Construction Trends

May 2009

USDOL Releases Model Notices for COBRA Subsidy under ARR Act of 2009
On March 19, the U.S. Department of Labor released four model notice packages that will enable group health plans and employers to provide notice on the availability of premium reductions and additional election opportunities under the Consolidated Omnibus Budget Reconciliation Act.

The changes are authorized by American Recovery and Reinvestment Act signed into law by President Obama on Feb. 17, 2009. The law made available a premium reduction and the additional election period as part of the administration’s Stimulus Package.

The department has developed four notice packages tailored to fit different types of plans and individuals:

• A general notice to be given to qualified beneficiaries covered by plans subject to the federal COBRA at the initial COBRA election opportunity.

• An abbreviated general notice, which may be furnished to individuals who elected and are still covered by COBRA.

• An alternative notice to be sent by issuers of group health insurance coverage subject to state continuation coverage laws.

• A notice of extended election periods for eligible individuals who declined or discontinued COBRA coverage.

Each package contains a summary of the premium reduction provisions, questions and answers, and forms to use in requesting the premium reduction (and COBRA coverage, if not already enrolled). You can download the four model notice packages from www.dol.gov/ebsa/cobra.html. The Web page also contains additional frequently asked questions to help dislocated workers, their families and their employers understand the requirements.

COBRA generally covers health plans maintained by private-sector employers with 20 or more full- and part-time employees. Under COBRA, most group health plans must give employees and their families the opportunity to temporarily continue their group health coverage when coverage would otherwise be lost for reasons such as termination of employment, divorce or death.

The American Recovery and Reinvestment Act makes several important changes to the requirements that contractors must meet in order to comply with COBRA. Grant Thornton LLP’s Construction group and Compensation and Benefits practice have identified key points that contractors and construction companies should be aware of in the new requirements:

• The changes are generally effective March 1, 2009, and require employers to pay 65 percent of COBRA continuation coverage premiums for "assistance eligible individuals” for up to nine months after their separation from service. The assistance eligible individuals pay only the remaining 35 percent of the premium.

• The United States Treasury will reimburse the employer that is responsible for the plan for the portion of the premium it pays (i.e., 65 percent) through a credit on its quarterly employment tax return (Form 941).

• An "assistance eligible individual” is generally defined as an employee who is involuntarily terminated between Sept. 1, 2008, and Dec. 31, 2009, and who elects COBRA coverage and pays 35 percent of the required premium amount.

To read Grant Thornton’s guidance New Group Health Plan COBRA Requirements, go to www.grantthornton.com/construction.

USCIS Reminds all U.S. Employers of Requirements to Use Revised Form I-9, Employment Eligibility Verification
U.S. Citizenship and Immigration Services issued a reminder that the revised Form I-9, Employment Eligibility Verification (Rev. 02/02/09), went into effect April 3 for all U.S. employers. The revision date is printed on the lower right-hand corner of the form.

The interim final rule, published Dec. 17, 2008 in the Federal Register, revised the list of documents acceptable for the Employment Eligibility Verification (Form I-9) process. Employers may no longer use previous versions of the Form I-9.

The revised list improves the security and effectiveness of the Form I-9 process. The list specifies that expired documents are no longer acceptable forms of identification or employment authorization. Allowing for expired documents makes it more difficult for employers to verify an employee’s identity and employment authorization and compromises the Form I-9 process.

Employers who do not have computer access can order Forms I-9 by calling the USCIS toll-free forms line at (800) 870.3676.

USCIS forms and information on immigration laws, regulations, and procedures can also be requested by calling the National Customer Service Center toll-free at (800) 375.5283.

Nonresidential Construction Jobless Rate Jumps in March
Employment in the nation’s nonresidential construction industry continues to fall as 15,400 jobs were lost in March, according an April 3 report from the U.S. Labor Department. For the first quarter of this year the industry shed 49,800 jobs, and on a year-over-year basis, job losses reached 90,700 from March 2008. Nonresidential construction employment now stands at 753,700.

Meantime, the residential building construction sector lost 18,000 jobs from February, the largest monthly decrease in the cycle. With that, the residential building sector lost 46,800 for the first quarter, still less than the job losses experienced by the nonresidential building sector. Total private construction employment, which includes specialty trade contractors, continues to drop as 126,000 jobs were eliminated in March.

Overall, national employment fell 663,000 for the month, 2,055 for the first quarter and 4,795,000 on a year-over-year basis. The unemployment rate grew to 8.5 percent for March, the highest level since late 1983.

"The March jobs report did not provide many surprises. The overall pace of job loss and the corresponding increase in the overall unemployment rate were predicted with near perfection by the community of economists,” said Associated Builders and Contractors Chief Economist Anirban Basu.

