Tag Archive for 'infrastructure'

Commercial Construction Index Finds High Optimism in U.S. Commercial Construction Industry

Hurricane Recovery Efforts Expected to Heighten Concerns about Labor Scarcities in the South, Where Two-Thirds of Contractors Already Face Worker Shortages 

Commercial construction is in high demand across the country and contractors remain optimistic about the current and forward-looking health of the sector, according to the Q3 USG Corporation + U.S. Chamber of Commerce Commercial Construction Index (‘Index’), released today. Nearly all contractors surveyed this summer (95 percent) expect revenues to grow or remain stable over the next 12 months compared to the prior 12 months, nearly the same percentage as in the Q2 2017 survey. Most contractors (93 percent) also expect to see profit margins stay the same or increase in the next 12 months, reflecting healthy contractor sentiment.

Commercial construction is in high demand across the country and contractors remain optimistic about the current and forward-looking health of the sector, according to the Q3 USG Corporation + U.S. Chamber of Commerce Commercial Construction Index (‘Index’), released today. Nearly all contractors surveyed this summer (95 percent) expect revenues to grow or remain stable over the next 12 months compared to the prior 12 months, nearly the same percentage as in the Q2 2017 survey. Most contractors (93 percent) also expect to see profit margins stay the same or increase in the next 12 months, reflecting healthy contractor sentiment.

Despite contractors’ expectations for growth, access to talent continues to pose challenges in the third quarter of 2017, with 60 percent of contractors having difficulty finding skilled workers, compared to 61 percent in Q2. Nearly all contractors (91 percent) said they are at least moderately concerned about the skill level of the workforce, with 66 percent of contractors in the South expressing concerns about the availability of skilled labor. The Index release comes on the heels of Hurricanes Harvey and Irma, which are expected to exacerbate existing concerns about labor shortages in the South.

“The Commercial Construction Index is unique in providing the contractor’s view of the state of the industry, which is a key driver of the U.S. economy,” said Jennifer Scanlon, president and chief executive officer of USG Corporation. “This quarter’s findings reveal strong optimism about future prospects for the industry, and also highlight a real need to address ongoing concerns about skilled labor shortages and the impact it has on building in the U.S.”

The Index looks at the results of three leading indicators to gauge confidence in the commercial construction industry – backlog levels, new business opportunities, and revenue forecasts – generating a composite index on a scale of 0 to 100 that serves as an indicator of health for the contractor segment on a quarterly basis. The Q3 2017 composite index score was 73, down slightly from the second quarter’s 76, but close to the first quarter’s 74, representing a consistent sentiment of health in the sector.

The Q3 results from the three key drivers were:

  • Backlog: On average, contractors currently hold 9.5 months of backlog, close to their average ideal amount of 12 months, indicating a steady market and a healthy amount of booked work. This represents 77 percent of their ideal backlog levels.
  • New Business: More than half of contractors (54 percent) reported high confidence in new business over the next 12 months (compared to 59 percent in Q2).
  • Revenues: The majority of contractors (67 percent) continue to expect revenues to grow or remain stable in the next year, although expectations for the rate of expected growth inched toward more modest levels (compared to 71 percent in Q2).

“The commercial construction industry employs millions of Americans and the contributions the sector makes to the U.S. economy are vital to our country’s growth,” said Thomas J. Donohue, president, and CEO of the U.S. Chamber. “However, finding skilled workers remains a challenge for this industry, and it’s likely to remain a challenge in the areas affected by the recent hurricanes. Finding skilled construction workers will be essential to ensure the Gulf region is able to quickly and efficiently rebuild. Our nation must address our workforce challenges to enable the economy to grow.”

This quarter, contractors surveyed were also asked about workforce skills development after revealing insights last quarter about the increasing difficulty in finding skilled workers. Respondents identified safety, technical proficiency, and communication as the most valued skills on the job site. Of note, there is a wide gap (40 percent) in the number of contractors who note the importance of communication skills and those who think their workers have strong skills in that area.

Just over half (53 percent) of contractors surveyed in Q3 said they plan to hire new workers, a decrease from 66 percent in Q2. This is accompanied by a 10 percent increase over last quarter in the number of contractors that plan to keep the same number of workers, indicating an anticipated shift from hiring staff to maintaining staff levels in the upcoming fall and winter months. Looking forward, only 39 percent of those surveyed in the third quarter predicted the situation will worsen, down from nearly a half (47 percent) in Q2, indicating that although there are shifts in the hiring environment, contractors believe it to be stabilizing. This situation bears monitoring in the coming months as parts of the Southern United States begin rebuilding from Hurricanes Harvey and Irma.

