Construction Jobs Rebound as U.S. Homeowners Increase Remodeling Projects
February 22nd, 2012The number of people working in residential remodeling grew 5.8 percent in December to 250,700 from a year earlier, based on preliminary data released Feb. 3 by the Bureau of Labor Statistics. This was the highest growth for these jobs — which account for about 5 percent of construction employment — since December 2006, before the housing bubble burst.
Sales of existing homes, which rose 4.3 percent in January, precede spending on improvement projects by about six months, as new owners often do a lot of “fix-ups” soon after they move in, said Kermit Baker, a senior fellow at Harvard University’s Joint Center for Housing Studies. That means there’s now a “strengthening market” for this work, buoyed by demand that’s more discretionary in nature — such as minor kitchen remodels – - and mild winter weather in much of the U.S.
“More remodeling projects are going to create more jobs in the construction industry,” said Baker, who also is the chief economist for the American Institute of Architects.
Home Depot Inc. (HD), the world’s largest home-improvement retailer, echoed the optimism yesterday when it reported fourth- quarter net income that exceeded analysts’ estimates. An increase in traffic and transactions among its professional customers is encouraging as “they’re getting more jobs, more work,” Craig Menear, executive vice president of merchandising at the Atlanta-based company, said on a conference call.
Remodeling Projects
Fortune Brands Home & Security Inc. and Beacon Roofing Supply Inc. (BECN) also have seen a pick-up in sales related to residential-remodeling projects, according to company reports.
Home improvement probably will bounce back the most this year since 2006, after spending fell as much as 20 percent during the three-year home-remodeling slump that ended in mid-2010, Baker said. Growth in the “low-to-mid-single digits” may follow an estimated 0.8 percent last year, with total spending projected to be $112.4 billion in 2012, he said, citing the Cambridge, Massachusetts, center’s leading indicator of remodeling activity.
The index forecasts changes in the industry for the current quarter and subsequent three periods, using data including sales of existing homes, which rose to a 4.57 million annual rate in January, the highest since May 2010, the National Association of Realtors said today. December sales were revised down to a 4.38 million pace from 4.61 million.
Rising Construction Permits
Growth also is showing up in another index based on the number of construction permits filed, which rose 23 percent in December to 127.4 from a year earlier, according to Joe Emison, co-founder and vice president of research and development at BuildFax, an Austin, Texas-based real-estate data company.
Another driver for the rebound in contractor hiring comes from “pent-up demand” by Americans who can’t afford to move, said Ellen Zentner, a senior economist at Nomura Securities International LLC in New York. She was among the top-ranked forecasters of nonfarm payrolls as of Feb. 1, according to data compiled by Bloomberg.
“If you can’t sell your home, may as well make the box you live in better,” she said.
The rebound “makes sense” because BuildFax’s data captures all work that requires a hired contractor, which accounts for about two-thirds of such projects, Emison said. Amid a “glut of bad homes” on the market, and with homeowners worrying their properties are undervalued, “people may be stuck in their existing homes for a while.”
Vinyl-Siding Sales
Remodeling projects represent “almost all” Beacon Roofing Supply’s current sales of vinyl siding, windows and doors, which are more-discretionary purchases, Chief Financial Officer Dave Grace said on a Feb. 9 conference call. As the economy continues to expand, owners will “start spending on their homes,” he said.
Similarly, Fortune Brands is forecasting “slight improvement” in its repair and remodel business this year, Chief Executive Officer Christopher Klein said on a Feb. 1 conference call. The market for this segment and new housing construction will grow 3 percent in 2012 from 2011, the Deerfield, Illinois-based company forecast when it released fourth-quarter earnings that day.
“Recent modest improvement in the U.S. economy and the unemployment rate, coupled with some pent-up demand in home improvements, seems to be supporting modest growth in remodel activity,” Klein said.
