Contractors see some encouraging market signals for 2011, but they still believe it will be a tough year, according to a survey by the Associated General Contractors.
AGC’s member survey, released on Jan. 24, received about 1,300 responses. It showed that, despite predictions of slight growth in demand for several key sectors and an improving employment picture, construction firms are bracing for at least one more difficult year. Fading stimulus spending and overall weak demand will limit the rebound.
“While there are some promising and positive signs in the outlook, the bottom line is 2011 will not be an easy year for most firms,” says AGC Chief Executive Stephen E. Sandherr.
“Although the picture is improving, the industry is extremely fragile,” adds Ken Simonson, the association’s chief economist. Only about a quarter (27%) of companies plan to add workers, and one out of five plan on layoffs. Last year, 55% of firms laid off workers, and only one in five expanded their workforces.
The brightest markets are hospitals and higher education, with about a third of the responding firms predicting a rise in the dollar volume in these types of pro-jects. Power-related projects also should increase, say 29% of the respondents.
But even in those two segments, more firms foresee volume declining, Simonson says. On the other end of the scale is private office construction, where 56% of responding firms foresee lower volume this year than in 2010.
Simonson says, “While the overall outlook is not as dreary as we have seen in prior years, the industry is still pushing against some brisk headwinds.”
As the stimulus work winds down, contractors will be hard-pressed to replace it in their backlogs. The AGC survey shows that, depending on the market category, 56% to 66% of responding firms expect stimulus spending to drop. The reason why is plain: Nearly all the highway, airport and sewage-treatment funds provided by the stimulus law—the 2009 American Recovery and Reinvestment Act—are under contract.