About the Index

The USG Corporation + U.S. Chamber of Commerce Commercial Construction Index is a quarterly economic index designed to gauge the outlook for, and resulting confidence in, the commercial construction industry. USG Corporation and the U.S. Chamber produce this Index, along with Dodge Data & Analytics (DD&A). Each quarter, researchers from DD&A source responses from their Contractor Panel of more than 2,700 commercial construction decision-makers in order to better understand their levels of confidence in the industry and other key trends. This panel allows DD&A to provide findings that are representative of the entire U.S. construction industry by geography, size, and type of company. The majority of data represented in this quarter’s Index is from the Q3 2017 survey conducted online from July 12 to 19, 2017. Click here to see the full report, methodology, and graphics.

Please note the Commercial Construction Index report is intended for general informational purposes only. It is not intended to support an investment decision with respect to USG Corporation, nor is it intended to be used for marketing purposes to any existing or prospective investor of USG. This report is not a forecast of future results for USG and actual results of USG may differ materially from those of the commercial construction industry.

Where the Index is Available

Each quarterly Index published is available on the USG Corporation website at www.usg.com/news as well as on the website www.CommercialConstructionIndex.com.

About the U.S. Chamber of Commerce

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations. For more information, visit www.uschamber.com.

About USG Corporation

USG Corporation is an industry-leading manufacturer of building products and innovative solutions. Headquartered in Chicago, USG serves construction markets around the world through its United States Gypsum Company and USG Interiors, LLC subsidiaries and its international subsidiaries, including its USG Boral Building Products joint venture. Its wall, ceiling, flooring, sheathing and roofing products provide the solutions that enable customers to build the outstanding spaces where people live, work and play. Its USG Boral Building Products joint venture is a leading plasterboard and ceilings producer across Asia, Australasia, and the Middle East. For additional information, visit www.usg.com.

Tom Ewing’s Environmental Update

*  Last week, the National Highway Traffic Safety Administration (NHTSA) released a new voluntary guidance on automated driving systems—”Automated Driving Systems: A Vision for Safety.” This guidance is based on public comments received on the Federal Automated Vehicles Policy (FAVP) released a year ago, September 2016. The updated guidance is “to support industry innovators, States, and other key stakeholders as they consider and design best practices relative to the testing and deployment of automated vehicle technologies while informing and educating the public and improving roadway safety.” NHTSA is looking for public comments on the guidance and “additional ways to improve its usefulness.”  The document is part of DOT’s efforts to support the introduction of automation technologies that “hold the promise of fulfilling NHTSA’s mission of reducing the number of injuries and fatalities on our roads.”  Comments are due by November 14.
*  In Oregon, an interim joint House-Senate committee on energy and environment meets today for two hearings focused on transportation electrification.  One hearing is titled  “Public Utility Commission’s Resource Value of Solar and Transportation Electrification Dockets.”  Staff from OR’s Public Utility Commission will update legislators.  The second hearing topic is titled “Electrification Transportation Programs and Electric Vehicle Charging Stations.”  Testimony will be from utility experts and officials from vehicle trade groups.
*  Who knew, right, that we have a National Advisory Committee on Windstorm Impact Reduction (NACWIR or the Committee)?  Well, we do and the Committee holds an open video conference meeting next week, on Monday, from 9:00 a.m. to 10:00 a.m. Eastern Time. The purpose of the meeting: to finalize the Committee’s report on wind reduction assessments and recommendations. You can participate remotely. The NACWIR was established in accordance with the requirements of the National Windstorm Impact Reduction Act Reauthorization of 2015. The Committee is charged with offering assessments and recommendations on trends and developments in the natural, engineering, and social sciences and practices of windstorm impact mitigation, program priorities and coordination and, importantly, the effectiveness of the Program in meeting its purposes.
Tom Ewing
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ABC Reports: Construction Input Price Growth Accelerates in August

Construction input prices rose 0.6 percent in August and are up 3.7 percent on a yearly basis, according to an analysis by Associated Builders and Contractors (ABC) of data released today by the Bureau of Labor Statistics. Nonresidential construction input prices behaved similarly, rising 0.6 percent for the month and 3.5 percent for the year. 

