Missouri Contractor Confidence a Mixed Bag
Date Posted: January 26, 2015
Posted In: Discussion, News, Organizations,
by Tom Finan, Executive Director, Construction Forum STL
Things are looking up – mostly – for the members of AGC of Missouri. The Jan. 1, 2015 merger of the Associated General Contractors (AGC) of St. Louis and the Jefferson City-based AGC of Missouri united 550 members across 110 counties with sometimes disparate business models under the banner of AGC of Missouri (AGCMO).
Monday AGCMO released a quarterly Contractor Confidence Index (CCI) report showing a mixed bag of results among St. Louis contractors. And AGCMO’s president said the heavy/highway work that has been the bread and butter of his outstate members is looking grim without funding changes.
Long and short: Contractors in the St. Louis market responding to the survey were not as optimistic as they were a year ago about the upcoming quarter, but they felt that overall 2015 will be a growth year. While outstate members of AGCMO were not surveyed, the membership in that area has historically been more dependent on highway and infrastructure work, which has been adversely affected in the extreme by funding cuts.
The fourth-quarter 2014 report, which has been assembled based on online surveys for the last seven quarters by AGC of St. Louis, reflects only the input of contractors from St. Louis and surrounding counties.
St. Louis area contractors expect improved business conditions over the next 12 months, showing a 9.1 point increase in expected business conditions over similar data collected in Jan. 2014. However, the contractors showed less optimism for the near term (next six months), dropping from a 71.4 point index collected during third quarter 2014 to a 63.5 point index when surveyed during 4th QTR 2014. Still, the 63.5 point index reflected a rise of 1.4 points over six-month projections collected (62.1 points) during the same period a year ago.
Looking ahead 18-24 months, St. Louis area contractors anticipate an improvement in business conditions, moving up to 69.2 points, as compared with 57.1 points when they were polled for third quarter 2014. The online survey of member contractors was completed on Jan. 20, 2015.
“Our member contractors have been dealing with a tough market since late 2008,” said Leonard Toenjes, CAE, president, AGC of Missouri. “But most of them have been able to weather the storm with some built-up backlog and then by diversifying, cutting waste, improving technology and using prudent business practices. For building contractors, we are starting to get back into a growth mode. However, for highway and transportation work, the marketplace is still severely depressed.
Toenjes says the contractors are facing a double challenge – a less-than-robust economy and a looming workforce crisis. “More than 25 percent of our construction workforce will have retired by 2017 and we’ve already lost skilled craft workers and project managers to other industries because of the lack of projects,” observed Toenjes. “This presents a tremendous opportunity for young people looking at the construction industry to get the necessary training. There are jobs for them now,and many more in the future.”
The Missouri data in the new AGC of America 2015 Construction Hiring and Business Outlook reinforces Toenjes’ employment projections.(http://www.agc.org/galleries/news/2015_Outlook_Survey_Missouri.pdf)
Seventy-five percent of Missouri’s contractors reported an increase in hiring during 2014 (Question 4), 72 percent expect to hire in 2015 (Question 7), and 56 percent expect it to be difficult to find qualified professionals (Question 10). Finally, 95 percent believe it will be difficult to find qualified skilled craft workers. (Question 11).
“Funding for infrastructure also is very important to future growth,” added Toenjes. “If we don’t do something soon to address infrastructure in Missouri, funding for MoDOT’s construction budget will drop to $325 million annually, which is less than the amount needed each year just to maintain state roads and bridges. Our roads and bridges, and public transportation all need our attention,and a significant investment in Missouri’s infrastructure will translate directly into construction jobs as well as federal matching funds.”