Falling Jobless Rate
The U.S. jobless rate fell to 8.3 percent in January from 8.5 percent the prior month to the lowest level since February 2009, marking five consecutive months of declines. Meanwhile, payrolls climbed 243,000, the most in nine months, exceeding the most optimistic forecast in a Bloomberg News survey.
Consumer confidence strengthened to minus 39.8 in the week ended Feb. 12 from minus 41.7 the previous week, as measured by the Bloomberg Consumer Comfort Index. That’s the highest in a year and more than 13 points above a nearly two-year low of minus 53.2 in October 2011.
Still, there may be some slowing before remodeling activity picks up, based on the Harvard indicator, which suggests acceleration may occur later this year, and the BuildFax index, which has fallen nearly 20 points since peaking in October.
Behind Prerecession Levels
Contractor-hired work also has a long way to go to reach prerecession levels, as the number of residential remodelers lags behind the September 2006 peak by more than 76,000, Labor Department data show. Government figures may underestimate the size of this industry because they track workers on payrolls, and about two-thirds of home-improvement businesses consist of self-employed people, Baker said.
Even so, the revival in residential remodeling seen last year probably will continue, which is encouraging for people in this industry, Zentner said.
“An increase in these jobs should precede a broader recovery in housing,” she said. “We have a bit of strengthening that does appear to be legitimately returning.”
To contact the reporters on this story: Anna-Louise Jackson in New York at ajackson36@bloomberg.net; Anthony Feld in New York at afeld2@bloomberg.net
To contact the editor responsible for this story: Anthony Feld at afeld2@bloomberg.net
ABC Virtual Construction Project Maps Available Nationwide
October 18th, 2011Washington, D.C. – A new collaboration between Associated Builders and Contractors (ABC) and Business Social will, for the first time, provide the public with a virtual illustration of the great volume and diversity of projects ABC member companies are building from coast to coast through a new program called Map ABC.
During the months ahead, a national map and individual state maps will offer specific information on U.S. construction projects being built by ABC member firms, showcasing their national economic impact. In addition, viewers will be able to click on each individual construction site to view a description of the project, including photographs and/or drawings, the project’s status and principals involved.
“This dynamic new initiative will demonstrate the tremendous influence construction projects have on the nation’s economy and job creation,” said ABC President and CEO Mike Bellaman. “Through participation in this new initiative, ABC member firms will show the public, developers, owners and elected officials how they are building America.”
“We are excited to be working with Associated Builders and Contractors by implementing an innovative technology that will help build community around ABC chapters and provide national focus to the men and women that shape the landscape of our communities and cites,” said Rick Geritz, president and CEO of Business Social.
Now operating as a pilot program in four ABC chapters, including the Baltimore Metro Chapter, all 75 ABC chapters will have the opportunity to develop a chapter- specific map illustrating the hub of construction activity in that area. Each construction project will be connected through social media outlets such as LinkedIn and Facebook, providing greater visibility and networking opportunities.
Link to original: http://www.forconstructionpros.com/press_release/10430373/abc-virtual-construction-project-maps-available-nationwide
American Jobs Act – What Is In It For Your Construction Business?
September 19th, 2011Please, ladies and gentlemen, don’t shoot the messenger. I don’t write the legislation, I just report what is in it so your business can take advantage of the appropriations if you so choose. Having said that, here is a breakdown of what is in the 155 page American Jobs Act of 2011, as introduced by the Obama administration, which affects the construction industry, segment by segment.
If your construction industry group or business would like a more detailed presentation of the provisions of this proposed federal law, I am available to speak to your organization about it. Just send me an e-mail at the address below proposing a time and location.
