Construction Trends

July 2007

Construction Industry Reacts to Immigration Reform
On June 7, conservative Republicans in the Senate defeated proposed legislation that would allow the 12 million illegal immigrants in the United States to apply for residence visas and eventual citizenship, crack down on employers of undocumented workers and improve border security. The Senate had been debating major comprehensive reform legislation, S. 1348, but the legislation failed to advance because some senators voted to permit more amendments.

According to The Washington Post, "The guest worker provision at the heart of the dispute … would have allowed as many as 200,000 foreign laborers a year into the country.”

Five days later, President Bush made what the press called "a rare trip to Capitol Hill” to meet with Senate leaders to try to revive the White House–supported immigration bill.

By June 14, Senate lawmakers were finalizing an amended reform bill that would be put up for a vote. At that time, more than 100 amendmets had been filed. Passage of any immigration-related laws remains uncertain as we go to press, but many in the media are predicting that nothing will be resolved before members of Congress leave for their summer recess. When they get back to work on Sept. 4, it is predicted that the debate will continue but that nothing will be resolved until after there is a new president in the White House.

In the meantime, construction industry groups are voicing their opinions about the events that have taken place.

The Associated Builders and Contractors has expressed disappointment over the U.S. Senate’s failure to move forward on comprehensive immigration reform legislation.

"The fact remains that something needs to be done to fix our broken immigration system,” said Dave Meyer, 2007 ABC national chairman and founding partner of The Meyer Companies, Lee’s Summit, Mo. "To help fill the ever increasing demand for workers in the construction industry, comprehensive immigration reform needs to be addressed in the 110th Congress.”

ABC continues to believe that any effective reform legislation must secure our borders, create a workable system to determine an employee’s legal status and create a usable temporary worker program to meet the increasing labor demands of the construction industry.

"Leaving this issue sitting in limbo is not the best solution to address our nation’s immigration dilemma,” added Meyer. "We are disappointed that the immigration bill was pulled from consideration and we call on the Senate to resume debate on this important legislation as soon as possible.”

The National Association of Home Builders is calling on the negotiators to proceed cautiously regarding Title III language. NAHB said in a press release that "any provision that would hold general contractors responsible for the hiring decisions made by their subcontractors could have significant repercussions for the nation’s business community.”

"Such a change in our immigration laws would be unfair, disruptive and almost impossible to enforce. In effect, U.S. employers would be required to literally verify the legal status of millions of workers they never hired. For residential construction, this would drive up the cost of housing and devastate an industry already reeling from the effects of the worst housing downturn in almost two decades,” said Jerry Howard, NAHB’s executive vice president and CEO.

Howard continued: "It makes absolutely no sense to deputize the business community to enforce laws that the federal government has been unable and unwilling to enforce. The Senate needs to put the responsibility of verifying a person’s immigration status where it really belongs—with the employer who hires and pays them.”

The American Subcontractors Association Inc. praised President Bush for his June 12 visit to Capitol Hill, where he met with Republican legislators to advance the cause of comprehensive immigration reform.

"ASA applauds the president for calling on Congress to pass, without further needless delays, comprehensive immigration reform legislation,” said 2006–2007 ASA President Stephen Rohrbach, CPC, president of F.A. Rohrbach Inc., Allentown, Pa. "Killer amendments that block comprehensive immigration reform do not serve the American people, who demand action. The American people understand that there is a fundamental choice to be made between action and inaction—between change and the status quo. ASA agrees with them and with President Bush that comprehensive reform won’t happen by itself. The time for Congress to act is now.”

ASA supports immigration reform legislation that
  • Addresses both future economic needs for workers through the creation of a guest worker program and practically addresses the undocumented workers already in the United States.
  • Creates an immigration system that functions efficiently for employers, workers and government agencies.
  • Creates a program that allows hard-working, tax-paying undocumented workers to earn legal status.
  • Ensures that U.S. workers are not displaced by foreign workers.
  • Ensures that all workers enjoy the same labor-law protections.
  • Strengthens national security by providing for the screening of foreign workers and creating a disincentive for illegal immigration.
  • Strengthens the rule of law by establishing clear and sensible immigration laws that are efficiently and vigorously enforced.
"Should passage not occur, comprehensive immigration reform’s promise of enhanced national security and economic well-being would be that much further away,” said ASA Manager of Government Relations Freeman Smith. "As of June 12, S. 1348 did not contain all the elements ASA wants, but it does represent a workable compromise. ASA is hopeful that provisions such as those in S. 1348 creating an electronic system for verification of eligibility to work would make compliance easier for subcontractors and help create a safe harbor for compliant businesses.”

