategic planning, organizational development and multi-brand execution.
Fabral has appointed Jonathan Williams as plant manager at Fabral’s Lancaster, Pa., facility. With more than 30 years of manufacturing experience and 15 years of operational and sales experience in the building materials industry, Williams provides a substantial wealth of knowledge and insight.
Williams has held several significant industry leadership roles, most recently serving as Operations Manager at New York–based Weatheredge Building Products. Prior to this role, he spent nearly 20 years at Potlach Corporation where he held progressively demanding positions ranging from packaging specialist to materials manager.
Williams’s immediate focus will be to ensure that Fabral’s metal building products are manufactured, shipped and delivered to customers in a well-organized and effective manner.
BakerTriangle CEO Steve Baker has named David Long the new president of Triangle Plastering, Ltd.
Long has been working in the Baker Drywall Dallas office for eight years as project manager and has been part of some of the premier projects that office has completed. He will now manage the plastering division that installs, lath, plaster, stucco, stone, EIFS, acoustical plaster and veneer plasters.
Atlas Roofing Corporation, Atlanta, announced Jan. 6 that Steve Heaton will oversee product sales and marketing for the polyiso division including Atlas Roof Insulation and the Wall CI Board. He will succeed Tom Rowe, vice president of the Polyiso Division, who will retire from Atlas Roofing in early 2015 after spending more than 21 years with the company.
Heaton has been in the building products and materials industry since 1986. He has served in a number of sales, marketing and management roles, including working for James Hardie Building Products for 15 years. Most recently he served as the vice president of sales at Parex USA. He spent five years at Atlas Roofing Corporation when he served as the director of sales and marketing for the Atlas EPS division.
Companies in the News
Cascade Mfg Co, located in Cascade, Iowa, has opened a cold-formed steel truss production facility in Tyler, Texas, that. will be operational in the first quarter of this year
Industry veteran Emmett Koen will lead Cascade Mfg Co’s sales and marketing efforts in support of the new production site.
Products in the News
FastenersPlus.com now has more than 600 new products from Simpson Strong-Tie® available on its website. As with all of the products on FastenersPlus.com, each is available in bulk quantities, and custom price quotes are always an option.
New on the ’net
The Northwest Wall & Ceiling Bureau has launched a new website at www.nwcb.org. This new, easy-to-navigate site is fully connected to the NWCB’s association management system and provides members access to the latest information, registration for NWCB events and membership transactions.