All Segments of Construction
· Buy American iron, steel and manufactured goods
· Employee payroll tax cut from 4.2% to 3.1%
· Employer payroll tax cut from 6.2% to 3.1%
· Zero payroll tax on pay increases up to $50 million in increased wages
· 100% first year write off for new equipment in 2011
· 50% first year write off for new equipment in 2012
· Tax credit for hiring veterans unemployed 6 months or more increased from $4,800 to $9,600
· Tax credit for new hiring of veterans unemployed 6 months or more of $5,600 and $2,400 for new hiring of veterans unemployed 4 weeks to 6 months
· Tax credit of $4,000 for new hiring of any person unemployed for 6 months or more
· $1.5 billion for job training, including registered apprenticeship programs
· Prohibits hiring discrimination against the unemployed
· Requires payment of Davis Bacon prevailing wages on any project receiving funding
Residential Construction
· Project Rebuild appropriates $15 billion for rehabilitation of vacant and foreclosed homes and neighborhood stabilization
· Includes homeownership assistance and homebuyer rehabilitation funding
· Prohibits use of funds for demolition of existing public housing
· Prohibits flipping of rehabilitated properties
· Includes requirements to hire a certain portion of labor force from the project vicinity
Commercial Construction
· School Building Modernization: $25 billion for elementary and secondary school buildings, plus another $5 billion for community colleges
· Up to 30% of $15 billion in Project Rebuild funds may be used for commercial building rehabilitation that will help stabilize neighborhoods
Industrial Construction
· $6.5 billion for construction of a new nationwide public safety broadband network
Government Construction
· Increases SBA surety bond guarantees from $2 million up to $5 million
· $27 billion for highway and railway construction under current formulas
· $4 billion for intercity and high speed passenger rail corridor construction with 100% federal share
· $3 billion for public transit construction with 100% federal share
· $2 billion for Amtrak construction upgrades
· $6 billion for fixed bus guideway construction
· $5 billion for competitive surface transportation construction grants
· $10 billion initial funding for American Infrastructure Financing Authority to provide direct loans or loan guarantees financing infrastructure construction projects which can repay by means of tolls, user fees or other dedicated revenue sources in 35 years or less
About the Author
James G. McConnell
Attorney at Law
Construction Law Services, LLC
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Blog: http://chicagoconstructionlaw.blogspot.com/
Are aluminum door frames LEED compliant?
August 19th, 2011LEED (Leadership in Energy and Environmental Design) was developed by the U.S. Green Building Council in 2000 to give builders and owners guidelines for green (environmentally friendly) building design, construction, operations and maintenance. There are a number of levels you can achieve, whether constructing a new building or improving on a present structure. LEED certification is achieved by accumulating points in several areas, two of which are Materials and Resources, and Indoor Environmental Quality. But, even if you are not attempting to achieve LEED certification, following many of the guidelines can be advantageous not only to the environment, but to personal health and money savings.
Choosing aluminum door frames are just one way you can adhere to LEED standards. Aluminum frames are lightweight, strong, and generally less expensive than alternatives. While these are positive characteristics, for you to meet LEED standards there are other considerations to keep in mind. For instance, it’s important to choose a local company that uses regional materials – sourced within 500 miles of the building site. Using local materials cuts down on the amount of waste and environmental impact from shipping. Regional materials fall under the Materials and Resources category and can earn you several points toward LEED certification.
It’s even better if your company also utilizes recycled materials in their product, further cutting down on waste and reducing the need for extra manufacturing costs. Recycled materials also help certification in the Materials and Resources category; the higher the recycled content, the better. Think about the money saved and the burden on the environment lifted when you reuse instead of beginning anew from mine, to processing, to manufacturing.
Many builders and designers like to use aluminum door frames because of the flexibility of design and the ability for manufacturers to create custom frames to order. Aluminum frames generally come in a wide range of colors that can match any décor, and unlike wood does not need the maintenance required to keep it looking fresh. To keep in LEED compliance, find a company that uses zero VOC (volatile organic compound) emission materials, coatings and paints. Products with high VOC can cause a myriad of health problems from minor irritation of throat and eyes to liver and kidney damage, even cancer. As the EPA estimates that we spend 90% of our time indoors, keeping your air quality to high standards can be important. Cutting out VOCs falls under the Indoor Environmental Quality category of certification.
