Month: November 2021

Construction starts will rise 6% in 2022, which is above levels for peak year 2019, according to a new forecast by Dodge Construction Network.

That’s a drop in growth from this year, which Dodge predicts will be at 12%. But it still edges higher overall, to $946 billion, from this year’s predicted total starts of $863 billion.

Dodge Chief Economist Richard Branch cautioned that the main driver of the increase has been residential construction, and when taking those numbers out, construction starts would rise by only 4% and drop below 2019 figures.

“There is a long road back here to full recovery for the construction space,” Branch said.  

Branch noted, too, that the forecast factors in Congress preventing a government shutdown before a December 3 deadline, as well as raising the debt ceiling, and passing the $1.2 trillion infrastructure bill.

“But assuming that all comes to pass, we’re looking at a fairly modest to moderate pace of growth in construction starts in 2022,” he said.

He pointed to Dodge’s Momentum Index, which has risen throughout 2021 and is now at a 13-year high. The index measures nonresidential construction projects in planning. He also noted that the count of general building projects in bidding is ahead of where the industry was at the beginning of 2020 and is a little behind 2019. Some of those projects are under construction, with the rest starting in the final quarter of this year or early next year.

The Dodge Momentum Index reaches a 13-year high in 2021.Dodge Construction Network

Material prices and shortages

Aside from Congress, the construction industry faces rising material prices and supply shortages that could dampen starts in 2022, Branch said.

Branch noted that material price increases are starting to erode, but they’re still 30% up over last year. He expects increases to continue until mid-2022, begin to pull back in the second half of the year, and remain high throughout 2022.

This chart shows the rapid increase in inflation of construction material prices versus overall consumer prices.Dodge Construction NetworkMaterial delivery delays are affecting 60% of small construction businesses. “And that is causing production delays, causing shipping delays and continuing to ripple through the lifecycle of a project,” he says. “So even as those prices cool in 2022, this web is very tangled, and these issues will continue to exert downward pressure on construction starts as we move into 2022.”

This also translates into construction projects taking longer to get started and completed.

“When we look at projects in our pre-planning stages, they are currently taking about nine months longer to break ground than they were prior to February 2020,” he says.

Another challenge is the labor shortage, but he notes that is not a new or temporary problem for construction. There are 350,000 construction jobs open. That compares to 400,000 openings in 2019.

“I think it’s very clear as we put all this together, that if not for the challenges and for the shortages and prices that we’re currently facing, that construction activity would be much stronger than it currently is,” he said.

Sectors looking up…and those not so much

Branch sees a continued increase in single-family home construction in 2022 but not at the rapid pace of 2021, which is expected to post a 14% increase in total dollar amount.

He’s seen a drop in home construction in the second half of the year after an exceptionally strong late 2020 and early 2021.

Still, 2021 is a banner year for single-family home construction and on track to top 1 million units built for the first time since 2006. But the sector is also more vulnerable to high material, labor and land prices, and supply shortages, he says.

As the single-family market cools down some, the multifamily sector has taken off as the supply of affordable housing has shrunk dramatically. “We haven’t seen this kind of strength since the mid-80s,” Branch said.

The multifamily trend has also shifted from urban high rises to smaller suburban projects in the $25 million to $50 million range. The national vacancy rate has dropped to 2.9%, the lowest level since 1994. But he also expects the sector to hit a more normal rate of growth in 2022 as many projects were hastened in 2021 out of a fear of rising material prices.

The warehouse sector also continues its tear, with Amazon leading the way building massive distribution centers. Warehouse construction has been the main driver of the commercial building sector and that will continue.

But Branch also believes commercial growth will become more broadbased in 2022, with a greater focus on office additions and renovations. Data centers are another big area of growth for the sector.

The manufacturing sector has also shown surprising growth, particularly in the petro-chemical industry.

Branch saw a turning point in the third quarter for hotel starts, but the beleagured sector is still way behind its pre-pandemic levels and will continue in that position for the next five years.

Retail also continues to lag, but he notes that as more people migrate from urban areas to the suburbs, retail projects will follow.

Charts tell the story

These charts released by Dodge Construction Network show how various sectors of the construction industry are forecast to perform:

Dodge Construction Network 

Dodge Construction Network

 

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You know that feeling when you want to sell a piece of equipment on the Internet, and you have to open a half-dozen tabs and manually toggle back and forth to gather up all the relevant information?

