Overall U.S. job growth continued to be undermined by the severe downturn affecting the construction industry as another 75,000 construction workers lost their jobs in January 2010 and the industry's unemployment rate jumped to 24.7 percent, according to federal employment figures released Friday.  Excluding construction job losses, nonfarm payroll employment actually rose for the second time in three months, AGC said.

Read the full press release here.

For more information, contact Brian Turmail at (703) 837-5310 or turmailb@agc.org.

Linda Conrad of Zurich Insurance explains the risks and opportunities posed by global supply chain changes.

What would you do if your steel fabricator for five projects suffered a catastrophe? Be it financial collapse or a devastating hurricane, it poses a significant risk to your projects and profitability.

Linda Conrad, Zurich Insurance, and Don Nabor, Gilbane Building Company, presented a session on weak links in the global supply chain at AGC's Surety Bonding and Construction Risk Management meeting.

They explained that natural and man-made catastrophes are occurring much more frequently than ever before, from tsunamis to earthquakes to market collapse. Since suppliers can easily be located in areas affect by these kinds of disasters, companies need to start planning for these kind of external factors when developing their risk management program.

Additional supply chain risks exist, including regulation changes and damage to company reputation.  In addition, increased competition among subcontractors brings new players to the table, forcing a learning curve.

And as new interest in Lean practices and cutting inventory risks grows, contractors will face a greater chance of running out of supplies when supply chains fail.  Risk is neutral, according to Conrad, and can be a threat or opportunity.

Both Conrad and Nabor urged attendees to consider the global supply chain a financial issue, instead of just a purchasing issue.

For more information contact Monica Cardenas at (703) 837-5364 or cardenasm@agc.org

Ed Gentilcore, partner with Duane & Morris, explains the risks associated with LEED v3.

AGC's Surety Bonding and Construction Risk Management meeting included Tiptoeing Through the Garden, a presentation that explored the new risks embedded in LEED v3, and how the ConsensusDOCS green building addendum addresses those issues.

Presenters Ed Gentilcore, partner at Duane & Morris, and Steve Charney, partner at Peckar & Abramson, discussed some of the issues inherent in the green building process as LEED certification is awarded by the U.S. Green Building Council, a non-government entity.  In addition, the Green Building Certification Institute (GBCI), which oversees LEED credentialing, allows for an unrelated third party to report that a green building is not in compliance, and may investigate without notification until a building is decertified. 

Gentilcore and Charney also discussed the ConsensusDOCS 310 Green Building Addendum, which responded to many of the risks associated with green building by reducing and allocating potential liabilities.  In fact, Charney noted that the addendum acts as a "conductor of the orchestra" so that all project participants are aware of each other's roles.

For more information, contact Monica Cardenas at (703) 837-5310 or cardenasm@agc.org.

Contractors share cost saving and risk reduction tips.

More than 200 contractors and insurance and surety professionals attended AGC's meeting on Surety Bonding and Construction Risk Management to talk about their shared issues and concerns and increase efficiency and effectiveness.

AGC Risk Management Committee chairman David O'Haren, executive vice president of Holder Construction Group, kicked off the meeting Tuesday morning, which began with a discussion on relating risk assessment and mitigation to a company's core values, led by industry leaders John Alberici (Alberici Constructors, Michael Bolen (McCarthy Construction Co.) and Robert Van Cleave (Balfour Beatty Construction).

Virtually every community in America experienced a decline in construction employment based on a new analysis of federal employment statistics prepared by the Associated General Contractors of America.  Given that construction spending declined by $100 billion last year to a six-year low of $903 billion, it is easy to understand why only four communities added construction jobs between December 2008 and December 2009.  The lone bright spot last year was the stimulus, which helped boost highway and street construction spending last year.  The lesson is that Congress needs to pass a jobs bill with significant new infrastructure investments to avoid further job losses.

Click here to read our news release, or read about the job losses in the Greenville News  and the Idaho Statesman.

AGC member Art Daniel (AR Daniel Construction Services, Inc., Cedar Hill, Texas) explained the uncertainty many small businesses face in a Reuters article on Thursday.

Read the article here.