There are many elements that go into getting a LEED certification, but whether or not it is your goal, following their guidelines can help you make your home or building a healthier, more efficient environment. Choosing to use aluminum door frames from a reliable company with green practices in mind makes environmental, financial, and decorating sense, along with putting you closer to LEED compliance.
Hosting Your Construction Software Application in the Cloud for Use Anywhere
July 11th, 2011Be more productive on the go!
We at PrioSoft, are thrilled to announce hosting of Contractor’s Office. Any number of users can, from any internet connection, use the Contractor’s Office system. You can take your laptop to the job site or on an estimate where you can connect to the internet and do your
work. No synchronizing necessary. All your up-to-date data is always available from anywhere, for the ultimate cloud computer experience. Although cloud computing is an emerging field of computer science, the idea has been around for a few years. It’s called cloud computing because the data and applications exist on a “cloud” of Web servers. So… No more backups. No more worries about computer malfunctions ruining the data. No more dependence on being at a certain place. No more concern about having the latest version of the software. We take care of maintenance on all our hardware, software and your data so you always have the latest version of the software and current, uncorrupted data.
There’s a good chance you’ve already used some form of cloud computing. If you have an e-mail account with a Web-based e-mail service like Hotmail, Yahoo! Mail or Gmail, then you’ve had some experience with cloud computing. Instead of running an e-mail program on your computer, you log in to a Web e-mail account remotely. The software and storage for your account doesn’t exist on your computer — it’s on the service’s computer cloud, meaning you no longer have to spend big bucks to have the fastest computer with the most memory.
Contact us today for pricing and more information.
Can Your Estimate Cost You Credibility?
June 21st, 2011“Today’s marketing tip isn’t so much a marketing tip as it is a suggestion, in story format. As you may know, part of what I do is make follow-up phone calls for some of my bigger contractors on the sites they go out on that don’t close. I do this to ask consumers for their feedback as to why they opted not to choose my client.
And you will be amazed at the answers
Everything from “the guy smelled like smoke” to “the price was too high” are answers I hear all the time. But on this one particular call, Mr. Jones really set me back on my heels.
My client is a kitchen and bath remodeler who does great work at fair prices. But his take-rate has been pretty low for the last couple of months so I suggested we find out right from the horse’s mouth why people were opting to go somewhere else.
After about 40 minutes of phone calls I got a hold of Mr. Jones. After going through a series of questions with Mr. Jones, I finally got down to the estimate and price. I asked Mr. Jones if he thought the price was fair and reasonable.
He said he had no idea
I asked him to qualify what he meant. He proceeded to tell me that he was an accountant by training, and works with numbers all day. He also told me that statistically speaking, it was almost impossible for his estimate to be submitted to him in round numbers.
$22,000
That’s what Mr. Jones’ estimate was for a new kitchen, so I asked him what his problem was. Again he reiterated that it was highly unlikely that his estimate would come out to $22,000 even. So he wasn’t sure if my client added the bill upwards or downwards, and if so, by how much. $500, $1000, $5000?
You see, round numbers are always fake
I forget where I read that, but as soon as I had this conversation with Mr. Jones it was like a flashing sign in the back of my head.
Now, this may seem like a minor detail to you, and maybe it is, but it wasn’t to Mr. Jones. And as you know, people will come up with hundreds of different reasons not to do business with you. It may even seem silly, but I know contractors who issued their first invoice with invoice #367 to give the impression that they didn’t just start their businesses.
I went back to my client and mentioned to him the issue that Mr. Jones had. I asked him to pull the last three months worth of estimates so we can review them together. Lo and behold almost 2/3 of these estimates ended in round numbers. When I asked my client about the statistical anomaly, he claims that he did it to make it easier for the homeowner. He said he only rounded up to the nearest hundred dollars and made mention of it to most of his prospects.
