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Ready to Hire Again: AGC Members Forecast a Bright 2015

Always keeping its finger on the industry’s pulse, AGC of America, in late December and early January, conducted an in-depth survey of its member firms to get a glimpse of what 2015 holds for construction. After all, who better to predict the industry’s next steps than those with boots on the ground? AGC analyzed the results that more than 900 firms from 48 states and the District of Columbia provided and prepared a comprehensive forecast for 2015: “Ready to Hire Again: The 2015 Construction Hiring and Business Outlook.”

As the title suggests, most contractors are optimistic about the year ahead and are preparing to expand. In fact, 80 percent expect to increase their company’s payroll this year (significantly higher than in 2014 when 57 percent reported an expected increase), while only 7 percent expect to reduce it. “Contractors are extremely optimistic about the outlook for 2015,” says Steve Sandherr, AGC’s chief executive officer. “Indeed, if their predictions are true, industry employment could expand this year by the most in a decade.”

Increasing demand for private sector construction should drive much of the growth in the industry. In particular, contractors are most optimistic about the growth in the retail/warehouse/lodging area with the net positive reading (the difference between the optimists and the pessimists) being a strong 33 percent. In fact, growth is expected in every market segment covered in the survey with the exception of two: marine and direct federal construction.

This is not surprising, as both rely almost exclusively on federal dollars; there was a net negative of 6 percent for marine construction and a net negative reading of 16 percent for direct federal construction (e.g., military bases, courthouses).

Beyond expanding payrolls, contractors are looking to invest in new equipment this year as well. Seventy-nine percent plan on buying new equipment while 81 percent expect to lease new equipment. However, companies appear to be cautious when it comes to these dollars, because two-thirds of those planning to invest in equipment will spend only $250,000 or less.

Despite the overall optimism, some challenges remain. While many plan on expanding their payrolls, they continue to have a difficult time finding enough skilled construction workers. Of those who will hire, 87 percent report having a hard time filling key professional and craft positions. In particular, 76 percent of the firms that are hiring report having difficulty finding qualified craft workers, while 62 percent say the same about professional positions.

“As the supply of qualified construction workers tightens, compensation levels appear to be rising,” reports Ken Simonson, AGC’s chief economist. “Fifty-one percent of firms report they have increased base pay rates to retain construction professionals and 46 percent have done the same to retain skilled craft workers.”

In addition, 25 percent report they have improved their benefits package to retain construction professionals and one in five firms has done the same to retain craft workers.

Another challenge facing the industry, according to survey respondents, is the potential impact of new regulations coming down the pike. In particular, 37 percent report they are concerned about the Environmental Protection Agency’s efforts to expand their jurisdiction over wetlands. Thirty-six percent of contractors worry that new regulations forcing them to keep detailed records of all job applicants will have a negative impact. Thirty-five percent are worried about the impact new silica exposure rules will have.

“Instead of pushing new regulations, federal officials should be working to solve key problems,” says Sandherr. Yet, despite these challenges, contractors remain extremely optimistic about the outlook for 2015. Should Congress and the administration fail to find a way to address highway, transit and other infrastructure funding shortfalls, contractors will become less optimistic about public-sector market demands. AGC of America will continue its Hardhats for Highways campaign, encourage elected and appointed officials to act on measures outlined in its Workforce Development Plan, and push back against the administration’s regulatory agenda.

“With a little luck and a lot of effort,” says Sandherr, “we will make sure the construction industry has the support it needs to continuing expanding in 2015 and beyond.”