Survey reveals construction industry's grim outlook

Nine out of 10 contractors who build highways, buildings and sewers predict their companies will not rebound in 2010, according to a survey of 700 U.S. contractors conducted by the Associated General Contractors of America. Eighty-eight percent of the businesses do not expect overall conditions to improve before 2011, and some likely will go out of business.

The construction industry is considered a leading economic indicator of spending on infrastructure, rebuilding and building expansion, which affects purchases of construction materials and equipment.

Unemployment in the construction industry is more than 22 percent. During 2009, 73 percent of companies laid off employees—averaging 39 layoffs per company—and spending declined $137 billion. Thirty percent of businesses surveyed predicted they will add staff in 2010, and 27 percent predicted laying off workers; the rest were uncertain.

Although the $135 billion federal government stimulus funds gave about one-third of contractors a lifeline, Stephen Sandherr, chief executive of the Associated General Contractors of America, predicts some contractors will go out of business this year as stiff competition for fewer contracts will cause them to bid below cost.

"We never saw the stimulus as a panacea for all that ails the construction industry," he says. "We saw it as a primer for the pump."

Date : 1/22/2010