For more information, contact Brian Turmail at (703) 837-5310 or turmailb@agc.org.

AGC's Ken Simonson talked to CNBC News about what's in store for the economy, including the construction industry, in 2010.  Simonson discussed the results of a National Association for Business Economics survey. Watch the video here.

For more information, contact Ken Simonson at simonsonk@agc.org.

Left to right: AGC's Marco Giamberardino, Congresswoman Rosa DeLauro (D-Conn.), Long Island Contractors Association executive director Marc Herbst, and Governor Ed Rendell (D-Pa.).

On January 21, a broad coalition of members of Congress, industry experts, and stakeholders called on Congress and the Obama Administration to create a National Infrastructure Bank to help fund infrastructure projects of regional and national importance.  AGC attended the event and stressed that the infrastructure bank concept must be part of a larger comprehensive approach to tackling infrastructure investment, including robust multi-year funding and significant regulatory reforms. It must also be created separate and apart from jobs legislation currently being drafted in the Senate.

The proposed National Infrastructure Bank would be designed to help improve the nation's roads and highways, bridges, ports, rail (freight and passenger), drinking and waste water treatment plants, smart grid, broadband and schools. AGC believes that an infrastructure bank should be capitalized with general fund revenue to assist individual or groups of states with financing, particularly for mega projects. Infrastructure bank financing should be available as low interest loans to help states finance projects or to assist in leveraging private funds.

For more information, contact Marco Giamberardino at (703) 837-5325 or giamberm@agc.org.

For the first time since the start of the economic downturn, every state and the District of Columbia reported losing construction jobs over the past twelve months, according to AGC's analysis of state-by-state employment data released Friday. The analysis found few signs of a construction industry recovery with only six states reporting construction job increases between November and December 2009.

Read the press release here. The news was covered by the Memphis Business Journal, Idaho Business Review and Dayton Business Journal.

For more information, contact Brian Turmail at (703) 837-5310 or turmailb@agc.org.

Public agencies have been reporting for more than a year that they are paying less for school buildings and other facilities than they had been. But few governments seem to have stepped up their construction programs to take advantage of the price breaks.

Montgomery County, Maryland, just outside of Washington, D.C., is an exception. "Montgomery County's government would get a $4 billion jolt over the next six years under a capital spending plan detailed Friday by County Executive Isiah Leggett," the Washington Post reported on January 16. "The proposal represents a nearly 7 percent boost in spending…With interest rates low and construction companies hungry for work, Montgomery officials said, the county should take advantage of the community's general affluence to press ahead with its capital priorities, especially those affecting education….Constructing a new Paint Branch [High School, which began this month], for example, is expected to cost $20 million to $30 million less than what was spent on a similar school that was built recently, schools officials said. The county can build an elementary school with the difference, they said."

An AGC survey of nearly 700 contractors, released on January 20, confirmed that the decline in building costs reflects more than a dip in materials prices. About 81 percent of the respondents said they cut profit margins for their 2009 bids, and 11 percent were willing to take a loss. That's a great opportunity for both public and private owners who are willing to act promptly. But most contractors cannot afford to operate at a loss for long. By later this year, contractors will either be out of business or charging more.

The drop in materials costs may soon run its course, as well. The producer price index (PPI) for inputs to construction industries, a weighted average of materials used in all types of projects plus items such as diesel fuel that are consumed during construction, rose 0.2 percent in December before seasonal adjustment and 0.4 percent from a year earlier, the Bureau of Labor Statistics (BLS) reported today. The December-to-December increase was the mildest since 1999, but December was also the first month since February that the construction PPI did not decline from year-ago levels.

Meanwhile, the PPI for new school building construction, which measures contractors' overhead and profit as well as materials costs, fell 2.4 percent from December 2008 to December 2009. That was the first 12-month drop since the index was introduced in 2006. In other words, contractors are still lowering their prices but are starting to pay more for the inputs they use - an unsustainable squeeze play.

Owners should take heed: the double delight of plentiful bidders and falling materials prices appears poised to end soon. If they want the most value for their construction dollar, now is the time to buy.

For more information, contact Ken Simonson at simonsonk@agc.org.