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TradeWinds

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Architecture Billings Index Inches Back into Positive Territory
South continues to lead regions in demand for design services

On the heels of a nearly three-point increase, the Architecture Billings Index (ABI) climbed into positive terrain for the first time in five months. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the August ABI score was 50.2, up from the mark of 48.7 in July. This score reflects an increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 57.2, up from mark of 56.3 the previous month.

You can see this press release online here: http://www.aia.org/press/releases/AIAB096012

“Until the economy is on firmer ground, there aren’t likely to be strong increases in demand for design services,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “In the meantime, we can expect to see design activity alternate between modest growth and modest decline.”

Key August ABI highlights:

  • Regional averages: South (52.2), West (51.2), Northeast (45.5), Midwest (45.3)

  • Sector index breakdown: multi-family residential (53.0), institutional (50.2) commercial / industrial (47.9), mixed practice (46.8)

  • Project inquiries index: 57.2

The regional and sector categories are calculated as a 3-month moving average, whereas the index and inquiries are monthly numbers.

About the AIA Architecture Billings Index
The Architecture Billings Index (ABI), produced by the AIA Economics & Market Research Group, is a leading economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction spending activity. The diffusion indexes contained in the full report are derived from a monthly “Work-on-the-Boards” survey that is sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended as compared to the prior month, and the results are then compiled into the ABI. These monthly results are also seasonally adjusted to allow for comparison to prior months. The monthly ABI index scores are centered around 50, with scores above 50 indicating an aggregate increase in billings, and scores below 50 indicating a decline. The regional and sector data are formulated using a three-month moving average. More information on the ABI and the analysis of its relationship to construction activity can be found in the White Paper Architecture Billings as a Leading Indicator of Construction: Analysis of the Relationship Between a Billings Index and Construction Spending on the AIA web site.

About The American Institute of Architects
For over 150 years, members of the American Institute of Architects have worked with each other and their communities to create more valuable, healthy, secure, and sustainable buildings and cityscapes. Members adhere to a code of ethics and professional conduct to ensure the highest standards in professional practice. Embracing their responsibility to serve society, AIA members engage civic and government leaders and the public in helping find needed solutions to pressing issues facing our communities, institutions, nation and world. Visit www.aia.org.

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Economic Downturn Cut Architecture Firm Revenue by 40 Percent, Employment by Almost a Third
2012 AIA Firm Survey details current state of Architecture Firms across the U.S.

Since the beginning of the recession in early 2008, architecture firms have collectively seen their revenue drop by 40 percent and have had to cut personnel by nearly a third. Despite a national recovery from the recession in 2009, construction activity continued to spiral downward, according to the recently release 2012 AIA Firm Survey, now available for purchase at the AIA Store.

Total construction spending levels, which exceeded $1 trillion in 2008, fell to under $800 billion in 2011. As a result, gross revenue at architecture firms declined from more than $44 billion in 2008 to $26 billion by 2011, a 40 percent decline over this three-year period.

You can see this press release online here: http://www.aia.org/press/releases/AIAB096004

Such a significant reduction in firm revenue produced a comparable reduction in employment. Construction payrolls peaked in early 2007 and steadily declined through mid-2011 due to the housing downturn. Since then, there has been very little recovery. Positions at architecture firms have generally followed the path of the broader construction industry. Due to the heavy reliance of architecture firms on nonresidential construction activity, payroll positions continued to grow through mid-2008. But at that point they dropped sharply through early 2011 and have not recovered much since. Between 2007 and 2011, more than 28 percent of positions at architecture firms disappeared, more than erasing the 18 percent increase in architecture positions seen during the 2003–2007 upturn.

The general downsizing of firms has also produced a change in staff compositions. In the 2009 AIA “Business of Architecture” report, 60 percent of payroll positions were architecture positions (including interns and students), 21 percent were other design professionals (with engineers and interior designers accounting for the largest shares), and the remaining 19 percent were technical and support staff. By the beginning of 2012, these proportions had changed significantly. The largest losses were in technical and nontechnical staff, positions that generally were not directly billable on projects. Architecture staff positions increased their share somewhat over this period, while the share of other design professionals remained essentially unchanged.

Other key finds from the 2012 AIA Firm Survey:

  • S Corporations is the most common legal structure at firms

  • The number of LEED APs on staff nearly doubled in the last three years

  • The share of firm billings from renovations, rehabilitations, additions, and other construction projects increased substantially in the last three years

  • More than two-thirds of international billings in the last three years were from projects in Asia, the Middle East, or Latin America

Purchase:
The Business of Architecture: 2012 AIA Survey Report on Firm Characteristics is available for purchase through the AIA Store in PDF format only. The full 40-page report is available for $79.98 for AIA members and $129.95 for non-members. Six individual chapters from the report are available for $29.98 each for AIA members and $49.95 for non-members, while firm size reports by small, medium, and large firm sizes are available for $39.98 each for AIA members and $59.95 for non-members.