Now, I don’t know if this is the cause for slowing sales or not. But if it affected one person, there’s a good chance it had some kind of an impact on others as well. Or maybe Mr. Jones was hypersensitive to the round numbers because of his occupation? I will tell you this, as I look at the number of 22,000 in the middle of page it does strike me as odd to look at. There is something not right about it. ”
Original Post: http://darrenslaughter.com/can-your-estimate-cost-you-credibility
At PrioSoft we are committed to helping you win as many estimates as possible. Our Contractor’s Office Estimating Software contains the labor, materials, subcontract, equipment and miscellaneous breakdown and gives you a base for unit costing and pricing. For more information on our Construction Estimating Software go to: http://www.priosoft.com/construction/estimating/
Government Says Remodelers Must Now Worry About Formaldehyde
June 13th, 2011Government scientists listed formaldehyde as a carcinogen, and said it is found in worrisome quantities in plywood, particle board, mortuaries and hair salons….
Consumers can reduce their exposure to formaldehyde by avoiding pressed-wood products or buying only those that are labeled as U.L.E.F. (ultra-low-emitting formaldehyde), N.A.F. (no added formaldehyde) or C.A.R.B. (California Air Resources Board) Phase 1 or Phase 2 compliant.
Formaldehyde had been expected to join the carcinogens list for many years, but the chemical and manufacturing industries long downplayed its risks and argued, successfully, that further regulations would hold back businesses. Hurricane Katrina didn’t help their cause when many evacuees living in trailers developed respiratory problems believed to stem from walls and cabinets made from formaldehyde-containing particleboard.
Now that formaldehyde is on the carcinogens list, further regulation is inevitable, though it’s too soon to know whether it will be banned in the U.S., as lead paint and asbestos were in 1977 and 1989, respectively. The new development will affect remodelers, however, in that many manufacturers of products containing formaldehyde will likely remove it from their products in order to remain competitive.
“The Nasty Stuff”
Some formaldehyde basics. From Wikipedia:
Formaldehyde is used extensively in the woodworking and cabinet-making industries. Formaldehyde is used in the glues that bond particle board together….
Formaldehyde emits from a variety of construction materials, furnishings, and consumer products. The three products that emit the highest concentrations are medium density fiberboard, hardwood plywood, and particle board.
Other than the naturally occurring kind, there are two kinds of formaldehyde in building materials. Phenol formaldehyde, used in exterior plywood products, is nasty in the factory but has limited offgassing installed. Urea is the stuff that is nasty in the house and is found in typical particle board and interior plywood products.
For years, many manufacturers have been developing products that are formaldehyde-free (sometimes abbreviated NAUF, for no added urea formaldehyde). Most green building certifications require or give credit for NAUF products and projects, and at least one, the Greenguard Environmental Institute, has a formaldehyde-free verification. In the meantime, a plethora of new formaldehyde-free products are emerging, but many — so far — are specialty products and pricey.
Simple Solutions, Stronger Demands
So how can remodelers stay out of trouble with formaldehyde? As is often the case, some of the best alternatives are the cheapest.
Fortunately, of all preventative measures, keeping formaldehyde away is the easy one. For instance, almost all exterior-grade laminated or engineered-wood products are NAUF. This is because urea formaldehyde is a cheap additive but it doesn’t perform well in wet conditions. As long as remodelers use exterior-grade plywood they are fine.
Aspiring for broader change, remodelers need to pressure manufacturers and suppliers to provide safer materials at all price points.
What do you think, readers? Feel free to comment below.
Sources:
The Federal Highway Trust Fund Conundrum
June 10th, 2011Will Federal Highway Construction Dollars Ever Come Back?
One of the many political issues in Congress which presently suffers from a dearth of press coverage amid the toxic debates over Medicare cuts, tax increases, budget slashing and the deficit ceiling, is the question of long term reauthorization of the Federal Highway Trust Fund. However, work on the Highway Trust Fund issue does continue in Washington. Joseph Kile, CBO’s Assistant Director for Microeconomic Studies, testified recently before Max Baucus’ Senate Committee on Finance about the status of the Highway Trust Fund. The picture Kile painted was not a particularly pretty one.
