News & Updates

New Jobs, Renewed Optimism Demonstrate Potential for Nonresidential Construction

on . Posted in New construction equipment and products

Nonresidential construction is on the upswing in the United States. The Associated Builders and Contractors reported on U.S. Department of Labor statistics that show it may be easier for professionals in the industry to find construction jobs. Nonresidential construction added 21,000 jobs in January, making up 47.7 percent of the total construction industry job gains during the month. 

"Based on data regarding backlog, architectural billings and other leading indicators, the nonresidential construction outlook remains benign," said Anirban Basu, chief economist of the ABC.

The Outlook for Nonresidential Construction is Positive
Adding nonresidential jobs in January has caused many construction industry executives from across the U.S. to be more optimistic about the upcoming year. In fact, the "2014 Construction Industry Forecast" by Wells Fargo Equipment Finance, which polled more than 500 professionals, showed its Optimism Quotient - the main benchmark of the survey for measuring contractor and equipment distributor sentiment  is at an all-time high. With a reading of 124, 18 points higher than 2013's reading and a vast increase from 42 in 2009, the quotient demonstrates nonresidential construction activity is expected to improve throughout the year.

In addition to the positive Optimism Quotient reading, more contractors are investing in or renting equipment construction equipment. More than 90 percent of respondents expect to rent in 2014, while roughly one-quarter plan to increase their purchases this year. Nearly two-third of distributors are anticipating higher sales numbers in 2014 compared to last year.

"The strong sense of optimism about construction activity is a natural contributor to the upward trends in construction equipment acquisition and rental we expect to see in 2014," said John Crum, senior vice president and national sales manager of the Construction Group at Wells Fargo Equipment Finance. "In fact, unit counts of light and heavy construction equipment sold in the U.S. correspond quite well with the curve of the Optimism Quotient over the last 10 years."

Equipment Purchases on the Web are Growing in Popularity
In the past, many contractors were hesitant to buy or rent their equipment via the Internet without trying it out first. But now, times are changing and companies are getting more comfortable browsing the Web for the things they need to complete projects. According to the Wells Fargo Equipment Finance survey, one-fifth of contractors have bought equipment on the Internet without inspecting it first, and nearly 70 percent of these professionals said they are satisfied with their purchases. 

While many construction companies are embracing the idea of buying equipment over the Internet, a majority of these purchases are for less expensive items. The study showed of the 20 percent of contractors who bought online, 4 in 5 completed transactions totaling less than $250,000. With construction companies use the Web to buy products, materials, vehicles and machinery they need, it may become easier for nonresidential construction firms to compete for more projects and put themselves in a position to have a stronger 2014.

 

Secure Job Sites to Prevent Theft

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A series of construction site thefts in Douglas County, Colo., have already caused large losses for firm owners who had lost equipment and materials to burglars. CBS Denver reported that within the past month thieves have infiltrated 16 different job sites throughout Castle Rock and Lone Tree. Company owners on the construction projects have discovered thousands of dollars worth of tools, copper and building materials have been taken from their sites. Not only is this impeding their progress and ability to complete jobs on schedule, such thefts can have other negative effects on contractors.

"When construction site security is breached, owners' losses go well beyond the value of the scrap metal and other materials," said Kathleen O'Toole, former Boston Police commissioner and board member at Netwatch, a full-service remote surveillance company. "Indirect costs often include downtime, rentals and project overrun penalties, which can be very substantial."

Better Site Surveillance is Needed
Larry Tillman, who is one of the victims of the burglaries, told CBS Denver that a lot of the stolen equipment was expensive. For example, taking one or two paint sprayers that cost roughly $4,000 a piece can do some serious damage to construction companies that need them to complete their work. He added electricians' materials and a lot of copper had been taken from his site. Without proper security measures, he sees how it's easy for thieves to get in and out without being noticed.

Tony Spurlock, undersheriff for Douglas County, told the news source that the robbers are getting to the sites just as workers are leaving, making it easy for them to go unnoticed. 

"These folks are backing up trucks and they are stealing lots and lots of equipment," he said. "Big rolls of copper, huge components and they are stealing them."

Protect Your Sites from Copper Theft
Copper is an expensive metal that isn't easy for construction companies to replace. Keeping this in mind, managers have to inform their staff about security measures that they can use to decrease the theft of copper. Below are some tips from Netwatch that firms can use to ensure they aren't a victim of copper theft:

  • Build a secure perimeter: One of the best ways to deter thieves is to make it difficult for them to infiltrate the job site. Using barbed wire on fences and making sure they are locked at the end of each day makes it much more difficult for burglaries to take place.
  • Keep the lights on at night: Even if workers aren't around the job site at night, thieves are more likely to stay away if areas are brighter. Light makes it easier to see burglars on camera and even catch their license plates if they attempt to steal any copper or other materials.
  • Order supplies throughout the project: When large quantities of copper are just sitting around the job site, it can be very tempting for thieves. A good way to alleviate that problem to is make weekly orders of copper as it is needed by workers.

