Kickin’ Off a Big Year

2. Kickin’ Off a Big Year • Although the US GDP increased a tepid 0.5% during Q1 2016, total construction spending was $3.393 trillion at a seasonally adjusted rate, or 8.6% more than Q1 2015. Plus, all three months of Q1 2016 had high single-digit growth. • Y-O-Y private sector construction increased 9.5% for January 2016, 10.6% for February 2016 and 8.5% for March 2016. In public construction, the monthly Y-O-Y increases were 13.0%, 9.2% and 6.7%, respectively. • Residential construction increased each month of Q1 2016, compared to Q1 2015, at 7.7%, 10.7% and 7.8%, respectively. New multi-family construction drove the increase each month, at 30.4%, 24.1% and 34.6%, respectively.

3. Employment Improvement • Employment is certainly a good indicator of the health of an industry. From February 2015 to February 2016, 43 states and the District of Columbia added construction jobs and 27 states had increases from January to February 2016. • From March 2015 to March 2016, 244 of 358 metro areas recorded construction employment increases, with just 44 reporting no change and 70 declines. • The flipside of this growth is that 70% of firms responding to the Associated General Contractors of America Outlook survey and 52.6% of those participating in Professional Builder’s 2016 Market Forecast survey said it is difficult to find qualified workers.

4. Measured Optimism • According to the latest Associated Builders and Contractors’ (ABC) Construction Confidence Index, all three categories – sales expectations, profit margin expectations and staffing level intentions – declined from the first half of 2015 to the second half. • Nonetheless, they were still in good, positive territory. Members of the building industry are just as concerned as other industries about the inconsistencies in financial markets, the presidential election, geopolitics and the future of interest rates. • Fewer contractors and builders may have had less expectations of big increases in sales and staffing levels for the second half of 2015, but those expecting a big increase in profit margins increased 1.13%, and none of them expected big decreases in all three categories.

5. A Leap Ahead in Housing • Although new single-family home construction has not recovered from the recession as quickly as many economists predicted, 2016 is forecast to be the best year since 2006, with an increase of 14%, or 812,000 units. • The forecast for 2017 is even better, at 964,000 units, representing a 19% increase. By the end of 2017, single-family home construction will be 77% of “normal,” based on the 2000–2003 total of 1.343 million units. • Labor, building lots and lending are seen as builder and contractors’ biggest challenges. Another obstacle is the 10% decrease in entry-level home inventory during 2015. Prospective homebuyers can find low-mortgage rates, but a limited home selection.

6. Non-Residential Sectors on the Rise • CMD Group has revised its 2016 forecast for residential/non-residential construction starts to 7.4%, after Q1 2016 starts increased 7.4%, compared to CMD Group’s’ forecast of a 6.4% increase. • The company expects non-residential construction starts throughout 2016 to be responsible for 86.5% of the increase, with office buildings, transportation terminals and medical facilities to be the leading sub-categories. • Dodge Data & Analytics’ forecast is not quite as robust, but its projected 6% increase will result in $712 billion in new construction starts. It also predicts that “total construction activity” will increase 13% during 2016, the best year since the recession.

7. Building with Technology • Smartphones and tablets are common devices on a building site, but drones are being introduced to view the site from a different perspective, monitor deliveries, generate progress reports – and direct the work of automated bulldozers. • Loughborough University in the UK has developed a 3D printer that can create many intricate concrete forms: curved, hollow and with multiple geometrics. The technology is now being tested and could reduce concrete prefabrication from weeks to hours. • An augmented-reality device called the Daqri helmet allows a construction worker or tradesperson to view a set of pipes, wiring, etc. and receive tolerance data, instruction and tips to help them work quicker, more efficiently and much safer.

8. Advertising Strategies • Local TV news is likely the most effective placement for local building contractors. Suggest a broadcast news-type format for commercials with a “live reporter” on various building sites announcing new projects and/or project benefits to the community. • Building contractors can use ad placements on the station’s news, weather and financial Web pages with a link to the owner’s blog, a company newsletter, case studies or white papers on the local building economy and/or issues. • Golf, tennis, horse racing and other “affluent” sports programming could be valuable platforms for building contractors. The owner could appear in the commercial explaining the company’s commitment to creating a better community.

9. New Media Strategies • High quality content is the key to B2B social media engagement. Building contractors should have case studies written and posted with photos and videos of their latest projects. A newsletter is also a beneficial tool, with opted-in email campaigns to increase distribution. • Building contractors will also find a blog valuable, not just because it improves Internet search position, but also because it provides the owner with a forum to present ideas and trends in building and create a prestigious brand. • Companies can use their social media sites to promote a career in the building trades and to alleviate the current labor shortage. Post a list of local training programs and videos about specific trades occupations and allow employees to speak about their careers.