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Construction Trends

New Construction Starts Slipped 2 Percent to $421 Billion in 2011


For all of 2011, total construction starts slipped 2 percent to $421.4 billion, following the slight 1 percent gain reported for 2010, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. After the steep declines reported during the 2007–2009 period, when activity dropped a combined 38 percent, the overall volume of new construction starts has essentially stabilized at a low level during the past two years.




For all of 2011, the Dodge Index averaged 89.




Nonresidential building in 2011 dropped 4 percent to $154.8 billion, the same as the 4 percent retreat for 2010 but less severe than the 30 percent plunge back in 2009. Most of the downward pull in 2011 came from the institutional sector, which fell 14 percent. The two largest institutional categories, educational buildings and healthcare facilities, registered moderate declines of 12 percent and 9 percent, respectively. More substantial declines were posted by the smaller institutional categories: public buildings, down 14 percent; churches, down 15 percent; recreation-related projects, down 18 percent; and transportation terminals, down 29 percent.




The commercial sector in 2011 registered a 6 percent gain in dollar terms, a noteworthy change following the declines of 12 percent in 2010 and 42 percent in 2009. The upward push for the commercial sector in 2011 came from hotels, up 51 percent; and warehouses, up 18 percent; both showed improvement from extremely depressed activity in 2010. While stores and offices continued to lose momentum in 2011, with respective shortfalls of 1 percent and 6 percent, the declines were considerably more gradual than what occurred during the previous three years. Manufacturing plant construction in 2011 surged 61 percent, reflecting both a broad-based upturn for this category as well as the boost coming from several massive projects, which included a $3.0 billion coal-to-gasoline plant and two large semiconductor plants.




The 2011 amount for residential building came in at $123.4 billion, up 2 percent from the previous year, and barely maintaining the upward momentum that began in 2010 with an 8 percent increase. Single-family housing in 2011 retreated 2 percent in dollar terms, following the 6 percent gain during 2010 that reflected the lift to housing demand coming from the homebuyer tax credits that year. The regional pattern for single-family housing in 2011 showed declines in four of the five major regions: the Northeast, down 15 percent; the Midwest, down 5 percent; the West, down 2 percent; and the South Central, down 1 percent. The South Atlantic was the one region able to post a 2011 increase for single-family housing, rising 2 percent in dollar terms.




Multifamily housing in 2011 jumped 22 percent, continuing the upward trend that began in 2010 with an 18 percent increase. The regional pattern for multifamily housing in 2011 showed growth for all five major regions: the Midwest, up 5 percent; the South Central, up 14 percent; the Northeast, up 20 percent; the West, up 35 percent; and the South Atlantic, up 36 percent.




The 2 percent decline for total construction starts at the national level during 2011 was the result of mixed behavior at the five region level. Decreased activity for total construction was shown by three regions: the South Central, down 4 percent; the Midwest, down 9 percent; and the Northeast, down 12 percent. Increased activity for total construction was reported for two regions: the South Atlantic and the West, each up 6 percent, with substantial gains for new electric utility starts helping the total construction amount for each region.
List of Improving Housing Markets Expands to Nearly 100
The list of housing markets showing measurable improvement expanded by 29 metros in February to include a total of 98 entries on the National Association of Home Builders/First American Improving Markets Index, released Feb. 6. Thirty-six states are now represented by at least one market on the list.




The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. The February index adds some metropolitan areas that have been particularly weak; this is due to the fact that the IMI measures improvement from a bottom, and some of the hardest hit markets are showing signs of coming off of extreme lows. Keeping this in mind, notable new entrants to list in February include Miami, Boston, Detroit, Kansas City, Mo.; Portland, Ore.; Memphis, Tenn.; and Salt Lake City.




The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metropolitan area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list.




Seven markets dropped from the NAHB/First American Improving Markets Index in February as they experienced softening house prices. These metros include San Jose, Calif.; Washington, D.C.; Kankakee, Ill.; New Orleans; Worcester, Mass.; Jackson, Miss.; and Sherman, Texas.




A complete list of all 98 metropolitan areas currently on the IMI, and a separate breakout of metros newly added to the list in February, is available at: www.nahb.org/imi.





ABI Positive for Second Straight Month


After showing struggling business conditions for most of 2011, the Architecture Billings Index has now reached positive terrain in consecutive months. As a leading economic indicator of construction activity, the ABI reflects the approximate nine- to 12-month lag time between architecture billings and construction spending. The American Institute of Architects reported the December ABI score was 52.0, following the exact same mark in November. This score reflects an overall increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 64.0, down just a point from a reading of 65.0 the previous month.




“We saw nearly identical conditions in November and December 2010 only to see momentum sputter and billings fall into negative territory as we moved through 2011, so it’s too early to be sure that we are in a full recovery mode,” said AIA Chief Economist Kermit Baker, Ph.D., Hon. AIA. “Nevertheless, this is very good news for the design and construction industry and it’s entirely possible conditions will slowly continue to improve as the year progresses.”




