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More than 100 industry leaders and stakeholders came together June 25 for ABC’s fourth annual Diversity & Inclusion Summit to discuss the value of diversity in construction and promote the association’s mission within diverse groups.

Cathy Padalino, senior vice president at AON National Financial Services Product Group, and Laura Lapidus, risk control director at CNA Insurance, kicked off the summit with a session on workplace harassment prevention. “There’s sexual harassment under the law, and then there’s just bad behavior.  Your first step as an employer is to manage the bad behavior,” said Padalino. Both speakers emphasized the importance of leadership’s role in preventing harassment, as well as the impact harassment can have on the company’s reputation and bottom line.

In a keynote address, Robb Wong, associate administrator of the U.S. Small Business Administration’s Office of Government Contracting and Business Development, shed light on the critical role small businesses play in job creation. “If a large business wins a contract, they shift the staff. If a small business wins a contract, they hire,” he stated. Wong also emphasized that while minority business certifications are important in winning work, contractors should always lead with quality, not just credentials.

Leadership development professional Jennifer Brown delivered the second keynote address of the day, underscoring the need for diverse groups to have allies in the workplace so that they don’t feel the need to “cover” aspects of themselves to be accepted. “Diversity of thought leads to innovation,” Brown said. She encouraged individuals to be authentic in who they are, and to bring their own unique value to their organizations.

Joanne Brooks, vice president and counsel at The Surety & Fidelity Association of America, shared insights on the importance of a surety bonding relationship in business development. Brooks said that the number one reason contractors fail is by taking on too much work, and a good surety relationship can go far in helping a business properly manage the amount of work it takes on while leaving room for growth.

Another panel spotlighted diversity efforts at the local ABC level, featuring Jimmy Greene of the ABC Greater Michigan Chapter, Brian Sampson of the ABC Empire State Chapter and Mike Henderson of the ABC Baltimore Metro Chapter. Each shared how their organization is working toward achieving ABC’s goals of expanding diversity and inclusion initiatives, delivering best practices and addressing the workforce shortage.

The summit concluded with a panel on best practices in supply chain diversity, with both subcontractors and general contractors sharing their perspectives on best practices MBE firms can bring to the table in the pre-construction and construction processes. Panelists from the Baltimore and Washington, D.C., area included Donna Venerable Davis, CEO of D&L Cleanup, a woman-owned full service cleaning company; Carolyn Ellison, director of marketing, citizenship and community engagement for Turner Construction; Linda Graves, vice president of diversity and community affairs at Gilbane Building Company; Brad Lewis, corporate director of supplier diversity at Hensel Phelps; Gregory Malcolm, founder and president of roofing company IronShore Contracting, LLC; and Cristina Vena, president and CEO of Plexus Group, a telecommunications and electrical company. The moderator was ABC National Diversity Committee member Kirby Wu, CEO of Wu and Associates.

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Adding to a long list of honors ABC’s Construction Executive magazine has won since its launch in 2003, the CE mobile app won silver at the 2018 Excel Awards, which recognize excellence and leadership in nonprofit association media, publishing, marketing and communications. The award was presented June 25 during a gala at the Association Media & Publishing Annual Meeting in Washington, D.C.

Launched in 2017, the Construction Executive mobile app lets readers view current and past issues of the magazine in a high-quality digital format that maximizes readability on mobile devices. Content can be downloaded for offline reading, and individual articles can be bookmarked and shared via social media. There’s a powerful search function too.

Find the free app for Apple, Android and Kindle devices by scanning the QR code below or searching for “Construction Executive Mag” in your app store. 

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Estimated May construction unemployment rates fell in 45 states on a year-over-year basis, rose in four states and were unchanged in one state (Alabama), according to an analysis of U.S. Bureau of Labor Statistics data by ABC.

The May 2018 not seasonally adjusted national construction unemployment rate fell 0.9 percent from May 2017 to 4.4 percent, the lowest May rate on record. At the same time, the construction industry employed 291,000 more workers nationally than in May 2017.

“May proved to be an excellent month for construction employment, despite the ongoing shortage of skilled construction workers,” said Bernard M. Markstein, Ph.D., president and chief economist of Markstein Advisors, who conducted the analysis for ABC. “In addition, contractors are contending with a rise in building materials prices and the likelihood of further increases due to proposed tariffs on many inputs into construction.”

Because these industry-specific rates are not seasonally adjusted, national and state-level unemployment rates are best evaluated on a year-over-year basis. The monthly movement of the rates still provides some information, although extra care must be used in drawing conclusions from these variations.

From the beginning of the data series in January 2000 through May 2017, the national NSA construction unemployment rate from April to May has declined every year but one (May 2009). The rate for May 2018 was down as well, decreasing 2.1 percent from April. Among the estimated state construction unemployment rates, all were down except for one, Wyoming, which was up 0.9 percent from April.