Record360 has designed a mobile-based product that takes all this digital complexity out of assessing and selling used equipment. The product is called SalesPro, and it is designed to meet the needs of construction firms, dealerships, vehicle rental fleets and other commercial equipment owners. With SalesPro you can identify equipment for sale, determine its condition, price it appropriately and respond to interest from potential buyers.

“Selling a piece of used equipment, whether it’s a rental car or truck, a tractor, loader, crane, backhoe or other industrial equipment asset, is a painfully manual process,” says Record360 CEO Abby Chao. “It’s difficult to know with any degree of reliability what’s available and what shape the asset is in,” she explains. “It’s even more tedious and cumbersome to create an effective listing and then market it to the right person at the right time over the proper channels.”

SalesPro solves these problems by enabling sellers to select the best photos or videos of the equipment, attach those to a detailed listing and share listings to leads across multiple channels in less than a minute. Additionally, the software can create a listing using the latest Record360 image, and then text or email that offer to an interested buyer, or with a single tap, populate the listing over popular social media platforms.

Rather than force you to search for information, SalesPro automatically imports the latest inventory data from your ERP. It identifies whether equipment is out on rent, sold, damaged or otherwise unavailable for sale. And it filters for make, model, year, hours, price and other data to match buyer need to available inventory and set proper pricing. Additionally, quotes can be sent directly to customers by email or text.

For rental equipment agencies, the platform also provides additional benefits by bringing together what were formerly siloed operations — rental managers on one side of the house and sales reps on the other — in a collaborative process.         

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Shawn Wilson made history with the American Association of State Highway and Transportation Officials, becoming the 107-year-old organization’s first African-American president.

Wilson is the secretary of the Louisiana Department of Transportation and Development. The AASHTO board also elected Roger Millar, secretary of the Washington State Department of Transportation, as its vice president.

“This is truly an honor that I approach with tremendous humility and excitement,” Dr. Wilson said. “I am looking forward to an incredible year with AASHTO and the great people I’ll be working with at state departments of transportation around the country. One of the significant advantages of serving as AASHTO president is that it gives me a platform to address issues that matter.”

Wilson served as AASHTO vice president and has been Louisiana’s transportation secretary since 2016. That same year he joined the AASHTO board and was its only African-American member at the time. “Today, he is among six African-American board members – a board that now also includes 13 female members,” AASHTO says.

Wilson says he plans to do more as president to expand that diversity.

“I’m interested in how we sustain that opportunity to achieve equity,” he said. “How are we, as state DOTs, building a bench of leaders that reflects the population in the communities we serve? How do we diversify, not just with race, but with gender, with disciplines? How do we change what we do as a department of transportation in a way that opens up the opportunity to recruit and retain a more capable, qualified and inclusive professional workforce?”

Wilson has a bachelor’s degree in urban and regional planning from the University of Louisiana, a master’s degree in public administration from Southern University, and a doctorate in public policy from Southern University

Roger MillarWashington State DOTVice President Millar has led the Washington State Department of Transportation since 2016. He is a fellow of the American Society of Civil Engineers and a fellow of the American Institute of Certified Planners. He also serves as vice chair of ASCE’s Transportation and Development Institute and vice chair of the Intelligent Transportation Society of America’s board of directors.

He is a member of the National Complete Streets Coalition Steering Committee, chair of the AASHTO Council on Public Transportation and co-chair of the Cooperative Automated Transportation Coalition. He graduated from the University of Virginia in 1982.

 

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The long-awaited $1 trillion infrastructure bill passed the U.S. House on Friday night and heads to President Joe Biden’s desk for his signature.

The Infrastructure Investment & Jobs Act includes $550 billion in new funding over five years as well as reauthorizes increased transportation funding through 2026.

The Surface Transportation Reauthorization Act included in the bill would spend a record $304 billion over five years for highway, road and bridge programs, a 34% increase over current levels, according to the Associated General Contractors.

“Because of today’s vote, state and local officials will be able to invest in a more efficient supply chain network. They will also be able to improve roads and bridges to make them safer and more reliable,” says AGC CEO Stephen Sandherr. “Metro areas will be able to better maintain and expand transit systems. And water authorities will be able to further safeguard the quality of local drinking water, among other improvements funded by this bill. The measure also provides needed investments to make infrastructure more resilient to extreme weather events.”

The American Road & Transportation Builders Association says the bill will amount to a 36% annual increase in real highway funding, the highest since the late 1950s.

