U.S. contractors to slash workforces amid economic woes, AGC forecasts

January 08, 2009 |

An estimated two-thirds of the nation’s non-residential construction companies are planning to cut their payrolls, according to new employment and business forecast figures released on January 8 by the Associated General Contractors of America.  All told, those layoffs are forecast to result in a 30% decline in the number of people working on construction projects.


“Unless the business climate changes significantly and soon, the construction sector will continue to experience the kind of devastating job losses and crippling declines in business activity that will undermine efforts to end the recession,” Stephen Sandherr, the association’s chief executive officer said.


The forecast results, which are based on a representative survey conducted by the construction association late in 2008, found no relief in sight for construction companies that already have been among the hardest hit by the economic slowdown. Many construction companies experienced significant slowdowns beginning late last year, resulting in a 10% decline in the number of construction workers since 2006, Sandherr noted.


According to the forecast figures, the association’s member companies have seen or are planning for declining activity in every type of construction market. Ninety-two percent of building contractors and 93% of road builders are expecting or experiencing declining activity. More than 83% of utility contractors are bracing for declines while 77% of water resource contractors are expecting a decline in business building levees or locks.

One bright spot: Infrastructure

The forecast did find, however, that planned investments in infrastructure projects as part of the stimulus package is likely to dramatically improve the employment and business outlook for the year. For example, 85% of nonresidential construction companies would either cancel layoffs or add new employees if states embarked on stimulus-funded infrastructure projects.


According to the forecast, construction companies would increase their payrolls by 25% if the stimulus included new infrastructure investments. And construction companies predict they would invest an average of $500,000 this year in new equipment if they received new work as part of the stimulus package.


“With a stimulus, construction companies can get more people to work and more money into the economy in a way that will immediately boost our economy,” Sandherr said. “Without a stimulus, construction companies will cut jobs, slash spending and continue to be among the hardest hit sectors within our economy.”


Sandherr noted that the association was working to find ways to improve the business environment for the construction community. He said builders across the country were urging Congress to include infrastructure investments in the stimulus, and that the association was calling for $2.2 billion to help renovate hundreds of federal facilities and for additional funds to repair crumbling schools.


He noted that the association was working with a range of building, design, and labor groups to call today for new tax incentives to encourage conversion to energy-efficient buildings, construction of renewable energy facilities, remediation of brownfields, and construction of new airport and commercial projects.


Sandherr added that the groups were proposing the creation of “economic crisis zones” that would, similar to natural disaster zones, provide tax exemptions and private activity bonding authority to finance construction projects in communities experiencing two consecutive months of double-digit unemployment.


“We are doing everything imaginable to ensure that our construction employment and business forecast does not become a reality,” Sandherr said.


For survey results: http://www.agc.org/galleries/news/survey_results.pdf

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