"These data are still informative however. Unlike previous periods in this economic cycle, the bulk of job losses for the first quarter of 2009 were in the nonresidential sector as opposed to the residential sector,” added Basu. "This suggests that the residential construction sector is much closer to its bottom than is the nonresidential construction sector, which is a relative newcomer to the ongoing downturn.

"The data also indicate major employment losses among specialty trade contractors, many of whom are no longer able to secure adequate business revenues in either the residential or nonresidential sectors,” Basu continued.

"As a growing share of the nation’s nonresidential construction contractors work through much of their remaining backlogs, job losses will persist and be quite large for months to come,” Basu said. "However, the stimulus package will likely help moderate these losses later in 2009 and into 2010.”

Private Nonresidential Construction Spending Edges Up in February
Construction spending in the private nonresidential sector rose 0.3 percent in February, according to the April 1 report by the U.S. Census Bureau. On a year-over-year basis, private nonresidential construction spending is down slightly at 0.2 percent. However, total nonresidential construction spending increased 0.5 percent on the month to $684.9 million from the revised January figure of $681.5 million. All in all, total nonresidential construction spending is up 1.3 percent from February 2008.

Gains were sporadic across the board. Only five of the 16 total nonresidential construction subsectors have recorded increases in construction spending on a year-over-year basis with manufacturing up significantly (up 63.3 percent) followed by more modest gains in educational construction (up 6.7 percent) and power (up 5.6 percent). Nine subsectors had increased spending on a monthly basis, including conservation and development (up 6.5 percent), lodging (up 4.6 percent) and manufacturing (up 4.1 percent).

Construction subsectors experiencing decreased spending on a year-over-year basis include communication (down 31.3 percent), commercial (down 22.3 percent) and amusement and recreation (down 11.4 percent). Those construction subsectors posting the largest decreases in spending on a monthly basis include communication (down 7.4 percent), water supply (down 3.4 percent) and power (down 2.6 percent).

Public nonresidential construction spending is up 3.4 percent from last February and increased 0.8 percent for the month. Residential construction spending continues to tumble, down 29.2 percent on a year-over-year basis and down 4.1 percent from January. Overall, construction spending is down 10 percent from the same time last year and down 0.9 percent from last month. This is the fifth straight month of decline.

McGraw-Hill Construction Releases Spring Update
McGraw-Hill Construction has released its 2009 Construction Outlook Spring Update, providing updated 2009 forecasts of construction starts for various project types.

The major findings of the forecast, authored by Robert Murray, vice president of economic affairs for McGraw-Hill Construction, include the following:

• New construction starts for 2009 are estimated at $463.1 billion, down 15 percent, but cushioned by support provided by the recently enacted stimulus legislation, the American Recovery and Reinvestment Act of 2009.

• Commercial building in 2009 will drop 27 percent, steeper than the 17 percent slide reported last year. The tight lending environment has made it extremely difficult to obtain project financing, leading to more projects being deferred or cancelled. All commercial project types will register declines in 2009, with the most severe retrenchment anticipated for hotel construction.

• Institutional building in 2009 will retreat 6 percent, as the weak financial environment takes its toll on educational and healthcare facilities. The stimulus funding will provide a lift to military facilities and energy upgrades for federal buildings, which will moderate this year’s overall institutional decline.

• Residential building in 2009 will drop an additional 31 percent, continuing the downward trend that has been under way since 2006. Similar declines are expected for single family housing (down 30 percent) and multifamily housing (down 31 percent). Steps taken in early 2009 to address the foreclosure problem should help to ease the rate of descent for housing as 2009 progresses.

Dietrich’s Framing System Receives Key Code Endorsement
Dietrich Metal Framing, Columbus, Ohio, obtained a key code endorsement for its Heavy Duty Stud (HDS) framing product. The HDS® Framing System is a multipurpose heavy-duty stud for headers, jambs, posts and built-up tube truss chords and webs.

HDS® studs received approval from the International Code Conference Evaluation Services (ICC-ES) in Report ESR-2374 certifying that it is a compliant building product and is approved for construction use even when not specifically named in existing codes. ICC-ES reports are accepted by almost every code jurisdiction in the United States.

Leading Environmental Groups List Georgia-Pacific Gypsum’s Tile Backer
Georgia-Pacific Gypsum LLC, Atlanta, is announcing that DensShield® tile backer has been listed by two leading environmental organizations. The Collaborative for High Performance Schools has listed DensShield tile backer on its low-emitting materials list. DensShield tile backer has also been listed by the GREENGUARD Environmental Institute as a microbial-resistant product.

To achieve GREENGUARD listing as a microbial-resistant product, DensShield was tested under controlled laboratory conditions to demonstrate its resistance to mold growth, in compliance with ASTM Standard D 6329-98. It also exhibited the highest level of performance for mold resistance when tested in accordance with ASTM D3273.