In his Finance Committee testimony, Kile outlined four potential scenarios for long term Highway Trust Fund reauthorization legislation: 1) funding highway projects for which benefits exceed costs; 2) spending enough to maintain highway performance; 3) maintaining current spending levels adjusted for inflation; or 4) limiting spending to revenues raised by existing motor fuel taxes.
Option 1) Funding projects where benefits exceed costs.
This option would involve significant increases from current spending levels, estimated at $209 billion per year from federal, state and local governments. If the current proportion of federal funding is maintained, this would mean Federal Highway Trust Fund annual expenditures would increase from the current level of $45 billion per year up to $94 billion per year. A somewhat less generous approach would involve setting a minimum threshold for the cost/benefit ratio. If federal funding were restricted to those projects for which benefits exceed costs by at least 20%, total government funding from federal state and local governments would drop to $188 billion per year, with the Federal Highway Trust Fund share decreasing to $84.5 billion per year. If the funding threshold were increased to 150% of costs, project funding would drop to $165 billion per year, and the federal share would drop to $74.2 billion per year.
Option 2) Spending at levels to maintain current highway performance.
Spending levels designed to merely preserve current average travel delays and pavement quality on federal highways would require all levels of government to spend a combined $127 billion per year, with the Federal Highway Trust Fund share approximating $57 billion, an increase of $12 billion above current Trust Fund spending levels.
Option 3) Maintaining current spending levels adjusted for inflation.
Current Highway Trust Fund spending levels of $45 billion per year, adjusted for inflation in construction costs, will exceed the revenues produced by current federal motor fuel taxes by $2.5 billion in fiscal 2011, and by $3.2 billion in 2012. Since the Highway Trust Fund is not permitted to go into a deficit position, even the modest option of maintaining current spending levels will require either annual make up appropriations from general revenues, an increase in federal motor fuel taxes, or additional user fees in the form of tolls or vehicle miles traveled taxes.
Option 4) Limiting spending to revenue from existing motor fuel taxes.
Limiting Highway Trust Fund spending to an amount equal to revenues produced by existing federal motor fuel taxes would result in an immediate reduction in federal highway expenditures from the current $45 billion per year down to about $30 billion per year. Funding at this level would increase deferred road maintenance and reduce new road and transit construction, resulting in accelerated crumbling of an already overstressed national transportation infrastructure.
Which Way Is Congress Headed?
Even if the Republican dominated House of Representatives would pass significant motor fuel tax increases together with new tolls or vehicle miles traveled taxes, the nearly universal inability of state and local governments to raise revenues to produce the required additional matching funds makes it very unlikely that we will see the federal transportation dollars represented by either option 1) or option 2) enacted in a long term Highway Trust Fund reauthorization measure in the foreseeable future. For the same reason, option 3) is less than likely since it would also require more state and local matching appropriations, though not quite at the astronomical levels represented by options 1) and 2). Even should a vehicle miles traveled tax be enacted to supplement revenue from motor fuel levies, the long lead time for adoption of the in vehicle metering technology required to assess and collect the new tax, together with the anticipated privacy objections to letting the federal government have a detailed GPS record of everyone’s minute by minute vehicle travel movements, will likely delay options 1), 2), and 3) for many years to come.
This makes option 4), an immediate one third reduction in Federal Highway Trust Fund expenditures, seem to be the most likely result in any long term Highway Trust Fund reauthorization measure coming out of the 112th Congress. Of course, the fifth alternative, unmentioned in Kile’s Committee testimony, is that Congress continues to limp along with quarterly or semi-annual highway trust fund reauthorizations, as it has for the last few years, awaiting a game changing House election for the enactment of any long term reauthorization legislation. So, will federal highway construction dollars ever come back? As I see it, not any time soon.
Source:
James G. McConnell
Attorney at Law
Construction Law Services
