Industrial Distribution - November/December 2014

34 INDUSTRIAL DISTRIBUTION / November/December 2014 www.inddist.com BY ANNA WELLS In last year’s Nov/Dec issue of Industrial Distribution, we xamined the state of the construction industry from a unique vantage point: the government, at the time the article was written, was in the midst of a shutdown (Oct 1 – Oct 16, 2013). It was too soon at that point to understand the true impact of this decision, however industry experts like Ken Simonson, chief economist for The Associated General Contractors of America (AGC), warned of a decline in federal construction spending, and AGC's CEO Stephen E. Sandherr said the shutdown posed a real risk of "undermin-ing the industry's long-awaited recovery."

So what were the real effects? According to the White House Office of Management and Budget (OMB), the shutdown inflicted completely unnecessary damage on the economy and took a toll on families and businesses across the country. Even as soon as November of last year, the Office was able to identify the negative aftereffects, including an estimate that the combination of the shutdown and debt limit brinksmanship resulted in 120,000 fewer private sector jobs created during the first two weeks of October. “And multiple surveys have shown that consumer and business confidence was badly damaged,” said OMB.

Further into 2014, we saw industry experts place blame
on sluggish state and local government spending for some
softness. “The institutional market has been a drag on the
overall recovery for the design and construction industry for
the last few years, and until we see state and local govern-
ments ramp up spending for new education, healthcare, and
public safety structures, there likely won’t be a widespread
acceleration in spending for the entire industry,” said AIA
(American Institute of Architects) Chief Economist, Kermit
Baker, PhD, Hon. AIA, in July. “But we continue to have an
optimistic outlook for the commercial and industrial sectors
both for the rest of this year and into 2015.”
Other organizations support this optimism, including ISM
(Institute for Supply Management). In ISM’s latest Non-Man-
ufacturing Report on Business, the construction industry
was cited as the number one segment out of 12 reporting
growth. From a residential housing starts standpoint, Mar-
ket Watch reported in September that builders themselves
are optimistic about the sales market for single-family
homes. The Feds echoed this optimism with their own re-
port, citing a rise in housing starts by 6. 3 percent to a sea-
sonally adjusted annual rate of 1.017 million homes. Much
of this growth, it’s said, is spurred by apartment starts, as
meager wage growth has left more Americans renting ver-
sus owning.

Growing Industry, Shrinking Workforce

And while it appears the construction industry can remain
cautiously optimistic about growth, perhaps the problems
have simply become more nuanced. According to AGC’s most
recent press release, while the industry is adding jobs it is, in
fact, facing a severe impending worker shortage.
Construction employers added 16,000 jobs and the sec-
Experts Optimistic About
Construction, but Employment
Issues Could Hamper Growth