Based in California, CHPS is a national, non-profit organization that encourages the building of high performance schools by providing guidelines for school districts and design teams to construct learning environments that are healthy, efficient and comfortable. Throughout the country, the CHPS program has been regionally adopted to meet the needs of the varying climates and local conditions in states such as New York, Texas and Washington.

National Gypsum’s Joint Compounds Achieve GREENGUARD IAQ Certification
National Gypsum, Charlotte, N.C., has achieved GREENGUARD Indoor Air Quality Certified® status for its complete line of ProForm® BRAND joint compounds.

The GREENGUARD Certification ProgramSM is an industry independent, third-party program that has been certifying products for low non-toxic emissions since 2001. To achieve GREENGUARD Indoor Air Quality Certified status, National Gypsum’s products passed rigorous sample testing and review of the manufacturing processes to meet strict standards set by the GREENGUARD Environmental Institute, a globally recognized leader in indoor air quality, to determine their impact on indoor air pollution.

National Gypsum’s complete line of XP® interior gypsum board products also achieved GREENGUARD Indoor Air Quality Certified® status and GREENGUARD Children & SchoolsSM Certification earlier this year.

New ICC-ES Approval Confirms Compliance of CertainTeed’s Full CertaSpray™Spray Foam Insulation Product Line
CertainTeed Corporation, Valley Forge, Pa., announces that its CertaSpray™ closed-cell polyurethane spray foam insulation has been approved by the ICC Evaluation Service, Inc. The approval makes CertaSpray the only closed-cell foam insulation offered in the United States that is both approved by the ICC-ES and certified through the GREENGUARD® Indoor Air Quality and GREENGUARD Children & Schools program.

Through an analysis of CertaSpray, including testing, calculations and quality control methods, the ICC-ES evaluation report provides third-party verification to architects, contractors, specifiers and building officials that the product meets the 2006 International Building Code®, the 2006 International Residential Code® and the 2006 International Energy Conservation Code®. The comprehensive evaluation report, ESR-2669, will be available soon at icc-es.org.

AISI Standards Council Announces New Projects to Advance Cold-Formed Steel Design Practice
The Standards Council of the American Iron and Steel Institute will commence three new projects this year to improve or add to the tools available for cold-formed steel design. Under procedures approved by the American National Standards Institute, AISI’s Standards Council will facilitate this effort under its Committee on Specifications and Committee on Framing Standards.

The projects include the following:

• Development of a Supplement 1 to AISI S110-07, Standard for Seismic Design of Cold-Formed Steel Structural Systems—Special Bolted Moment Frames.

• Development of a Supplement 1 to AISI S213-7, North American Standard for Cold-Formed Steel Framing—Lateral Design.

• Initiation of a new project to develop a Beam Test Method for Cold-Formed Steel Diaphragms.

The Supplement to AISI S110-07 will address comments raised during the code development process by the Building Seismic Safety Council and the ASCE 7 Seismic Subcommittee.

The Supplement to AISI S213-7 will adjust provisions for shear walls sheathed with 27-mil sheet steel based on research conducted at the University of North Texas. It will also adjust values for diagonal strap-braced (concentric) walls to match the values approved by the Canadian National Committee on Earthquake Engineering for inclusion in the National Building Code of Canada seismic provisions.

Development of the Beam Test Method for Cold-Formed Steel Diaphragms will be assigned to AISI’s Committee on Specifications Subcommittee on Test Methods, with work beginning on a draft standard prior to its August 2009 meeting. The intent is to provide an alternative to the existing AISI Cantilever Test Method for Cold-Formed Steel Diaphragms that is suitable for cold-formed steel light-frame construction. It is envisioned that using a beam test method that more realistically simulates the design and in-place loading conditions will result in more economical design solutions.

For more news about steel and its applications, visit AISI’s Web site at www.steel.org.

CSI Announces New Revision Program for MasterFormat™
The Construction Specifications Institute is introducing a new annual revision process for maintaining and updating MasterFormat™.

"The change is designed to improve MasterFormat by offering a greater level of certainty and predictability when it comes to resolving proposed changes that we receive,” said CSI Executive Director and CEO Walter Marlowe, P.E., CSI, CAE.

Using a defined periodic updating process will provide a number of benefits to MasterFormat and its users:

• Greater predictability for numbers and titles by providing a limited, grouped set of revisions released at a predictable time each year.

• More certainty about when submitted proposals will be resolved.

• Improved capacity to keep pace with the volume of submitted proposals.

Proposals already received to revise MasterFormat and those submitted by April 30 will be eligible for consideration during the 2009 revision cycle. Proposals sent after April 30, 2009, will be considered for the 2010 revision cycle.