The infrastructure bill increases annual real highway funding 36%, according to the America Road & Transportation Builders Association.ARTBA

“The Infrastructure Investment and Jobs Act is the most significant measure in more than 50 years to meaningfully address the condition and performance of the U.S. transportation network,” says ARTBA President and CEO Dave Bauer.

With record spending levels set for roads, bridges, utilities and other infrastructure, contractors around the country could see work from it for the next five years and longer.

Richard Branch, chief economist for Dodge Construction Network, says the additional infrastructure funding should start to come through next year. The years with the strongest influence on construction starts should be 2023 through 2025, he said.

“Our models are suggesting that, thanks to that $550 billion in new infrastructure spending, total non-building (construction) starts will increase by 33% by the time we get to the end of 2026,” he said during Dodge’s annual 2022 construction industry outlook event November 3. Non-building construction includes highways and bridges, environmental public works, and power and gas projects.

The infrastructure bill passed the House in a 228-206 vote, with 13 Republicans voting yes. Six progressive Democrats opposed the bill in protest over the House skirting a vote on the $1.75 trillion Build Back Better Act. That bill includes such measures as funding for pre-kindergarten, expanded healthcare coverage and environmental initiatives. They had wanted the bill voted on first before the infrastructure bill, but as the day’s debate extended into the night, House leadership instead called for a vote on setting the procedures for a floor debate on the bill. That passed 221-213.

The Infrastructure Investment & Jobs Act passed the Senate in August in a bipartisan vote.

What’s in the bill?

Here are highlights of the additional spending called for in the infrastructure bill:

Roads, bridges, major projects – $110 billion (Transportation funding is increased further by reauthorization of surface transportation funding.)Power infrastructure – $73 billionPassenger and freight rail – $66 billionBroadband infrastructure – $65 billionDrinking water infrastructure – $55 billionPublic transit – $39 billionAirports – $25 billionPorts and waterways – $17 billionTransportation safety – $11 billionElectric vehicle infrastructure – $7.5 billionElectric buses and transit – $7.5 billionReconnecting communities split by highway projects – $1 billion
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President Joe Biden’s administration announced Thursday that businesses with 100 or more employees have until January 4 for their employees to be fully vaccinated against Covid-19. As an alternative to vaccination, employers have the option of requiring unvaccinated employees to wear a mask while at work and get tested weekly for the virus.

The vaccine mandate, outlined in requirements set by the U.S. Occupational Safety & Health Administration, does not require employers to pay for the weekly testing if workers choose that option, unless required to do so by other laws or collective-bargaining agreements.

Vaccines are provided free by the federal government, but employers do have to provide paid leave for workers to get their shots and recover from any side effects of the vaccine.

The requirements for employers to pay time off for vaccines and to require masks for the unvaccinated start December 5. The weekly testing requirement for unvaccinated workers begins after January 4.

The rules say employees must have both Pfizer or Moderna shots or the one Johnson & Johnson shot by January 4 to be considered vaccinated, or face weekly testing. Businesses whose employees opt for testing must ensure those workers are masked at the workplace and have negative tests weekly.

The administration says that the “new rules preempt any inconsistent state or local laws, including laws that ban or limit an employer’s authority to require vaccination, masks, or testing.” (Governors in Texas and Florida have vowed to prevent the mandate from taking effect in their states, setting up a potential legal battle.) The January 4 deadline will also be the same for federal contractors; however, those businesses will not be subject to the new OSHA rules but will remain under the federal-contractor vaccine requirements.

The administration says the vaccine mandate is not only good for public health and safety but for the economy.

“Vaccination requirements have increased vaccination rates by more than 20 percentage points – to over 90 percent – across a wide range of businesses and organizations,” a White House statement says. “According to Wall Street analysts, vaccination requirements could result in as many as 5 million American workers going back to work, and a survey of prominent, independent economists found unanimous agreement that vaccination requirements will ‘promote a faster and stronger economic recovery.’”

The employer requirements for businesses with 100 or more employees will follow OSHA’s emergency temporary standard issued in summer. Employers are also subject to requirements for reporting and record-keeping in the OSHA temporary standard.

This rule governing businesses will cover 84 million employees, the administration says.

The same January 4 vaccination deadline has also been set for health care workers at facilities participating in Medicare and Medicaid. “The rule applies to more than 17 million workers at approximately 76,000 health care facilities, including hospitals and long-term care facilities,” the administration says.    

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