About The American Institute of Architects
For over 150 years, members of the American Institute of Architects have worked with each other and their communities to create more valuable, healthy, secure, and sustainable buildings and cityscapes. Members adhere to a code of ethics and professional conduct to ensure the highest standards in professional practice. Embracing their responsibility to serve society, AIA members engage civic and government leaders and the public in helping find needed solutions to pressing issues facing our communities, institutions, nation and world. Visit www.aia.org.

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Dodge Momentum Index Slips in August

The Dodge Momentum Index retreated 1.4% in August compared to July, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. The August Momentum Index came in at 96.8 (2000=100), down from July’s revised 98.1. Despite the month’s pullback, the index remains 21.4% ahead of its level a year earlier. The recent softening in the U.S. economy may be causing some deceleration in plans for future development.

This is particularly true for the commercial component of the index, which dropped 3.5% in August. By contrast, the institutional building segment of the Momentum Index inched up 1.0% over the month. Both components are well ahead of their year-earlier levels. In August, the institutional building segment was buoyed by two large projects entering the planning database: the $500 million MGM Resort Casino proposed for Springfield MA and the $200 million Milford Memorial Hospital proposed for Milford DE. On the commercial side, August saw the addition of Apple Computer’s $250 million planned expansion of its Prineville OR office park.

About McGraw-Hill Construction:
McGraw-Hill Construction’s data, analytics, and media businesses—Dodge, Sweets, Architectural Record, and Engineering News-Record— create opportunities for owners, architects, engineers, contractors, building product manufacturers, and distributors to strengthen their market position, size their markets, prioritize prospects, and target and build relationships that will win more business. McGraw-Hill Construction serves more than one million customers through its trends and forecasts, industry news, and leading platform of construction data, benchmarks, and analytics, including Dodge BuildShare and Dodge SpecShare. To learn more, visit www.construction.com.

About The McGraw-Hill Companies:
McGraw-Hill announced on September 12, 2011, its intention to separate into two companies: McGraw-Hill Financial, a leading provider of content and analytics to global financial markets, and McGraw-Hill Education, a leading education company focused on digital learning and education services worldwide. McGraw-Hill Financial’s leading brands include Standard & Poor’s Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts energy information services and J.D. Power and Associates. With sales of $6.2 billion in 2011, the Corporation has approximately 23,000 employees across more than 280 offices in 40 countries. Additional information is available at http://www.mcgraw-hill.com/.

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Simpson Strong-Tie Named Vendor Partner of the Year by 84 Lumber

84 Lumber Company, the largest privately held supplier of building materials in the U.S., named Simpson Strong-Tie its 2012 Vendor Partner of the Year. 84 Lumber has more than 4,000 vendors.

“Across our entire footprint, Simpson Strong-Tie has supported 84 Lumber on our 2012 key initiatives including cost structure, inventory control, retail sales for the DIYer, big national builders, and all customers in between,” said 84 Lumber Director of Purchasing Mitch Wagner. “They have exhibited true partnership.”

“Being named Vendor Partner of the Year is an exciting accomplishment, and on behalf of our company and all of our employees, I thank 84 Lumber for this honor. We look forward to continuing our longstanding relationship with 84 Lumber and are committed to helping them grow their business,” noted Simpson Strong-Tie President Terry Kingsfather.

84 Lumber operates 252 stores and component manufacturing plants in 30 states, representing the top 130 markets in the country. Many stores include manufacturing facilities such as door shops and engineered wood centers and also offer professional contractors turn-key installed construction services for a variety of products including insulation, framing, windows, roofing, decking, dry wall and after paint products.

The Vendor Partner of the Year award was presented at 84 Lumber’s awards ceremony on August 25-26, 2012 in Farmington, PA.

About Simpson Strong-Tie Company Inc.
For more than 55 years, Simpson Strong-Tie has focused on creating structural products that help people build safer and stronger homes and buildings. Considered a leader in structural systems research, testing and innovation, Simpson Strong-Tie works closely with industry professionals to provide code-listed, field-tested products and value-engineered solutions. Its structural products are recognized for helping structures resist high winds, hurricanes and seismic forces. The company’s extensive product offering includes connectors, fasteners, fastening systems, lateral-force resisting systems, anchors and products for concrete repair, strengthening and protection. Simpson Strong-Tie is committed to helping customers succeed by providing exceptional products, full-service engineering and field support, product testing and training. For more information, visit the company’s website at www.strongtie.com.

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Construction Materials Prices Increase In August And Year-To-Year; Prices Of Finished Buildings Mixed For The Month And Up Year-To-Year

Big Increase in Diesel Prices Since July and Year-to-Year Jumps in Gypsum and Architectural Coatings Prices Overwhelm Declines in Copper, Steel Products and Aluminum Mill Shapes Indexes, Officials Note

The cost of key construction materials increased in August and year-to-year, resuming a trend that has forced contractors to pay more for materials even as competitive pressures restrain prices for finished projects, according to an analysis of federal figures released today by the Associated General Contractors of America.