 

Construction Jobs are Readily Available Entering 2014

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There is hope for the many professionals in the industry looking to find construction jobs. Recent data released by the Associated General Contractors of America revealed construction employment increased in 192 out of the 339 metro areas throughout the country between December 2012 and 2013, while there was no change in hiring in 63 communities.

Some of the areas that experienced the largest jobs gains include Fargo, ND-Minn. (25 percent), Santa Ana-Anaheim-Irvine, Calif. (15 percent) and Atlanta-Sandy Springs-Marietta, Ga. (10 percent). The higher employment levels may indicate a growing number of residential projects for home builders are occurring this year. 

"Growing demand for apartment and single-family construction was behind a lot of the growth in most metro areas last year," said Ken Simonson, the association's chief economist. "Employment in December 2013 was held down in many areas by unusually snowy or cold weather. With the weather and the economy both likely to improve soon, even more metros should post employment gains in the coming months." 

Congress Could Stimulate More Hiring
Construction professionals could get see added boost this year if Congress listens to officials at the AGC and moves quickly on legislation that would provide funding for port and waterway repairs. Passing a new six-year surface transportation bill before it expires in September should also be a high priority for Congress if its members hope to stimulate the construction industry as a whole this year. These large projects have the potential to create many new jobs for contractors of all kinds.

"Congress has a real opportunity to help boost construction employment in many metro areas this year, and get aging infrastructure repaired at the same time," said Stephen Sandherr, the association's CEO. 

Home Construction is on the Rise
While jobs for home builders on residential construction projects have increased in the past year, spending has seemed to follow suit. Data recently released by the government showed home-construction spending is at its highest point in the past five years, MarketWatch reported. In fact, residential-construction spending reached $330.7 billion in 2013, an 18-percent increase from the previous year. With the economy still in recovery mode, consumers are more willing to purchase new properties than they have been in the past half-decade.

The improvement of the housing market can certainly be attributed to the economic turnaround, but there are several other factors that should have home builders feeling confident. An article for CNNMoney stated higher sales levels of sales in both new homes and previously owned houses, a reduction in foreclosures and near-record-low mortgage rates are also playing a role in the increase in jobs for residential home builders. In fact, many contractors have a number of construction jobs that need to be filled.

The layoffs that occurred during the Great Recession are creating opportunities for professionals in the industry today. Home builders have a reason to feel optimistic entering 2014.

 

Multifamily Homes are in Higher Demand in 2014

on . Posted in US and local economic forecasts

The demand for multifamily homes continues to be on the rise in the United States. At the National Association of Home Builders International Builders' Show in Las Vegas, panelists said the construction of such projects is expected to continue increasing in 2015 or 2016. David Crowe, chief economist at the NAHB, believes that three primary drivers are behind the strong performance of multifamily homes:

  • The economic collapse caused the construction of multifamily homes to greatly decrease and recent growth is the result of the market playing catch-up.
  • There is strong demand from baby boomers and millennials for housing in multifamily homes.
  • People are more willing to rent than buy because of strict underwriting standards for mortgages, decreased credit scores and lower entry-level salaries.

To complete all projects expected for the upcoming year, construction firms may need to hire electricians, subcontractors and other specialists. With the number of new construction jobs continuing to grow in 2014, the rise of multifamily homes will likely lead to more hiring in the industry.

"The multifamily market has come a long way since the collapse," said Guy Hays, president of Legacy Partners Residential Inc. in Foster City, Calif., and a panelist at the NAHB IBS conference. "Overall, supply and demand are in balance, and in most markets there is a need for the continued production of new units."

Baby Boomers See Potential in Multifamily Homes
Crowe stated that multifamily housing starts have grown from 82,000 in 2009 to 340,000 in 2013, citing data from the government. An article for The Wall Street Journal reaffirms the NAHB's statements that construction for such housing is expected to pick up in 2014 and 2015, due to the economic climate continuing to change. Jordan Rappaport, senior economist for the Federal Reserve Bank of Kansas City, is confident in the future of multifamily homes, according to the newspaper.

"The longer-term outlook is especially positive for multifamily construction, reflecting the aging of the baby boomers and an associated shift in demand from single-family to multifamily housing," he wrote in a recent issue of the bank's Economic Review. "By the end of the decade, multifamily construction is likely to peak at a level nearly two-thirds higher than its highest annual level during the 1990s and 2000s."

Demand for Multifamily Homes Could Shift the Economy
Rappaport believes that the growing interest in multifamily homes, not just among boomers and millennials, but across the country as a whole, can have a major impact on the economy. He wrote that the prices for single-family homes could fall in response, consumer goods and services related to single-family homes could become less popular and communities could change local zoning codes to accommodate multifamily homes.

"It will put downward pressure on single-family relative to multifamily house prices," he wrote. "It will shift consumer demand away from goods and services that complement large indoor space and a backyard toward goods and services more oriented toward living in an apartment."