The politicos keep announcing how the United States economy is recovering nicely. Too bad the recovery in the construction arena means unemployment is rising. A few months ago unemployment for construction was less than 15%. As of March 2010 it is 27%. The Economic Stimulus is still a bad joke for firms involved in construction. Private work is scarce. According to economists, the continuing and increasing debt load to GDP ratio will soon approach a point that can keep our economy in the doldrums for years.
The bright spots being pointed out by the government are great, but what does this mean for contractors, designers, vendors and others in the construction food chain? With the high rate of vacancies in retail and commercial space, demand will have to pick up for 10 years for firms involved in retail and the commercial sections of construction. Yes, there will be building at new locations, but there is still a glut of space in these markets.
We are told manufacturing is picking up its pace. How well utilized is the existing capacity for production. Reworking the tooling and replacing aging equipment is one thing, but what about expanding beyond the current capacities? Is capacity so under utilized that new construction will be minimal for the next two to five years?
Financial investment and related firms, not banks, are making record profits. The bankers that make money from lending for projects are being squeezed by the federal regulators. Lending for private projects is down substantially. From my understanding the FDIC is actually expecting bank failures in 2010 to be twice as many as 2009. If project cannot obtain financing this year, when will it occur?
I can see a glimmer of hope in the private sector. Companies are reporting profits. The problem is they are keeping the profits and not spending them on expansions, renovations or repairs. There see a great deal of uncertainty in the actions being taken regarding health care, cap and trade and other issues such as unsupported spending by the federal government.
What is the solution? Good question. At my pay grade it is to take steps to hold on to my company assets (employees) as long as possible to continue in business. It is to vote the people out that got us into this mess. What is your solution?