Putzmeister and Sany Merge



Putzmeister Holding GmbH and SANY Heavy Industry Co., Ltd. announced Jan. 27 the signing of an agreement on the merger of both companies. Sany, together with the Chinese Private Equity company CITIC PE Advisors (Hong Kong) Limited as a minority shareholder, has acquired 100 percent of Putzmeister. The final closing of the deal is subject to approval by the relevant authorities and the customary closing conditions. No financial terms were disclosed.




Putzmeister develops, produces and sells construction machinery worldwide, especially concrete pumps, for the building and mining industries, as well as for tunnel construction and large-scale industrial projects. Sany, based in Changsha, China, is a large Chinese producer of construction machinery and market leader for concrete pumps in China, which is the largest and fastest-growing market for concrete pumps and other industrial equipment worldwide.




Aichtal, Germany, will become Sany’s new headquarter for concrete machinery in the world outside of China. Putzmeister will continue to operate with a high degree of independence in day-to-day management. Sany will focus on operations in China.




Norbert Scheuch will remain in his position as CEO of Putzmeister within Sany and will join the Sany executive board. The entire proceeds of the transaction will be transferred to the benefit of the Karl Schlecht Charitable Foundation and the Karl Schlecht Family Foundation.





Survey: Construction Productivity Improves as Companies Do More with Fewer People



The early effect of the recession on the nonresidential construction sector included significant productivity improvement, FMI said in a new survey, “The 2012 U.S. Construction Industry FMI Productivity Report.”




“Downsizing has resulted in retaining the most experienced and best-trained personnel who are the most capable of working more efficiently and harder,” FMI said.




FMI warned, however, that the initial productivity spike has begun to wear off. While productivity continues to improve, FMI reports, the rate of improvement is slowing. FMI surveyed chief executive officers, chief financial officers, chief operating officers, presidents, executive vice presidents and vice presidents of larger contractors, including trade contractors and general contractors. One of the largest areas for improvement is planning at the field manager level, FMI said. Eighty percent of respondents reported they could save at least 5 percent of their annual field labor cost through better management. The survey noted that the industry is undergoing significant changes in procedures, roles and responsibilities.




“Emerging technologies, methodologies and practices, such as Building Information Modeling, Integrated Project Delivery, lean construction and prefabrication, create opportunities for increased productivity,” FMI said. “Forty-two percent of respondents who have used prefabrication on projects have experienced improved productivity by 10 percent or more. Additionally, although only 35 percent of all respondents have employed integrated project delivery, 19 percent of them are reporting significant improvements in productivity.”




FMI is the largest provider of management consulting and investment banking to the engineering and construction industry. Visit www.fminet.com to download a copy of the full report.
AISI Publishes New Standard for Nonstructural Members
The American Iron and Steel Institute has published a new standard for nonstructural members. AISI S220, North American Standard for Cold-Formed Steel Framing – Nonstructural Members, 2011 Edition and Commentary are available for downloading free of charge at www.smdisteel.org.




Developed by AISI’s Committee on Framing Standards, AISI S220 is applicable to commonly recognized nonstructural members such as wall studs used in interior partition walls. It is also applicable to other members, as long as they meet the nonstructural definition and limitations.




People in the News


Sto Corp., Atlanta has named John Edgar as the new technical director for Canada. Edgar has been working for Sto for the last 20 years, serving in multiple leadership positions involving both Canadian and U.S. technical matters.




Edgar will have full responsibility of specifications, details, website technical content, testing and approvals, and will support the Canada sales team. In addition, he will continue to manage several important research projects involving the U.S. and Canada markets.




Companies in the News


ClarkDietrich™ Building Systems, West Chester, Ohio, and Structa Wire Corporation, Vancouver, B.C., have signed a distribution agreement that provides wider distribution of Structa Wire’s proprietary stucco reinforcing wire products for walls, ceilings and corners. Under the new agreement, ClarkDietrich will offer full sales support and delivery of Structa Wire products nationwide except for the 11 western states, which will continue to be serviced directly out of the Structa Wire factory in Vancouver, Canada.




Products in the News


CertainTeed Corporation’s CertaSpray® Closed Cell Spray Polyurethane Foam (SPF) Insulation has been approved by the National Fire Protection Association for use within non-fire-rated wall assemblies of commercial non-combustible and heavy timber construction.





As a result of NFPA testing, CertaSpray can now be used within the stud cavities or on the exterior of walls in buildings clad with brick, stucco or other type of non-open-jointed heavy claddings. The product can also be used in walls, attics, ceilings, floors, basements and crawl spaces in Types I, II, III, IV, and V construction in accordance with the International Building Code and in dwellings in accordance with the International Residential Code.





ITW Buildex®, Itasca, Ill., received an evaluation report (ESR#3223) from ICC Evaluation Service that says the ITW Buildex Teks Select Self-Drilling Structural Fasteners are now approved to meet International Building Code requirements.





New on the ’net


USG, Chicago, has released its new USG Solutions Application for the iPhone. This new application is free through iTunes, and is like having your own contractor right on your smart phone or iPad. Among other things, the application includes project how-to information, a material estimator for ceilings, interior panels and tile/flooring, and the USG product catalog. The app supports English, Spanish and French.

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