OEM Report: Heavy Equipment/Construction
Monday | 30 November, 2009 | 6:04 am

Building revival

By Lisa Rummler

November 2009- The summer of 2009 was a quiet one at most construction sites across the country. Rarely did passersby hear saws buzzing through beams or the ringing of hammers as they hit nails.

This lack of sound and activity reflects the impact the economy has had on the construction industry. No sector was spared during the worldwide financial meltdown late last year, but construction was one of the hardest-hit areas.

In late September, the construction industry's unemployment rate was 16.5 percent, nearly double the overall national jobless rate, according to The Associated General Contractors of America, Arlington, Va. Additionally, construction employment declined in 324 cities in August.

"While construction jobs account for 5 percent of the nation's workforce, 20 percent of the jobs lost since 2007 have been in construction," according to an AGC report. "In August 2009 alone, nearly one out of every three jobs lost was in construction."

And despite the approximately $135 billion allotment for infrastructure and construction projects in the federal stimulus program, the construction industry still faces challenging times.

Ripple effect
In response to this, on Sept. 30, AGC unveiled its construction recovery plan, "Build Now for the Future: A Blueprint for Economic Growth," which is designed to help bring the industry back to life.

In remarks during a media call on the day the plan was introduced, Stephen E. Sandherr, CEO of AGC, said reviving construction is critical on both a macro and micro level.

"The problems facing [the industry] aren't just devastating construction firms and construction workers--these problems are crippling our broader economy," he said. "That is because construction spending accounts for 8 percent of gross domestic product and is responsible for one out of every 10 manufacturing shipments and one out of every 12 machinery shipments. Simply put, you can't fix our economy until you fix the construction industry."

The rundown
"Build Now for the Future" lays out various tax credits, incentives and policy changes geared toward stimulating demand for construction from the private sector.

Among these are the repeal of the alternative minimum tax, as well as increasing and extending a series of tax credits and cuts, according to Sandherr. Other components of the plan include the restoration of the president's "fast track" trade promotion authority and the removal of trade barriers, with the goal of increasing demand for new domestic manufacturing and shipping facilities.

"The plan also calls for pragmatic new public and private investments in infrastructure that will boost construction while enhancing our ability to compete globally for decades to come," said Sandherr. "This includes doubling federal investments in transportation infrastructure, renovating dated and inefficient federal facilities and investing in clean water, flood control and navigation projects."

Additionally, Sandherr said the plan outlines proposed regulatory revisions that would speed up construction investments and maximize their efficiency.

"These include streamlining environmental reviews, accelerating licensing of new nuclear power plants and establishing a federal multiyear capital budget for public works," he said. "And we need to do more to encourage green construction while avoiding counterproductive measures like government-mandated labor agreements and 'Buy American' requirements."

Dollars and cents
The proposed plan isn't free, but Sandherr stressed the importance of the potential positive impact it could make on the overall economy rather than specific costs.

"Every $1 billion worth of nonresidential construction activity supports [more than] 28,000 jobs, boosts GDP by $3.4 billion and raises personal earnings by $1.1 billion," he said. "Putting this plan in place may not be easy, but doing so will unleash a wave of new construction activity, employ thousands, stimulate new investments in equipment and supplies and lay a foundation for long-term economic efficiencies and prosperity." MM

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