By Marcy Marro, Editor
If you've had a chance to look at the
State of the Industry Report in the January issue, you'll see
that even though many people feel very uncertain about the future
under our soon to be new president, the experts we talked to are
predicting a fairly positive year for 2017.
This optimism is also supported by many construction firms, as
73 percent report that they plan to expand their payrolls this
year. According to a recent survey, "
Expecting a Post-Election Bump: The 2017 Construction Industry
Hiring and Business Outlook," by the Associated General Contractors of
America (AGC) and Sage Construction
and Real Estate, contractors expect private and public sector
demand to grow in all market segments. However, many firms report
they are still worried about the availability of qualified workers
and rising health and regulatory costs.
Although a high percentage of firms say they will increase their
headcount this year, association officials note this will only lead
to modest increases in the overall sizes of firms. Sixty-six
percent of firms expect hiring to increase their total headcount
between 1 and 25 percent, while only 6 percent expect their
headcount to be expanded by more than 25 percent.
One reason for the slight increases expected in headcounts is
that many firms are still having a hard time finding enough
qualified workers to hire. According to the report, 73 percent of
firms say they are having a hard time finding qualified workers,
while 76 percent of respondents predict labor conditions to remain
tight, if not get worse, over the next 12 months.
However, most firms say they are increasing pay and/or benefits
to retain or recruit qualified staff to deal with the worker
shortages, with 52 percent increasing base pay rates, 35 percent
are providing incentives and/or bonuses, and 28 percent have
increased contributions to employee benefits. Additionally, 52
percent report they plan to increase their investments in training
and development this year.
With Trump's promise to dismantle the Affordable Care Act,
otherwise known as Obamacare, many constructors are worried about
the increase costs in health care and regulatory compliance. Of the
firms that responded, 84 percent said the cost of providing health
care for employees increased in 2016, with 82 percent worried those
costs will continue to increase in 2017. And, growth in federal
regulations worries approximately 41 percent of firms.
According to the report, most contractors expect the overall
construction market to expand or remain roughly the same this year
as it did last year. Forty-six percent of respondents said they
expect a higher dollar volume of projects this year, versus just 9
percent who expect a lower volume, for a net positive reading of
approximately 36 percent. The remaining 45 percent expect volumes
to more or less stay the same.
Overall, contractors had a positive outlook for all 13 market
segments included, with respondents being most optimistic on the
outlook for hospital and retail, warehouse and lodging (23 percent
net positive for both). They were also optimistic on the outlook
for private office (20 percent net positive), manufacturing (18
percent), highway (15 percent) and public building construction (15
percent), higher education construction (14 percent), K-12 school
construction (14 percent) and water and sewer construction (14
Multifamily residential was the only market segment where
contractors are less optimistic than they were last year, with an
11 percent net positive compared to 14 percent last year. However,
association officials note that most respondents completed the
survey in the days and weeks following the elections, and may have
based some of their optimism on recent stock market value growth
and the fact that Trump has repeatedly promised to make investments
While overall economic conditions seem to show that 2017 will be
positive for the construction industry, association officials note
that it appears survey responses are based in high expectations for
the incoming administration and on Trump's commitment to investing
in infrastructure, improving federal health care laws and reducing
burdens. "If plans to invest in infrastructure, reform healthcare
laws and roll back regulations are delayed, many contractors will
likely scale back their plans to expand headcounts," said Stephen
E. Sandherr, AGC CEO.
As we head further into 2017, we'd love to hear how you're
feeling. Do you predict increased demand for projects, leading to
having to hire more people? How are you dealing with finding
qualified workers? Do health care costs create headaches in keeping
a business growing and profitable in this economy? Drop us a note
in the comments and tell us your predictions for 2017.