“After years of depressed construction activity, the last thing contractors need is to see materials price increases further erode their already slim margins,” said Stephen E. Sandherr, the association’s chief executive officer. “This isn’t the kind of economic recovery most contractors spent the past few years praying for.”

The producer price index for inputs to construction—covering materials that go into every type of project, plus items consumed by contractors such as diesel fuel—increased 0.9 percent in August and 1.0 percent from a year earlier, Sandherr noted. The price increases resume a longer-term trend that is forcing contractors to pay more for materials even as they struggle to raise prices for finished projects, the association official noted.

Sandherr observed that rising prices for several key construction materials produced the latest monthly and year-to-year increases. The price index for diesel fuel jumped 8.7 percent in August and 5.2 percent from a year ago. Prices for gypsum products are up 17.8 percent compared to August 2011 and up 0.3 percent compared to July 2012. The index for architectural coatings, while unchanged compared to July, is up 11.7 percent year-over-year. And lumber and plywood costs increased by 2.3 percent in August and are up 6.9 percent compared to August 2011.

A few materials posted substantial declines for the month and year, Sandherr added. Prices for copper and brass mill shapes dropped 1.0 percent for the month and are now down 14.0 percent year-to-year. The index for steel mill products fell by 2.5 percent compared to July 2012 and is down 8.2 percent compared to August 2011. And the price for aluminum mill shapes is down 0.7 percent for the month and 9.8 percent compared to the same point last year.

The price indexes for finished nonresidential buildings, which measure what contractors estimate they would charge to put up new structures, were mixed for the month and up only slightly year-over-year, Sandherr noted. The index for new industrial buildings was unchanged compared to July, but up 1.9 percent year-over-year. The index for new office construction also was unchanged for the month but climbed 2.4 percent for the year. The index for new school construction declined by 0.1 percent in August, but is still up 3.1 percent from a year ago. The price for new warehouse construction rose 0.3 percent in August and 3.8 percent from a year ago.

Association officials said the looming threat of substantial tax increases have likely dampened demand for new construction projects, forcing contractors to aggressively compete for the relatively few projects underway. “Washington’s failure to set tax rates for next year has put a lot of construction projects on hold, making it virtually impossible for contractors to keep pace with rising materials costs,” said Sandherr.

Click here to view August PPI table.

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Construction Employers Add 1,000 Jobs In August, Industry Unemployment Rate Hits 11.3 Percent As Sector's Workforce Shrinks By Over 200,000 In A Year
Employment Gains in Residential Construction Sector Offset Nonresidential Job Losses

Construction employers added 1,000 jobs in August while the industry's unemployment rate fell to 11.3 percent, according to an analysis of new federal data released today by the Associated General Contractors of America. The unemployment declines come as the construction industry continues to shrink, association officials noted, adding that over 214,000 workers have left the industry since August 2011.

"While we all breathe a sigh of relief any time the sector adds jobs, these numbers are hardly cause for celebration," said Stephen E. Sandherr, the association's chief executive officer. "If it wasn't for the fact that the housing sector is finally on the mend, construction employment would be heading in the wrong direction."

Despite the monthly gains, the sector's overall employment levels are essentially unchanged from a year earlier, Sandherr noted. He said that industry employment in August was only 17,000, or 0.3 percent, higher than one year earlier. There are now 5.5 million construction workers employed across the country compared to the peak levels of 7.7 million the industry hit back in 2006, Sandherr added.

The construction employment gains for the past month and past year have largely come from the residential sector. The residential construction sector added 7,100 jobs between July and August and 23,900 jobs since August 2011. Residential building contractors actually lost 1,000 jobs in August, but have gained 5,200 for the year. Meanwhile, residential specialty trade contractors added 8,200 jobs in August and 18,700 for the year.

Nonresidential construction employment declined by 6,000 in August and is down by 6,400 for the year, Sandherr noted. He said that the heavy and civil engineering construction sector, buoyed by the passage earlier this year of a new federal transportation bill, added 2,800 jobs between July and August and 17,400 since August 2011. However, nonresidential specialty trade contractors lost 6,400 jobs for the month and 18,900 for the year. And nonresidential building contractors lost 2,400 jobs in August and 4,900 since August 2011.

The 11.3 percent unemployment rate for construction workers was below the rate in August 2011 of 13.5 percent. Sandherr cautioned, however, that the declines in the construction unemployment rate are happening because many frustrated construction workers are leaving the sector. He noted, for example that since August 2011, 214,000 construction workers left the workforce while over 700,000 have left the industry since 2009.

Sandherr said construction employment remained stagnant as private sector demand remained relatively weak and overall public sector investments in construction and infrastructure continued to decline. He added that those declining infrastructure investments weren't just hurting construction employment, but were also responsible in part for the fourth annual decline in America's global competitiveness ranking.

"If we aren't careful, we are going to neglect ourselves right into global mediocrity," Sandherr said. "Instead of finger pointing and foot dragging, we need to start setting long-term tax rates, fixing critical infrastructure revenue challenges and passing measures to improve our aging drinking and waste water systems."