NAHB to Launch National Green Building Program
The board of directors of the National Association of Home Builders voted June 10 to approve the creation of a national green building program to provide a template for voluntary, market-driven green building all over the United States.

The new program, which will be released in early 2008, will be based on the National Green Building Standard, a model for residential construction and renovation written by builders, architects, environmentalists and product experts. This standard is the result of a cooperative effort between NAHB and the International Code Council and is based on NAHB’s Model Green Home Building Guidelines, which are the foundation of more than 20 green building programs created by state and local home builder associations throughout the country.

"With a national program, home buyers can be assured that their home is truly green, whether they live in Seattle or Savannah, in a condo or a ranch house, and whether they’re renovating or buying new,” said NAHB President Brian Catalde, a home builder from El Segundo, Calif.

Like the Model Green Home Building Guidelines and the standard, the National Green Building Program takes into account a home’s lot development, use of resources, energy and water efficiency, indoor environmental quality, durability and ease of maintenance, as well as the builder’s efforts to educate home owners.

The program will be housed at the NAHB Research Center, which is also serving as the secretariat for the residential green building standard development process. The standards process is certified by the American National Standards Institute, for which the Research Center is an accredited developer.

The National Green Building Program will include an interactive, Web-based certification system as well as other tools and resources for builders and certifiers, and a national registry of green builders and green homes.

Existing local programs that meet quality assurance benchmarks and performance criteria can become part of the national program—without costly additional certification fees.

April Construction Slides 5 Percent
The value of new construction starts fell 5 percent in April to a seasonally adjusted annual rate of $565.1 billion, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. Both nonresidential building and residential building experienced a slight loss of momentum, while the public works sector dropped sharply.

For the first four months of 2007, total construction on an unadjusted basis came in at $184.6 billion, down 17 percent from the same period a year ago. The year-to-date decline for construction starts reflects the comparison to the elevated activity in the first four months of 2006, which was just prior to the time when the single-family correction grew pronounced. Excluding residential building from the year-to-date statistics, new construction starts in the first four months of 2007 were down 3 percent from last year.

The April statistics lowered the Dodge Index to 120 (2000=100), compared to a revised 126 for March.

Nonresidential building in April slipped 3 percent to $191.8 billion (annual rate). For the commercial structure types, moderate declines were reported for stores, down 4 percent, and offices, down 9 percent. The slower rate of contracting for offices was cushioned by the start of several large projects, including $183 million related to renovation work at the Pentagon in Arlington, Va., and $166 million for a new office building in the Los Angeles area. On the plus side, April showed stronger activity for warehouses, up 8 percent; and hotels, up 17 percent.

The manufacturing plant category in April receded 7 percent, with the large projects for the month including groundbreaking for a $170 million ethanol plant in Indiana and an $80 million pharmaceutical plant in Massachusetts.

For the institutional side of the nonresidential market, weaker activity was reported for three of the smaller categories: churches, down 6 percent; transportation terminals, down 48 percent; and dormitories, down 60 percent from an exceptionally strong March. The educational building category in April held steady, at a level 6 percent higher than the average monthly rate for 2006. Helping to keep the educational building category moving at a brisk pace was a strong volume of public school construction in such states as California, Minnesota Ohio, Pennsylvania and Texas, as well as the start of a $175 million museum expansion in Boston.

Healthcare facilities in April grew 1 percent, with large hospital projects started in West Virginia ($169 million) and Alabama ($116 million). The public building category increased 11 percent, helped by the April start of a $150 million detention facility in West Virginia, while the amusement category (arenas, convention centers) advanced 20 percent.

Residential building, at $273.4 billion (annual rate), retreated 1 percent in April. Single-family housing registered a 3 percent decline in dollar volume, due to this performance by major region: the South Atlantic and West, each down 6 percent; the Midwest, down 3 percent; the Northeast, down 2 percent; while the South Central ran counter with a 5 percent gain.

The sharp pullback by investor-led demand over the past year continues to dampen the housing market, keeping the inventory of unsold homes at a high level. At the same time, the cost of financing remains low, as the 30-year fixed mortgage rate for April averaged 6.2 percent, essentially the same reading that was reported for the first three months of 2007.

Multifamily housing in April improved 5 percent, in what’s likely a brief departure from the downward trend that’s been present for this structure type during the latter half of 2006 and the initial months of 2007. Boosting the multifamily category in April was the $216 million condo portion of the Mandarin Oriental hotel/condo tower in Chicago, plus major multifamily projects in Honolulu ($197 million) and Boston ($100 million).