Only three of the 11 key construction input prices fell for the month. The inputs experiencing declines in prices were steel mill products (-1.5 percent), prepared asphalt, tar roofing and siding products (-0.3 percent), and natural gas (-1.8 percent). Crude petroleum prices exhibited the largest increase, rising 11 percent on a monthly basis and 15 percent on an annual basis.

“If we consider what ought to be happening with respect to materials prices, we would expect them to be marching steadily higher,” said ABC Chief Economist Anirban Basu. “After all, the global economic recovery is an increasingly synchronized one. China is on pace to meet growth expectations this year. Europe, Japan, Brazil, Russia and other nations are experiencing meaningfully better recoveries this year compared to 2016. While some economies like Great Britain’s and India’s have stumbled a bit lately, the broader story is one of more rapid global economic growth, driven in large measure by a low interest rate, post-austerity policy environment.

“The world’s improving global economic environment has helped stabilize demand and prices for various commodities. As a result, we are not observing the sharp declines in input prices that occurred during much of 2014 and 2015,” said Basu. “Demand for materials in the United States also remains reasonably high, given ongoing momentum in a number of private segments and indications of stable activity among road builders. The fact that asset prices have been rising, including in key global equity markets, has contributed to pushing materials prices higher, with positive wealth effects triggering greater confidence among real estate developers.

“For now, policymakers around the world appear focused on supporting economic growth.  While this may ultimately translate into problematic global inflation, for now inflation remains under control,” said Basu. “That suggests that accommodative monetary policy will continue to remain in place in much of the world, which will support asset prices, economic growth and demand for construction materials. While surging construction materials prices are unlikely during the near term, with the exception of areas recently impacted by Hurricanes Harvey and Irma, so too are large declines.” 

Visit ABC Construction Economics for the Construction Backlog Indicator, Construction Confidence Index and state unemployment reports, plus analysis of spending, employment, GDP and the Producer Price Index.

Tom Ewing’s Environmental Update

*  The Future: This will happen, one way or another: Quantum information science (QIS) seeks to advance research in the control of atoms and molecules and development of ultra-fast lasers capable of manipulating states of matter.  To advance that research the National Institute of Standards and Technology (NIST) will hold a workshop in October, a follow up to a current request for comments by the Department of Commerce regarding “the broader needs of the industrial community.”  The workshop will support the QIS Interagency Working Group, established in 2014, which includes participants from the Departments of Commerce, Defense, and Energy, the Office of the Director of National Intelligence and the National Science Foundation.  NIST seeks comments on R&D opportunities, support for emerging market areas, identifying barriers to near-term and future applications, and understanding workforce needs.
*  The Future: This could happen: The Federal Rail Administration (FRA) and the Virginia Department of Rail and Public Transportation (DRPT) released the Tier II Draft EIS for the Washington, D.C. to Richmond Southeast High-Speed Rail (DC2RVA) Project.  It’s worth a close look, for many reasons.  One, it’s an important transportation proposal within a very congested highway corridor.  This is a high-speed rail by US standards, not Europe or Japan, which is good because it becomes much more doable where reality (think money) is concerned.  These could be 90 mph trains, plenty of speed for a 123-mile trip. Second, this EIS Summary is a particularly well-done document: clear and straightforward, an excellent compilation of text, charts, and graphics.  Hats off to the team which prepared this summary.  A reader not only can stay awake while reading but she or he comes away with a strong understanding of the project and related benefits and costs.
*  The Future: This won’t happen: Federal Highway, in August, rescinded the Record of Decision (ROD) for a highway project in metropolitan Tacoma (Pierce County), Washington.  This would have been a new arterial highway between SR 7 and I-5, running east to west, south of McChord AFB.  The ROD was published in August 2004 – 13 years ago!  The project has been stalled since 2007 because of public policy, litigation, and transportation demand reasons. Shelf-life: too long.  Now, the ROD is “no longer a valid document without further environmental analysis and review.”  That DC to Richmond project should hold many lessons, for people in many places.
 
Tom Ewing
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513-379-5526 voice/text

GOMACO GHP-2800 two-track paver with Leica 3D guidance is slipforming a road in Dubuque, Iowa

This GOMACO GHP-2800 two-track paver with Leica 3D guidance is slipforming a road in Dubuque, Iowa. A GOMACO 9500 is placing material on the grade in front of the paver.

The 9500’s conveyor is being controlled by the operator’s remote control. The joystick is used for the up/down and right/left movement of the discharge conveyor.