American general contractors (GCs) are generally positive about the prospects for growth in their sector in 2019, according to a recent survey, but officials with the Associated General Contractors of America, who spoke during a recent presentation, identified a number of threats that could act as brakes.
The survey of more than 1,300 GCs was taken in October and November, before the recent partial government shutdown took effect. Stephen Sandherr, the association’s chief executive officer, said during the Jan. 2 live-streamed presentation he felt the shutdown has not yet affected the construction sector given that such major programs as U.S. Army Corps of Engineers projects and federal highway construction are not affected.
But the longer the shutdown goes, it might, said Sandherr.
The CEO also identified unresolved trade issues with China and an infrastructure funding impasse in Congress as other potential threats to the sector.
“If Washington officials can’t find a way to work together to continue needed regulatory reforms and enact new infrastructure funding, many contractors’ more optimistic expectations will not be met,” he said.
Both Democrats and Republicans agree on the need for more infrastructure spending, he said, but no one is willing to commit to specific spending measures to get it done.
“There is bipartisan talk of infrastructure needs but as far as paying for it, that for now remains elusive,”said Sandherr.
“No Republican member of Congress got elected by promising to find more money for infrastructure. When it comes how to pay for it, people change the subject.”
The China-U.S. trade dispute jeopardizes overall economic health, specific construction sector growth and the cost of supplies, said Sandherr.
“If American and Chinese officials cannot resolve their trade disputes, many contractors will be squeezed by growing costs for materials at a time when an expanded trade war will likely undermine private-sector demand,” he said.
The survey indicated that on balance contractors expect the available dollar volume of projects they compete for to grow in 2019.
“The percentage of respondents who expect a market segment to expand exceeds the percentage who expect it to contract for all 13 categories of projects included in the survey,” the association report said.
For every segment, between 23 and 32 per cent of respondents expect the dollar volume of projects they compete for to increase, while for all but one segment, between 11 and 16 per cent of respondents foresee less work available in 2019.
The range between expectations for growth and for reductions was tighter than last year, indicating greater contractor confidence in stable growth, the report indicated.
Public building construction scored the highest net positive reading, at 17 per cent.
At the other end of the spectrum, 21 per cent of firms expect the multi-family market to shrink in 2019.
“This may indicate that multi-family residential construction has outpaced demand for now in some locations,” said Ken Simonson, the association’s chief economist.
Nearly four of five contractors surveyed (79 per cent) said they intend to hire more workers in 2019, up from 75 per cent at the start of 2018 and 73 per cent at the start of 2017. But the hiring would be relatively minimal, the results show, with only seven per cent of respondents indicating they planned to increase their workforce by over 25 per cent.
Labour shortages continue to have an impact on constructors’ plans, including project scheduling and the bids they submit, the survey said. John Doerr, senior vice-president of the Tarlton Corporation, said the shortage of good workers had reached the stage where any additional hires would be poorly qualified.
“To have an aggressive schedule for a customer you have to be very clear that you can’t go faster if you can’t get qualified people,” he said.
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