The decreased volume for total construction during the first four months of 2007 was the result of this performance by major sector: residential building, down 29 percent; nonresidential building, down 3 percent; and nonbuilding construction, down 2 percent. In coming months, it’s expected that the decline for residential building will moderate, exerting less of a downward pull on the year-to-date amount for total construction.

For the five major U.S. regions, total construction during the first four months of 2007 relative to last year was the following: the South Central, down 9 percent; the Northeast, down 14 percent; the Midwest, down 15 percent; the South Atlantic, down 18 percent; and the West, down 25 percent.

National Lab Validates Benefits of EIFS
"[Exterior insulation and finish systems] outperformed all other walls in terms of moisture while maintaining superior thermal performance.” That’s what the Oak Ridge National Laboratory in Oak Ridge, Tenn., said about walls made of EIFS, comparing them favorably to other common types of wall construction based on 15 months of research released in the fall of 2006.

These preliminary findings are part of a three-year research program.

The government research initiative scientifically recorded the performance of EIFS with walls made of brick, stucco, concrete block and cement board in a field installation.Initial results show that EIFS walls are better at protecting buildings from moisture while offering superior thermal control.

The researchers used instrumentation that precisely and continuously monitored and recorded the side-by-side performance of typical wall assemblies in defending against common environmental challenges such as moisture and temperature swings during the 15-month period. Moisture intrusion can cause rust, rot and other structural damage. The study found that house wraps permitted more moisture accumulation than water-resistive barrier coatings, which are sprayed on. In addition, "the use of polyethylene vapor retarders is not a good strategy,” the summary says.

The study also provides insights as to the best ways to insulate buildings. "Insulation is more beneficial when placed toward the exterior,” says the summary.

Business Developments

Reward Wall Systems, Inc®, Omaha, Neb., acquired Tritex™ ICF Products on June 1, 2007. As a part of the transaction, Reward gained access to Tritex’s line of products, intellectual property and supporting services.

The Millennium Group, Denver, has signed a wholesale agreement with Northbrook Contractor Supply of Northbrook, Ill., for the sale of its patented metal drywall fastener that hard fastens to both the drywall and the framing and for the 100 percent recycled plastic version.

Northbrook Contractor Supply is a distributor of building materials, power tools and specialty fasteners throughout Northern Illinois and has been servicing residential and commercial contractors for more than 25 years.

People & Companies in the News

Bonsal American, Charlotte, N.C., has promoted Dale Thornbury and Jared Ziegler to regional sales managers for the Bonsal American Building Materials Independent Group. The BMI group includes building supply retailers, independent hardware retailers and home centers.

Thornbury has been appointed to the Central region, and Ziegler has been appointed to the Northeast region.

JLG Industries, Inc., McConnellsburg, Pa., will supply three aerial work platforms to the FABTECH Service Technician Education Center in Oshkosh, Wis. FABTECH is a new partnership between Fox Valley Technical College and FABCO Equipment Inc., the Caterpillar® dealer for Wisconsin and Upper Michigan, and is located in the hometown of JLG’s parent company, Oshkosh Truck Corporation.

The FABTECH program provides a certificate series of courses focused on developing entry-level technicians in the construction equipment, engine and electric power generation fields. The Rental Service Technician career track includes extensive hands-on experience with aerial equipment. These are accredited programs that will provide students with opportunities to be on-the-job in less than a year.

Students who successfully finish one of the four different career tracks in the program will receive a certificate of completion and can apply the credits earned toward an associate degree in selected fields. They also will have the opportunity to be employed at one of FABCO’s 23 facilities.

More information about the FABTECH Service Technician Education Center can be found on FABCO’s Web site, www.fabco.com, and at the Fox Valley Technical College site, www.fvtc.edu.

Flex-Ability Concepts, Oklahoma City, has announced that Jinmoon Woo and Ning Liu are the co-winners of its biannual scholarships awarded for innovative design using its product.

The scholarship competition is open to graduate students in the College of Architecture at The University of Oklahoma.

"Some students used Flex-C Trac® in distinctive architectural applications while others used it in the construction of furniture and works of art,” said Robert Widmer, Flex-Ability Concepts’ marketing manager.

Flex-Ability Concepts awarded $1,000 to each first-place winner.

Fabcon, located in Savage, Minn., has promoted Jeffrey Prewitt to vice president of corporate field operations. The company also hired Stephen Maass as director of estimating and Tracy Engstrand as director of human resources.

Prewitt’s new responsibilities include the continued development of Fabcon’s corporate field operations department, with a focus on safety, customer service and financial success.

Maass’ new responsibilities include overseeing the training of estimating department personnel, and maintaining and creating estimating procedures.

Engstrand will oversee the human resource functions for Fabcon’s four manufacturing plants.