The MasterFormat revision process will continue to be conducted by the MasterFormat Maintenance Task Team, a committee of volunteers appointed by CSI, CSC and MasterFormat sponsors. The MFMTT’s annual revision review workshop will take place in late July, and results from that meeting will be announced in September.

For more information, visit www.masterformat.com.

TrusSteel, an ITW Company, Acquires Dynatruss
TrusSteel, A Division of ITW Building Components Group Inc. located in Haines City, Fla., has acquired the assets of Dynatruss, a supplier of cold-formed steel truss products. TrusSteel will maintain the DynatrussTM brand name and operate it as a subsidiary of TrusSteel. The DynatrussTM system will continue to be manufactured at the facilities of Allied Tube & Conduit, Inc., located in Phoenix, Ariz., and Harvey, Ill.

TrusSteel also provides pre-engineered framing solutions, design software, fabrication machinery and engineering services to the commercial and residential construction industry. More information can be found at www.trussteel.com.

People & Companies in the News
Super Stud Building Products, Edison, N.J., has hired Kevin Bielat as technical sales manager for the Mid-Atlantic region, based in Ellicott City, Md. Bielat’s sales and technical experience includes the American Iron and Steel Institute, the National Association of Home Builders Research Center, Crane Composites and Enduro Systems.

For the fourth straight year, the corporate research team at Selling Power identified Hilti, Tulsa, Okla., as one of the best manufacturing companies to sell for. Hilti finished eighth—just two points away from first place—in the magazine’s annual "50 Best Companies to Sell For,” a comparison and evaluation of the largest U.S. sales forces.

Focusing on companies with sales forces of 500 or more, Selling Power’s annual rankings identify companies with the most to offer salespeople. The rankings are based on scores in three key categories: compensation, training and career mobility. Within the category of compensation, the team looked at average starting salaries, incentive pay plans, availability of company cars and other benefit packages, such as health and wellness. In the training area, the time companies invest in both initial selling-skills training and product-knowledge training programs were examined. To assess the issues of career mobility, Selling Power looked at performance review frequency, sales force turnover and the number of salespeople promoted each year.

Hilti earned outstanding scores in every category, including tying for first place among manufacturers in the career mobility category. Compensation and training scores were also among the best, leading to Hilti’s continued good standing on the list. As the Selling Power editors note, "anyone entering the sales field should begin their efforts by taking a good look” at companies such as Hilti and others on the rankings list.

The Gypsum Association, Washington, D.C., announces the election of the following officers from the Board of Directors for 2009–2010:

Chairman – Charles J. Poandl, vice president of customer value, logistics and public affairs for the gypsum division at Lafarge North America Inc., Herndon, Va.

Past Chairman – Gerard P. Carroll, senior vice president of manufacturing operations and engineering for National Gypsum Company, Charlotte, N.C.

First Vice Chairman – Stephen P. Raley, vice president, gypsum at Temple-Inland, Diboll, Texas.

Second Vice Chairman – Leo J. Bissonnette, director of innovation for Georgia-Pacific Gypsum LLC, Atlanta.

Treasurer – John K. Donaldson, president of CertainTeed Gypsum, Inc., Tampa, Fla.

Secretary – Michael A. Gardner, executive director, Gypsum Association, Hyattsville, Maryland.

The officers were elected at the recent meeting of the association’s board of directors in Nashville, Tenn. All terms are for one year and are effective May 1, 2009.

Members of the American Subcontractors Association elected Darlene East, president of Holes Incorporated, Houston, Texas, as the association’s 2009–2010 president, ASA announced at its Business Forum and Convention 2009 on March 6, 2009.

When East begins her one-year term as ASA president on July 1, 2009, she will serve as the principal spokesperson of the association and connect with other construction industry leaders to identify and pursue common goals that promote the interests of subcontractors and the construction industry. She will also preside at meetings of ASA’s board of directors, executive committee and the membership of the association.

ASA members elected three other national officers to one-year terms beginning July 1, 2009: 2009–2010 ASA Vice President Timmy McLaughlin, Austin Construction Company, Summerville, S.C.; 2009–2010 ASA Treasurer Kerrick Whisenant, Cornerstone Detention Products Inc., Tanner, Ala.; and 2009–2010 ASA Secretary Walter Bazan Jr., Bazan Painting Company, St. Louis, Mo.

ASA members elected five individuals to three-year terms on ASA’s board of directors beginning July 1, 2009: Susan Baxter, Corbins Service Electric LLC, Phoenix, Ariz.; Kevin Conboy, Southwest Lath & Plaster, Albuquerque, N.M.; E. Scott Holbrook Jr., Crawford & Bangs, Covina, Calif.; Greg Kanning, Dumas Hardware, San Antonio, Texas; and Linda Lucas, Hess Sweitzer Inc., New Berlin, Wis., Their terms begin July 1 as well.