Even as the Obama administration looks to pump more stimulus money into the marketplace, contractors are pointing to challenges of turning existing funds into new or saved jobs. Firms report some stimulus progress in stabilizing their workforce, but nonresidential construction job losses won’t end in 2009.
While construction job losses slowed last month to 59,000, industry unemployment is now at 19.2%, compared to 9.4% overall in the U.S., says Ken Simonson, Associated General Contractors’ chief economist. “Homebuilding has hit bottom, but nonresidential still has a ways to fall,” he adds.
Simonson points to “ominous signs,” such as architect-engineer employment, down 7% from a year ago. “The stimulus will add jobs back but it won’t overcome a decline in the sector until at least 2010 and beyond,” he says.
Contractors have shown early success in stimulus-averted job losses. Christian Zimmermann, president of Pike Industries, a Walpole, N.H., paving firm, says $80 million in stimulus work has allowed it to add 120 new employees. Last August, it was set to cut 100 jobs. “The stimulus has been very good for us, and it’s trickling down to our subcontractors,” he says.
A.M. Cohron & Sons Inc., an Atlantic, Iowa, bridge firm, is hoping to restore jobs to a workforce that has dropped to 108 from 240. “We may hit 150 by midsummer,” says President Rick Harlan. Stimulus money enabled Tracy Williams, a union laborer for Bettendorf, Iowa-based General Constructors Inc. and single mother of two, to end a six-month work furlough, she says. Her firm has restored 40,000 work hours.
But contractors say early stimulus jobs are competitive and carry lower margins. “We’re dealing with it,” says Don Laskey, president of Laskey-Clifton Corp., Coos Bay, Ore. “We’re trying to improve our management and make ourselves a better company.”
Executives also point to slow-moving state and municipal procurement offices and permitting delays, particularly on environmental infrastructure projects. “Agencies are already up to their ears in work,” says Michael Welch, president of BRB Contractors, Topeka. Rules and exemptions in “Buy America” provisions are still confusing firms. But Zimmermann says early coordination with the state highway agency has cut procurement time in half to between 30 and 45 days.