Eighty percent of construction firms in U.S. plan to expand in 2015

Published January 21, 2015 by Paula C. Squires

Eighty percent of U.S. construction firms plan to expand their payrolls in 2015 while only 7 percent expect to reduce headcounts, according to survey results released Wednesday by the Associated General Contractors of America.

In its report, “Ready to Hire Again: The 2015 Construction Hiring and Business Outlook,” the Arlington-based trade group found that many contractors are optimistic but still worry about regulatory burdens and their ability to find enough skilled workers.

“Contractors are extremely optimistic about the outlook for 2015,” Stephen E. Sandherr, the association's CEO said in a statement.  “Indeed, if their predictions prove true, industry employment could expand this year by the most in a decade.”

Of the 23 states with large enough survey sample sizes, 95 percent of the firms polled from Virginia said they plan to expand payrolls in 2015, more than in any other state, the report said.

Sandherr noted that the number of firms planning to add employees in 2015 is significantly higher than in 2014, when only 57 percent of firms expected to add workers.

Growing demand for private-sector construction should drive growth in 2015. Contractors expressed the most optimism about the retail/warehouse/lodging segment. They also reported positive opportunities for the manufacturing, private office and energy construction segments.

Contractors also are looking some public sector construction, especially segments that aren't entirely dependent on federal funding.

Seventy-nine percent of the firms said they plan to purchase new construction equipment in 2015, and 81 percent plan to lease new equipment. However, the scope of those investments is likely to be limited, with roughly two-thirds of firms reporting they will invest $250,000 or less.

“Despite the overall optimism, some challenges remain for the industry,” Ken Simonson, the association's chief economist, said in a statement. “In particular, as construction firms continue to expand, they will continue to have a difficult time finding enough skilled construction workers.”

Simonson noted that as the supply of construction workers tightens, compensation levels appear to be rising. Fifty-one percent of firms report they have increased base pay rates to retain construction professionals, and 46 percent have done the same to retain skilled craft workers.

The firms also said that they have improved benefits packages to retain workers.

Even as firms struggle with growing worker shortages, they anticipate paying more to provide health care. Eighty-one percent of firms report they expect the cost of providing health-care insurance for their employees will increase in 2015, while only 1 percent expect to pay less.

Large numbers of contractors are worried about the potential impact a number of proposed new federal regulations will have on their business operations, Sandherr said. Thirty-seven percent of respondents report they are concerned about the Environmental Protection Agency's efforts to expand its jurisdiction over wetlands. Thirty-six percent of contractors worry that new regulations forcing contractors to keep detailed records of all job applicants will have a negative impact.

The outlook was based on survey results from more than 900 construction firms from 48 states and the District of Columbia.