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Construction Spending Continues Year-Over-Year Growth Despite Dip In July As Private Nonresidential And Residential Building Offset Public Decline

Homebuilding and Apartment Construction Accelerate; Power and Manufacturing Slow but Top 2011 Levels; Public Categories Show Effects of Shrinking Local and Federal Budgets

Construction spending in July maintained consistent year-over-year growth despite a pullback from the June peak, according to an analysis of new federal data released today by the Associated General Contractors of America. Association officials said they expect the disparity between private and public construction to persist unless Washington acts to fix infrastructure funding challenges and pass long-delayed measures.

“The July spending numbers send a very mixed message,” said Ken Simonson, the association’s chief economist. “Construction of new homes, apartments and most private nonresidential structures appears to be driving gains in construction activity even as the public sector continues to drag on broader sector growth.”

Simonson noted that total construction spending declined 0.9 percent for the month but climbed 9.3 percent from July 2011 to July 2012 as well as for the first seven months of 2012 combined, compared with the same period in 2011. Private residential spending dropped 1.6 percent for the month but was 19 percent higher than in July 2011. Private nonresidential construction slumped 0.9 percent for the month but grew 12 percent year-over-year. Public construction slid further, edging down 0.4 percent in July and 0.7 percent year-over-year.

The single-family segment rose for the fourth straight month, by 1.5 percent from June and 19 percent from July 2011. New multifamily construction climbed 2.8 percent in July and 45 percent from a year earlier. The only reason residential spending decreased for the month was an apparent 5.5 percent drop in improvements, but initial estimates for improvements are often substantially revised, the construction economist noted.

Power and energy construction—the largest private nonresidential type—fell for the fifth month in a row in July, by 1.4 percent compared with June, but the total still rose 21 percent from a year ago, thanks in part to oil and gas activity. Simonson said he expected demand for power and energy construction to stabilize and probably expand. He added that he was optimistic that manufacturing construction, which shrank 2.1 percent for the month but was 17 percent higher than in July 2011, will resume growing in the coming months.

Public construction, which is dominated by highway and educational construction, remains plagued by budget woes, especially for local governments and school districts, Simonson remarked. He noted that highway and street construction spending inched down 0.3 percent in July but was up 5.2 percent over 12 months, while educational construction spending decreased 0.6 percent and 5.0 percent respectively. Other public segments dipped 0.2 percent for the month and 0.8 percent year-over-year.

Association officials said public construction growth will remain a drag on the industry unless lawmakers enact long-delayed measures for essential water, wastewater and other infrastructure projects. They added that Washington officials also need to address chronic funding imbalances for a host of infrastructure programs.

“The success of the newly built flood-control structures in protecting New Orleans from Hurricane Isaac is a good reminder of the wisdom and value of infrastructure investments,” said Stephen E. Sandherr, the association’s chief executive officer. “It costs far less to protect a city than it does to rebuild it.

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Nonresidential Construction Index Drops Five Points
FMI Reports Low-Bid Work with Rising Material and Labor Costs Add to Industry Losses

FMI, the largest provider of management consulting and investment banking to the engineering and construction industry, announces the release of its Third Quarter Nonresidential Construction Index Report. Plunging 5 points, the index is back to Q2-2010 levels.

Notably, confidence in the economy by panelists took a huge hit, dropping 24.7 points. “Beware of the upturn,” is the sentiment expressed by a number of panelists. They raise concerns that too many contractors have been taking on too much low-bid work just to keep their backlogs full. The result is businesses are becoming unable to finance ongoing losses.

On the rise is the number of contractors participating in self-funded projects as a financing partner with owner/developers. One panelist stated, “Eighty-five percent of our work is being funded through self-funding or in some case, equity investors.” This is due in part to fewer bank loans for construction. Add to this rising material and labor costs, as well as lower project management fees and profit margins, and the result is an upturn in bankruptcies for industry firms. Nearly a third of NRCI panelists have seen a decline in trade contractors, with more than 10% noting fewer general contractors and design firms.

If there is a bright side, temporary gains in the economy have been enough to boost sales and release some projects that have been on hold for a long time. The result is that panelists report that their backlogs have improved somewhat. This is the first time backlogs have shown improvement since the second quarter of 2011.

To download a copy of the full report, click here. For reprint permission or to schedule an interview with the author, please contact Sarah Vizard Avallone at 919.785.9221 or savallone@fminet.com.

About FMI
FMI is the largest provider of management consulting, investment banking and research to the engineering and construction industry. We work in all segments of the industry providing clients with value-added business solutions, including:

  • Strategy Development

  • Market Research and Business Development

  • Leadership and Talent Development

  • Project and Process Improvement

  • Mergers, Acquisitions and Financial Consulting

  • Compensation Data and Consulting

Founded by Dr. Emol A. Fails in 1953, FMI has professionals in offices across the U.S. FMI delivers innovative, customized solutions to contractors; construction materials producers, manufacturers and suppliers of building materials and equipment, owners and developers, engineers and architects, utilities, and construction industry trade associations. FMI is an advisor you can count on to build and maintain a successful business, from your leadership to your site managers. For more information, visit www.fminet.com.

