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Blog Post

2017 Construction Industry Predictions and Realities

01/23/2017

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There’s a clear consensus among industry experts and economists that the construction industry will continue to show gains in 2017. According to Robert Murray, chief economist for Dodge Data & Analytics, the industry is moving into a more “mature phase” of expansion rather than a period of decline. He noted that it will be more of a measured upturn instead of a boom. Murray predicted that the construction industry's period of growth will continue into 2017 and will be followed by a cyclical slowdown in 2018 and 2019. The slow nature of the recovery means that the subsequent decline also will be gradual.

Economists from three different U.S.-based construction-related trade groups have issued forecasts that predict continued growth for the construction industry in 2017 and are in sync with the Dodge Construction Outlook. National Association of Home Builders (NAHB) Chief Economist Robert Dietz agrees that there will be continued growth for the construction industry in 2017.

AIA Consensus Construction Forecast predicts a healthy but slower growth, especially in the nonresidential building sector. According to AIA, the commercial sectors are expected to be the strongest performers.

It was widely reported earlier this year that U.S. builders boosted spending on construction projects for a second straight month in November last year, pushing activity to the highest level in more than a decade. The increase led to a seasonally adjusted annual rate of $1.18 trillion, the highest point since the boom in 2006 and construction spending will continue to grow this year.

Anirban Basu of Sage Policy Group predicts that nonresidential construction spending growth will continue into the next year, with an estimated increase in the range of 3% to 4%. It will be led by privately financed projects, with commercial construction leading the way.

It bodes well for the ironworking industry that commercial sectors are predicted to be the strongest performer, and nonresidential construction spending is expected to continue to increase. The Ironworkers union already has a strong presence in the commercial sector, and it is currently analyzing the commercial market to see how it can expand.

The ironworkers will be in high demand this year. According to the Iron Workers (IW) Reinforcing Department forecast for 2017, based on Concrete Reinforcing Steel Institute (CRSI) 2016 reinforcing bar forecast, the demand for reinforcing ironworkers and U.S. rebar usage are expected to rise this year and continue to increase in the coming years. Total rebar usage this year is projected to be approximately 9,450,706 tons and the reinforcing ironworkers are predicted to contribute approximately 94,507,060 total work hours. Texas, California, Florida, New York and Pennsylvania are projected to have the highest demand.

The skilled labor shortage widely discussed in news articles last year is predicted to persist in 2017. There have been reports of emerging labor shortages in certain sectors and areas. For example, Reuters recently reported that refiners are facing a skilled labor shortage and competing for ironworkers and pipe fitters with a host of billion-dollar energy projects, including Cheniere Energy's liquefied natural gas export terminals and a new petrochemical unit for Dow Chemical.

However, from our perspective, it’s a perceived shortage of ironworkers. There’s no real shortage of skilled ironworkers or rigging professionals. You just need to know where to look.

When contractors partner with us at the planning stage, we have the facilities and capacity to supply ironworkers and scale up training to fit their needs. We invest millions every year in training our ironworkers and in our apprenticeship program to ensure that they are the best in the industry. They are safety conscious and come highly trained with necessary safeguards and guarantees.

We have upgraded our crane and rigging training and raised the bar by leading the industry in qualified rigger and signalperson certification programs. Apart from that, OSHA has acknowledged our rigger and signalperson qualification programs, and we have received industry-wide recognition for the quality of our program.

On another note, highly trained and skilled apprentices with on-the-job training graduate from accredited apprenticeship programs every day. Apprenticeship programs present an effective solution to the skilled labor shortage. The ironworker’s earn-while-you-learn apprenticeship program receives roughly 50,000 applications a year, and we average 6,000 graduates a year.

Yet, contractors report difficulties in finding skilled ironworkers. There’s a missing link here. It might be the result of misperceptions about union ironworkers or lack of knowledge about our highly trained and skilled ironworkers. The bottom line is that we can supply skilled ironworkers to meet the demand. We just need to bridge the gap. We need to partner with contractors and owners that report difficulty finding skilled ironworkers and rigging professionals to solve the perceived problem.

Another key element that will affect the construction industry is President Donald Trump’s proposed infrastructure plan. He hopes to create new jobs in construction, steel manufacturing, and other sectors. We agree with President Trump that we need to repair and upgrade the national infrastructure. Major investment in infrastructure is long overdue. We applaud the proposed plan and are ready to send our ironworkers to help. We have to have a sustainable maintenance program that recognizes that existing bridges need to have ongoing maintenance. However, job creation through the proposed plan will depend on Congress’ buy-in to the broad plan.

 

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