Author: mmcrebuildstg

We know a recession is coming, but we do not know when. In the 2019 FMI Overview, FMI reminds us that now is the time to prepare for the next downturn while the market is still good. To prepare, FMI put together a list of the top lessons learned from the last recession.

1. Do not wait too long to make any hard decision you have been deferring.
2. Find your sweet spot and do not just follow the herd.
3. Work on the new, envisioned future and set the strategy for post-recession success.
4. Get a grasp on “incremental economics” like revenue, margin, and overhead.
5. Maintain a healthy balance sheet in the context of growth plans.
6. Get positioned in your market early.
7. Get more feet on the street.

We are looking ahead and cautious, and we will be ready when the recession hits. Will you be ready?

Executive Summary

The labor shortage over the past years has caused wages to escalate. According to a report by Zillo Research, at the start of 2017, wages for construction-industry workers were growing slightly slower than wages for other workers – around 2.5% per year. But they are now growing 3.8% per year. This is happening for both skilled laborers and salaried positions. Anirban Basu, ABC’s Chief Economist, states in a Nov. 1 construction employment news release, “one potential cause for concern is growing evidence that wages have begun to rise much more rapidly of late. That, along with other sources of inflation, can be expected to push interest rates higher, which in turn would ultimately translate into more expensive financing for construction projects and fewer construction starts. But for now, it is all systems go for the U.S. nonresidential construction industry.” We’ll be keeping a close eye on how this might impact the industry.

12 Month Performance Summary

The construction industry has seen a 4.4% increase in net new jobs (308,000) since the first of the year. Industry unemployment decreased to 3.4% in July, which is the lowest in recorded history. Construction starts are up 2% Jan.-July 2018 from the same period last year. While these numbers look good, there is still a lack of skilled workers, and the pinch is being felt on construction schedules. Even after careful planning and paying attention to the labor market and concurrent local projects, schedules are being delayed. The consequences of which are felt throughout the project’s duration. Organizations are working to make a difference. Workforce development is a high priority of the Associated Builders and Contractors, Inc. (ABC) and they are pushing to expand apprenticeship opportunities in congressional testimony. Miles-McClellan is an active member of the ABC both in Central Ohio and Charlotte. Trade partners that invest in their people and workforce development programs, generally are also members of ABC. We participate because we want to have relationships with those companies. The apprenticeships that are happening now aren’t necessarily putting more people on jobs right now, but it speaks to the commitment from within the industry to improve the labor market.