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Architecture Billings Index Downturn Moderates as Negative Conditions Continue
South the only region reporting increase in design activity

The Architecture Billings Index (ABI) pointed to a slower decline in July in design activity at U.S. architecture firms. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the July ABI score was 48.7, up considerably from the mark of 45.9 in June. This score reflects a decrease in demand for design services (any score below50 indicates a decline in billings). The new projects inquiry index was 56.3, up from mark of 54.4 the previous month.

“Even though architecture firm billings nationally were down again in July, the downturn moderated substantially,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “As long as overall economic conditions continue to show improvement, modest declines should shift over to growth in design activity over the coming months.”

Key July ABI highlights:

  • Regional averages: , South (52.7), Midwest (46.7) West (45.3), Northeast (44.3)
  • Sector index breakdown: multi-family residential (51.4), mixed practice (49.1), commercial / industrial (48.4), institutional (46.6)
  • Project inquiries index: 56.3

The regional and sector categories are calculated as a 3-month moving average, whereas the index and inquiries are monthly numbers.

About the AIA Architecture Billings Index
The Architecture Billings Index (ABI), produced by the AIA Economics & Market Research Group, is a leading economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction spending activity. The diffusion indexes contained in the full report are derived from a monthly “Work-on-the-Boards” survey that is sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended as compared to the prior month, and the results are then compiled into the ABI. These monthly results are also seasonally adjusted to allow for comparison to prior months. The monthly ABI index scores are centered around 50, with scores above 50 indicating an aggregate increase in billings, and scores below 50 indicating a decline. The regional and sector data are formulated using a three-month moving average. More information on the ABI and the analysis of its relationship to construction activity can be found in the White Paper Architecture Billings as a Leading Indicator of Construction: Analysis of the Relationship Between a Billings Index and Construction Spending on the AIA web site.

About The American Institute of Architects
For over 150 years, members of the American Institute of Architects have worked with each other and their communities to create more valuable, healthy, secure, and sustainable buildings and cityscapes. Members adhere to a code of ethics and professional conduct to ensure the highest standards in professional practice. Embracing their responsibility to serve society, AIA members engage civic and government leaders and the public in helping find needed solutions to pressing issues facing our communities, institutions, nation and world. Visit www.aia.org.

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Simpson Strong-Tie launches Structural Engineering Blog

Simpson Strong-Tie recently launched a Structural Engineering Blog to provide information and resources specifically for structural engineers. The blog is intended to spark discussion and provide a forum for dialogue among peers that structural engineers can apply in their current line of work. Simpson Strong-Tie Engineering R&D Manager Paul McEntee is leading the conversation and posts to the blog weekly. McEntee also responds to comments posted on the blog.

The blog includes posts about what’s going on in the structural engineering industry, trends in design and materials, code updates, and sneak peeks into Simpson Strong-Tie R&D, testing and manufacturing processes. Going forward, the blog will include guest posts from other structural engineers within Simpson Strong-Tie, as well as from recognized industry experts and other influential leaders.

“We want our Structural Engineering Blog to help create and facilitate conversations with structural engineers that weren’t happening before. We think this is a good way to help our customers feel more comfortable using social media tools, as well as to engage with us in exchanging ideas and best practices,” McEntee noted.

Structural engineers are encouraged to subscribe to email updates and post comments to the blog at seblog.strongtie.com.

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Garland Named Silver ESOP Award Winner

Garland Industries, Inc. has been named a Silver ESOP Award winner by The ESOP Association for their work in sustaining their ESOP for more than 25 years. In the last two decades, Garland has become one of the most successful employee-owned companies in North America and is one of 49 corporate members of the Association to be honored in 2012 with a Silver ESOP Award.

“Our success is directly attributed to our employee owners who continuously go that extra mile for our customers, ensuring the continued growth and success of Garland. We have always believed that the only way to build lasting success is to help our customers succeed,” commented David Sokol, president of Garland Industries, Inc.

As a Silver ESOP Award recipient, Garland was recognized at The ESOP Association’s Annual Conference held in Washington, D.C. earlier this year. To be named a Silver ESOP Award winner, a company must be a member of The ESOP Association and have an ESOP in place for 25 years or more. This is the fifth year the Silver ESOP Awards have been presented by the Association.

“We believe strongly in the power of employee ownership and are pleased to have not only our company but our employees recognized for their efforts,” said Charles Ripepi, Garland’s chief financial officer.

The ESOP Association is the national trade association for companies with employee stock ownership plans and the leading voice in America for employee ownership. The core cause of the ESOP Association is the belief that employee ownership will improve American competitiveness, increase productivity through greater employee participation, and strengthen our free enterprise economy.

Garland Industries, Inc. is a century-old manufacturer of commercial and industrial building products that deliver best value in each niche that we serve. The family of 11 companies that comprise Garland Industries specialize in the building materials, general contracting and engineering services industries. Together, these companies – under the umbrella of Garland Industries – provide high-performance building envelope solutions to customers worldwide.

