Schinnerer's RM Blog - economy tag

Construction Outlook for 2013 Off to Bad Start

Thu, 05 Apr 2012 14:03:00 GMT

A few weeks ago we posted an entry on architectural billings potentially showing the beginnings of an economic recovery for the construction industry. This week we offer up an opposing view.

A few years ago, new construction was mired in an industry-shifting slump. In an effort to breathe new life into construction projects, the federal government offered up stimulus funding to various projects around the country. While the overall effect of that stimulus funding has been less than anticipated, it’s about to get worse according to Engineering News Record.

According to data from the Associated General Contractors of America (AGC), restrictions on funding began in 2011. Further cuts came in 2012 when appropriations were reduced by $7.6 billion. Reports from the government’s 2013 projected budgets show tightening of funds for construction projects for what would be the third year in a row. While final figures will not be known for some time, efforts to bring down the federal deficit are bringing increased pressure to reduce spending across the board, with construction projects expected to take a big hit.

The industry has yet to recover to pre-recession levels, and the uncertainty of where funding will come from is only exacerbating problems. As budgets continue to tighten at the local level, states may be less willing to commit to critical infrastructure and new building projects, eliminating their chances of receiving their share of federal money.

Architectural Billings Point to a Recovery

Tue, 13 Mar 2012 11:53:00 GMT

Design professionals take heed; it may be that the economy is headed towards a recovery. For the third straight month, the Architectural Billings Index indicated that U.S. construction activity was headed towards a recovery. The Architectural Billings Index was 50.9 in January and a measure over 50 marks expansion; forecasting U.S. construction spending 9 to 12 months ahead. AIA Chief Economist Kermit Baker noted that the encouraging indicators are reflected in most regions of the country and across major construction sectors.

AIA's Stalled Projects Database

Tue, 28 Feb 2012 12:50:00 GMT

Unless you’ve dropped out of society for awhile, you’ve no doubt heard about the ongoing stagnation of the construction market. Projects have either stalled or are abandoned at the drawing table, and thousands upon thousands of workers are still unemployed. According to AGC, while the employment rate for construction workers recently hit a two-year high, overall the construction industry’s unemployment rate is roughly double the national rate for all other markets.

Instead of requesting lawmakers to invest federal and state money on infrastructure projects, the AIA launched a stalled projects database in an attempt to match private and public investment money with projects in dire need of cash infusions. Design professionals can register projects they have worked on that have stalled and tell potential investors about the project. In turn, investors can sign up and tell design professionals about the types of investments they make. The database enables both sides to find matches that make sense. As of January 19, a little more than two months after initial launch, the database had 36 projects registered with a combined worth of more than $1.2 billion.

Finding financing for these projects could have a profound impact on the construction job market. As noted in one of the AIA’s press releases:

According to a study by George Mason University economist Stephen J. Fuller, each $1 million in new construction spending supports 28.5 full-time, year-round-equivalent jobs. If each of the projects listed in the database obtained financing, according to this equation, 28,500 jobs could be created nationwide.

It’s easy to see why this database could prove to be an important part of rebuilding the weakened economy.

Architectural Majors May Have Trouble Finding Work

Tue, 10 Jan 2012 12:53:00 GMT

A new study conducted by Georgetown University’s Center on Education and the Workforce shows that recent college graduates with degrees in architecture have higher unemployment rates than most other majors. Recent college graduates with architectural degrees have an unemployment rate of 13.9%, which is almost twice the rate of those with engineering degrees. This can be attributed to the decline of the construction industry in the recession. While those with recent engineering degrees are doing relatively well at 7.5%, civil and mechanical engineers are still having trouble finding work for the same reasons that architecture degree-holders are.

Despite the struggles of recent college graduates with degrees that are tied to the struggling construction industry, the study suggests that it is still worth it to obtain a college degree. Job seekers with recent high school diplomas are facing an absurd 22.9% unemployment rate.

The full study can be found here.

Architects in Europe

Thu, 01 Dec 2011 15:25:00 GMT

The European Architectural Barometer is a quarterly study of 1,200 architects in Europe. Architects from the United Kingdom, Germany, France, Spain, Italy, and the Netherlands participated in the quarter three study, which focused on architects’ expectations regarding the threats and opportunities for their companies this year. The study is intended to measure the economic activity of architectural firms via a series of questions. These opinions, obviously, are largely influenced by the economic crisis that has affected Europe much as it has here in the United States. However, it should be noted that the survey was taken prior to the most recent collapses and bailouts of Italy and Greece and the restructuring of the Spanish Economy.

Architects in Spain, Italy, and the Netherlands have seen less work coming their way this year due to the economy. In the United Kingdom, architects are suffering from less assignments, and the assignments they are getting are smaller. As expected, German architects appear to be weathering these economic times better than other countries in Europe. Two out of three German architects were not affected by the economic crisis.

Opinions varied on what the biggest opportunities going forward would be. British architects see the biggest opportunities being renovation projects. Spanish architects see possibilities in new segments. Architects in Italy expect improvements only if impulses come from the government.

This study was conducted by Arch-Vision. The full results can be found at www.arch-vision.eu.