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Construction Jobs Looking to Build from the Bottom

Construction Jobs Looking to Build from the Bottom

If you want to get a job or change jobs in construction in 2011, you’d better home in on the industry’s isolated sweet spots and demonstrate your superior value proposition to prospective employers. That’s the hard truth for tradespeople and professionals in a business that is being weaned from the federal life-support system of economic stimulus projects and home-buying tax credits. 
“Construction nationally is still barely off the floor,” says Ken Simonson, chief economist for Associated General Contractors of America (AGC). Residential construction, commercial construction and public projects continue at depressed levels.

Construction jobs have declined by about 2.2 million since their all-time peak of 7.7 million in April 2006, according to the Bureau of Labor Statistics. In May 2011, construction jobs numbered 5.5 million, right where they were a year earlier. But over the same 12 months, the construction unemployment rate declined from 20.1 percent to 16.3 percent as workers gave up on the industry, Simonson says.

“A lot of good people in our industry have been forced out and gone into other vocations,” says Terry Drahota, CEO of Drahota, a general contractor based in Fort Collins, Colorado.

For the survivors, here are pointers for how to get in on the ground floor of the eventual recovery.

Construction Industry Crosses Fingers for an Upturn

Now for some good news: More construction companies plan to hire in 2011 than lay off workers, the converse of 2010, according to a January 2011 survey of 1,300 firms by AGC.

Well-capitalized, seasoned contractors in the right markets are signing deals and breaking ground. “We’ve got $26 million in projects under way and another $34 million under negotiation,” Drahota says. His firm designs and builds commercial, medical, multifamily and resort projects, among others.

Who’s getting hired? “Our subcontractors are hiring construction project managers, superintendents, framers and foundation workers,” says Steve Davis, COO of Meritage Homes, a national builder with headquarters in Scottsdale, Arizona.

Industry Bright Spots for Construction Jobs

The power industry, healthcare and higher education should lead construction companies into the beginnings of a recovery in 2011, but a strong recovery isn’t expected until at least 2012, according to the AGC report.

A few sectors are finding opportunities created by external events. “After the triple tragedy in Japan and the Icelandic volcano, a lot of companies have become wary about foreign sourcing,” says Simonson. “So they’re building more facilities for domestic manufacturing, as well as warehousing and distribution.”

Even with persistent economic headwinds, sustainable construction is showing strength. Some 53 percent of firms expect demand for LEED green-building projects to increase in 2011, says the AGC survey. “There’s a tension there,” says Kermit Baker, chief economist for the American Institute of Architects. “In this environment owners and developers aren’t looking to put more money into projects, but it does make sense to put money in up front for energy efficiency.”

Stimulus Projects Near Completion; Regional Variations Emerge

Nearly half (45 percent) of the construction companies surveyed by the AGC were awarded federal stimulus projects, but in 2011 only 30 percent of firms expect to perform such work, according to the AGC survey. Stimulus projects will wind down by year’s end, along with the construction jobs they have spawned.

Construction workers in choice areas of some states will find themselves in the right place at the right time. “Texas is big with energy, and the state is continuing to get large population gains,” says Simonson. These trends create a demand for construction of housing, retail, schools and medical services, he adds. The armed forces’ Base Realignment and Closure program has also spawned construction projects in greater San Antonio and at military installations scattered across the country.

Construction workers who have made a living in the Sun Belt or out West may have better luck elsewhere these days. “The stronger regions have been the Northeast and Midwest,” says Baker. “The West is the worst, then the South.”

Job Requirements Broaden; Pay Stagnates

Construction employers these days require workers who can do more. “We’re looking for people with specific skills who can also wear more hats, are cost-conscious and understand how their work affects our bottom line,” Davis says.

Construction workers’ pay is likely to tread water at least for the rest of the year. Construction companies’ labor-cost increases are expected to run at 1.5 percent or less in 2011, according to an analysis by Simonson. From 2012 through 2016, labor-cost hikes are projected to run somewhat higher, in the 2 percent to 4 percent range.

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