For more information, visit www.garlandco.com or contact Garland at 1-800-321-9336.

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Construction Employment Declined In 31 States Between July 2011 And 2012, 28 States Lost Construction Jobs For The Month Amid Public Construction Cuts

California Adds the Most Construction Jobs and North Dakota Adds the Highest Percentage Year-over-Year While Florida Experiences Largest Annual Decline and Alaska Has Largest Percentage Drop in Construction Jobs

Construction employment declined in 31 states from July 2011 to July 2012 and in 28 states in the past month, according to an analysis by the Associated General Contractors of America of Labor Department data. Association officials noted that construction employment decreased in the majority of states as public construction funding continues to shrink, offsetting gains in homebuilding and nonresidential construction.

"Public construction cuts in particular are taking their toll on construction employment in many parts of the country," said Ken Simonson, the association's chief economist. "With economic growth remaining sluggish, there is a chance construction employment will begin to slip in even more places."

The economist said that among states losing construction jobs during the past year, Alaska lost the highest percentage (-15.0 percent, -2,200 jobs), followed by Mississippi (-10.8 percent, -5,300 jobs) and Arkansas (-10.4 percent, -4,900 jobs). Florida lost the most jobs (-16,900, -5.2 percent), followed by Illinois (-9,800, -5.0 percent) and Missouri (-9,500 jobs, -9.2 percent).

Simonson noted that 18 states and the District of Columbia added construction jobs between July 2011 and July 2012, while construction employment remained stagnant for the year in Hawaii. North Dakota added the highest percentage of new construction jobs (16.0 percent, 3,800 jobs), followed by D.C. (12.2 percent, 1,500 jobs) and Nebraska (10.0 percent, 4,100 jobs). California added the most new construction jobs over the past 12 months (27,300, 5.0 percent), followed by Texas (22,900, 4.1 percent) and Indiana (9,300, 7.8 percent).

Arkansas had the steepest percentage decline among states that lost construction jobs for the month (-4.1 percent, -1,800 jobs), followed by Missouri (-3.8 percent, -3,700 jobs) and Montana (-3.5 percent, -900 jobs). The largest number of construction job losses in July occurred in Ohio (-4,300, -2.4 percent), followed by Missouri and New Jersey (-2,700, -2.2 percent).

Twenty states plus D.C. added construction jobs between June and July, while construction employment was stagnant for the month in Utah and Alaska. The highest percentage gains for the month occurred in Rhode Island (3.8 percent, 600 jobs), followed by Hawaii (2.9 percent, 800 jobs) and West Virginia (2.6 percent, 900 jobs). New York added the most jobs during the month (2,700 jobs, 0.9 percent), followed by Indiana (2,400 jobs, 1.9 percent) and Oregon (1,200, 1.7 percent).

Association officials cautioned that construction employment would continue to suffer from the impact of ongoing cuts to public construction budgets. Worse, if economic growth slows as businesses worry about future tax uncertainty, private demand for construction is likely to lag. They urged officials in Washington to act quickly to provide employers with tax certainty and enact long-delayed infrastructure measures for water and other systems.

"The longer Washington waits to act on vital tax and infrastructure measures, the more construction workers will lose their jobs," said Stephen E. Sandherr, the association's chief executive officer. "The best way to boost employment and help the economy is to invest in basics like clean water and set predictable tax rates."

View the state employment data by rank and by state.

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Construction Materials Prices Post Rare Year-Over-Year Dip In July; Prices Of Finished Buildings Increase Modestly For Month And Year-To-Year

Increases in Diesel and Steel Prices Since Mid-July May Renew Squeeze on Contractors, Association Warns; Officials Call for Prompt Passage of Funding Bills to Let Taxpayers Benefit from Lull in Price Increases

The cost of key construction materials dropped for the third consecutive month in July, pushing down year-over-year prices for the first time since 2009, according to an analysis of producer price index figures released today by the Associated General Contractors of America. However, association officials warned that recent spikes in diesel fuel and steel prices may drive up the cost of construction again, and they urged lawmakers to invest in needed infrastructure projects promptly while prices remain low.

“This price decline may be the last, given the large jumps in diesel fuel and steel prices that have occurred or been announced since the Labor Department collected this producer price data in mid-July,” said Ken Simonson, the association’s chief economist. “If economic growth accelerates, we are likely to see an end to discounted prices for construction activity.”

The producer price index for inputs to construction—covering materials that go into every type of project, plus items consumed by contractors such as diesel fuel—decreased 0.7 percent in July and 0.6 percent from a year earlier, Simonson noted. The year-over-year decline was the first since November 2009, he added.

Simonson observed that falling prices for several key construction materials produced the latest monthly and year-to-year decreases. The price index for steel mill products tumbled 2.8 percent in July and 5.9 percent from a year ago. The index for diesel fuel fell 0.2 percent in July and 9.3 percent over 12 months. The index for copper and brass mill shapes rose 0.5 percent for the month, but plunged 16 percent since July 2011. Aluminum mill products dropped in price by 1.3 percent over the month and 9.4 percent over 12 months.

