AGC Releases Plan to Revive Construction Industry

Stephen E. Sandherr, CEO of the Associated General Contractors of America (AGC) was in Phoenix today to release a plan to increase the demand for construction and in so doing, grow the national economy.  The plan is titled Building a Stronger Future, A New Blueprint for Economic Growth.  According to AGC’s press release, the plan “outlines measures to help boost private sector demand for construction, help tackle a growing infrastructure maintenance backlog and reduce needless red tape and regulations. ... The association developed the plan to overcome the years-long construction downturn that has left over 2.2 million construction workers unemployed and the industry’s unemployment rate at 21.8 percent, more than twice the national average.”  

AGC decided to announce the release of this new plan in Phoenix because Phoenix lost more construction jobs over the past 4 years than any other metropolitan area in the US, with a 54 percent loss of jobs in the industry.  Other metropolitan areas with the highest number of lost construction jobs were Las Vegas, Riverside/San Bernardino/Ontario in California, Atlanta, and Los Angeles.  The metropolitan areas with the highest percentage losses of construction jobs were Lake Havasu City/Kingman in Arizona and Bend, Oregon with 65% losses in each of those areas.

According to the press release, “Sandherr said the recovery plan emphasizes boosting private sector demand, which once accounted for 76 percent of all construction activity, but now accounts for only 60 percent. It calls for approving pending trade agreements to boost demand for manufacturing and shipping facilities, repealing the alternative minimum tax and making permanent the tax cuts that were first put in place in 2001 and 2003.”

Topics discussed within the plan include tax credits, measures to tackle infrastructure problems, and measures to reduce unnecessary regulatory burdens.  The plan also reports, “Beginning in 2012, federal, state and local governments with total annual expenditures of $100 million or more will be required to withhold 3 percent from all payments for goods and services they purchase.”  Sandherr remarked: “For an industry where most firms are lucky to make three percent in profit on a project, this new mandate will either put a lot of people out of work or needlessly inflate the cost of public construction.”

The plan concludes with a section titled The Cost of Inaction Vs. The Benefits Of Action.  Within this section are the following statements:

“The construction industry has accounted for twenty percent of the jobs lost during the economic downturn, even though it accounts for just five percent of the workforce. That means a significant portion of the jobs lost over the past two years won’t return until the construction industry revives.  Given the construction industry’s heavy consumption of manufactured goods and shipped equipment and supplies, any prolonged downturn for the sector will drag on the hard-hit manufacturing and shipping industries.

“A prolonged construction downturn also means that the private sector will not be making needed upgrades to office, shipping, power generation, research or manufacturing facilities.  This will put private firms at a distinct competitive disadvantage as they work to expand exports and increase domestic market share against foreign, often state-funded, rivals.”

Read these details and more in AGC’s official press release.  This will certainly give leaders in the construction industry something to talk about.