A few materials posted substantial increases for the month and year, Simonson added. The index for gypsum products increased by 1.4 percent in July and 16 percent compared with July 2011, while the index for insulation materials climbed by 3.5 percent and 8.0 percent, respectively.

The price indexes for finished nonresidential buildings, which measure what contractors estimate they would charge to put up new structures, rose modestly both for the month and year-over-year, Simonson noted. The index for new industrial buildings posted a rise of 0.1 percent in July and 1.9 percent over 12 months. The index for new office construction also rose 0.1 percent for the month and climbed 2.5 percent for the year. The index for new school construction was up 0.2 percent in July and 3.5 percent from a year ago. The price for new warehouse construction rose 0.5 percent for the month and 3.5 percent from June 2012.

Association officials called on Congressional leaders to complete action on long-delayed measures to invest in aging infrastructure like clean water systems. “Delaying infrastructure repairs will punish taxpayers and undermine economic growth,” said Stephen E. Sandherr, the association’s chief executive officer. “Putting off needed rehabilitation and replacement of worn-out structures will only force taxpayers to pay more for the same amount of work.”

Click here to view July PPI tables.

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Nonresidential Construction Spending Expected to Increase through 2012 with Stronger Growth Projected for 2013

Even with the myriad of obstacles preventing a full scale recovery for the overall U.S. economy, the design and construction industry appears to have reasons to be at least modestly optimistic in the coming months and into next year. A sharp spike in demand for industrial facilities so far this year, along with sustained demand for hotels and retail projects factors into what projects to be a 4.4% rise in spending this year for nonresidential construction projects – up from a projection of a 2.1% increase in the January Consensus Forecast. The American Institute of Architects (AIA) semi-annual Consensus Construction Forecast, a survey of the nation’s leading construction forecasters, also projects a 6.2% increase of spending in 2013.

“With companies looking to bring back manufacturing jobs from overseas, there has been a sharp rise in demand for industrial facilities, which is leading to an upward revision in projections for future construction spending,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “Continued budget shortfalls at the state and local level, along with a depressed municipal bond market are holding the institutional market back from seeing similar upticks in spending.”

Market Segment Consensus Growth Forecasts    2012    2013

Overall Nonresidential                                        4.4%    6.2%

Commercial/Industrial                                      5.7%    10.2%

  • Industrial                                                    12.9%     8.1%

  • Hotels                                                        9.5%     18.2%

  • Retail                                                         6.2%     9.0%

  • Office buildings                                           4.7%     8.7%

Institutional                                                        0.7%     3.0%

  • Healthcare Facilities                                     4.0%     7.5%

  • Education                                                    0.3%     1.1%

  • Amusement/Recreation                                 0.1%     2.3%

  • Public Safety                                                0.0%     0.1%

  • Religious                                                     -5.0%     3.0%

Remarking on what risks exist that could undermine these projections, Baker added, “Federal tax and spending changes – the so-called fiscal cliff – that may come into play in early 2013 could upset the economic applecart and prove detrimental to recovery possibilities. We will likely have a better sense after the presidential election what will happen with regards to the Bush-era tax cuts, Social Security payroll tax, extended unemployment, and deficit reduction plans that will have a ripple effect that will extend to the construction industry.”

About the AIA Consensus Construction Forecast Panel
The AIA Consensus Construction Forecast Panel is conducted twice a year with the leading nonresidential construction forecasters in the United States including, McGraw Hill Construction, Wells Fargo Securities, IHS-Global Insight, Moody’s economy.com, Reed Business Information, Associated Builders & Contractors and FMI. The purpose of the Consensus Construction Forecast Panel is to project business conditions in the construction industry over the coming 12 to 18 months. The Consensus Construction Forecast Panel has been conducted for 13 years.

About The American Institute of Architects
For over 150 years, members of the American Institute of Architects have worked with each other and their communities to create more valuable, healthy, secure, and sustainable buildings and cityscapes. Members adhere to a code of ethics and professional conduct to ensure the highest standards in professional practice. Embracing their responsibility to serve society, AIA members engage civic and government leaders and the public in helping find needed solutions to pressing issues facing our communities, institutions, nation and world. Visit www.aia.org.
Twitter: http://twitter.com/AIA_Media

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Construction Spending Reaches Highest Level Since December 2009 As Pickup In Private Nonresidential And Residential Building Overrides Public Slump
Industry Economist Predicts Continuing Gains in Private Nonresidential and Apartment Building; Association Officials Call on Public Sector to Adequately Fund Range of Infrastructure Projects

Construction spending in June rose to a 2-1/2 year high as double-digit percentage increases in private residential and nonresidential construction more than offset an ongoing downturn in public construction, according to an analysis of new federal data released today by the Associated General Contractors of America. Association officials said they expect the disparity between private and public construction is likely to persist and urged policy makers to put more funding into infrastructure projects.

“The June spending gains come on top of upward revisions to May and April totals, reinforcing the notion that private construction is now growing consistently,” said Ken Simonson, the association’s chief economist. “Even more encouraging, the improvement is showing up in a wide range of residential and nonresidential categories.”

Simonson noted that total construction spending gained 0.4 percent for the month and 7.0 percent year-over-year. Private nonresidential spending climbed for the fourth consecutive month and was 14 percent higher than in June 2011. Residential construction increased 1.3 percent for the month and 12 percent year-over-year, with new multifamily construction soaring 3.4 percent and 49 percent, respectively, and single-family homebuilding up 3.0 percent and 19 percent.

The construction economist said that five of the 11 private nonresidential categories in the Census Bureau’s monthly report registered double-digit percentage gains in spending from June 2011 to June 2012: power and energy construction (including oil and gas-related projects), 26 percent; hotels, 26 percent; manufacturing and educational, 19 percent apiece; and transportation (mainly trucking and rail facilities), 17 percent. There were also 7 percent year-over-year increases in health care, commercial (retail, warehouse and farm) and office construction.

Public construction spending appears to have stabilized in recent months but the June 2012 total was 3.7 percent less than a year earlier, Simonson noted. He said only two of the Census Bureau’s 13 public categories posted year-over-year increases.

“Private nonresidential and multifamily construction should continue to grow in the second half of 2012 and beyond,” Simonson predicted. “Single-family homebuilding also should top last year’s figures, although progress may not occur every month. As a result, total construction spending in 2012 will be positive for the year for the first time since 2007 even though public construction will remain in the doldrums.”

Association officials said construction growth will remain unbalanced, however, unless lawmakers enact more funding for essential water, wastewater and other infrastructure projects.

“Although Congress has kept highway spending from falling, other types of infrastructure, including our aging water systems, need attention,” said Stephen E. Sandherr, the association’s chief executive officer. “There is nothing to be gained from letting our infrastructure deteriorate further.”

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Construction Employment Declines In 162 Out Of 337 Metro Areas Between June 2011 & 2012 As Economic Growth Slows, Public Sector Cuts Back
Anchorage, Alaska Had Largest Percentage Decline, Chicago-Joliet-Naperville, Ill. Lost the Most Jobs; Bakersfield-Delano, Calif. and Houston-Sugar Land-Baytown, Texas Are Top Gainers

Construction employment declined in 162 out of 337 metropolitan areas between June 2011 and June 2012, increased in 127 and stayed stagnant in 48, according to a new analysis of federal employment data released today by the Associated General Contractors of America. Association officials said that construction employment declined or remained unchanged in most metro areas as the public sector continued to cut back on investments in new construction and infrastructure and economic growth slowed.

“The construction sector continues to shrink or stagnate in most metro areas as demand for new construction remains weak in too many places,” said Ken Simonson, the association’s chief economist. “It is hard to see how the construction employment picture will improve significantly in the short term until the economy picks up more steam.”

The largest job losses were in Chicago-Joliet-Naperville, Ill. (-5,600 jobs, -5 percent); followed by New York City (-5,500 jobs, -5 percent); New Orleans-Metairie-Kenner, La. (-5,100 jobs, -16 percent); Tampa-St. Petersburg-Clearwater, Fla. (-4,800 jobs, -9 percent) and Nassau-Suffolk, N.Y. (-4,700 jobs, -7 percent). Anchorage, Alaska (-28 percent, -3,000 jobs) lost the highest percentage. Other areas experiencing large percentage declines in construction employment included Montgomery, Ala. (-20 percent, -1,300 jobs), Wilmington, N.C. (-20 percent, -2,000 jobs); Columbus, Ind. (-19 percent, -300 jobs) and Springfield, Mass.-Conn. (-19 percent, -2,000 jobs).

Bakersfield-Delano, Calif. added the highest percentage of new construction jobs (23 percent, 3,300 jobs) followed by Fargo, N.D.-Minn. (17 percent, 1,200 jobs); Knoxville, Tenn. (16 percent, 2,700 jobs) and Washington, D.C. (16 percent, 1,900 jobs). Houston-Sugar Land-Baytown, Texas (7,500 jobs, 4 percent) added the most jobs. Other areas adding a large number of jobs included Los Angeles-Long Beach-Glendale, Calif. (6,200 jobs, 6 percent); Phoenix-Mesa-Glendale, Ariz. (6,200 jobs, 7 percent); Indianapolis-Carmel, Ind. (5,400 jobs, 13 percent) and Baton Rouge, La. (5,200 jobs, 14 percent).

Association officials said they were becoming increasingly concerned that a combination of slower private sector growth and declining public sector construction investments will continue to undermine construction employment for months to come. They urged officials in Washington to act quickly to eliminate uncertainty about future tax rates and to pass long-delayed water and other infrastructure measures.

“A lot more metro areas are likely to experience construction job losses if economic growth continues to slow,” said the association’s chief executive officer, Stephen E. Sandherr. “Giving employers some certainty about future tax rates and investing in aging infrastructure will give a needed boost to our flagging economy.”

View construction employment figures by state and rank.

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