The Top Five States

The states with the lowest estimated NSA construction unemployment rates in order from lowest to highest were:

1.      Iowa, 0.9 percent

2.      Vermont, 1 percent

3.      South Dakota, 1.4 percent

4.      Maine and Montana (tie), 1.6 percent

Two of these top states were in the top five in April: Iowa and Vermont.

Iowa had the lowest rate in May, up from second lowest rate in April based on revised data (previously reported as tied with North Dakota for the lowest rate). It was the state’s lowest May rate on record since the beginning of the estimates in 2000.

Vermont had the second lowest May construction unemployment rate, up from tied with Utah for fourth lowest in April based on revised data (previously reported as sixth lowest rate). It was also the state’s second lowest May rate after last year’s 0.7 percent rate.

South Dakota had the third lowest May construction unemployment rate, up from tied with Kansas and Wisconsin for 11^th lowest in April. It was the state’s second lowest May rate after the 1.2 percent rate in May 2015.

Maine and Montana tied for the fourth lowest May rate. For Maine, this was a significant improvement from tied with Nevada for 28^th lowest in April. The state also had the nation’s largest year-over-year drop in its rate, down 3.3 percent, and the third largest monthly decline, down 5.4 percent. For Montana, May’s ranking was an improvement from eighth lowest in April. For both Maine and Montana, it was their lowest May rate on record.

North Dakota, which had the lowest rate in April, fell to sixth lowest in May, 1.7 percent. Nonetheless, it was the state’s second lowest May rate behind the 1.3 percent rate in May 2015.

Wyoming, which had the third lowest rate in April, dropped to 14^th lowest in May, 3.1 percent. It was the only state to post an increase in its rate from the previous month (up 0.9 percent) and one of the only four states to see an increase in its year-over-year rate (up 0.4 percent).

Utah, which tied with Vermont for the fourth lowest rate in April, tied with Minnesota for the eighth lowest rate in May, 1.9 percent.

The Bottom Five States

The states with the highest NSA construction unemployment rates in order from lowest to highest were:

46.   Kentucky, 7.6 percent

47.   Arkansas and West Virginia, 7.7 percent

49.   Mississippi, 10.3 percent

50.   Alaska, 11.1 percent

Four of these states—Alaska, Arkansas, Mississippi and West Virginia—were also among the bottom five states in April.

For the 11^th month in a row, Alaska had the highest unemployment rate in the nation. Since these estimates are not seasonally adjusted, a high construction unemployment rate for the state often occurs from late fall through early spring. However, its May rate—its fifth highest May rate over 19 years—continues a troubling trend. Still, the state posted the nation’s largest monthly decline, down 8.2 percent from April.

Mississippi had the second highest rate in May—the same as in April—based on revised data (previously reported as the seventh highest rate).

Arkansas and West Virginia tied for the third highest rate in May. For Arkansas, that was the same as in April based on revised data (previously reported as tied for the second highest rate with New Mexico). For West Virginia, that compared to fourth highest rate in April based on revised data (previously reported as the sixth highest rate). It was also the state’s lowest May rate since 7.2 percent in May 2013.

Kentucky had the fifth highest rate in May compared to being tied with New York for the seventh highest rate in April.

To better understand the basis for calculating unemployment rates and what they measure, see the article Background on State Construction Unemployment Rates.

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ABC has teamed up with more than two dozen real estate industry trade associations to highlight the rich variety of career paths in the real estate sector. The group collaborated on a new website, CareersBuildingCommunities.org, which allows visitors to navigate through the scores of career paths across all sectors of real estate as the industry confronts the need to fill millions of jobs in the coming decades.

For the first time, students in high school, college, trade school or community college can explore different positions, property types and career paths via a single website. The site also includes a quiz to help guide students across the various sectors and careers within real estate.

“ABC is excited to join forces with key stakeholders in the construction, development and management of real estate assets to promote careers in these dynamic industries,” said Michael D. Bellaman, ABC president and CEO. “Our industry is facing a significant shortage of skilled construction professionals, and we applaud these efforts to raise awareness of the endless opportunities in construction and the broader real estate market.  The Careers Building Communities platform provides a way to effectively communicate with those seeking a rewarding career in the built environment.”

Careers Building Communities is a strategic collaboration by 29 real estate-related associations representing more than 10 million jobs focused on raising awareness and attracting diverse talent to the many careers available across the built environment.  Careers Building Communities is a platform designed for students, educators and other individuals to explore the commercial industry and learn more about what it takes to obtain education and employment within each sector. Learn more at CareersBuildingCommunities.org.

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ABC is thrilled to announce that Mick Mulvaney, director of the Office of Management and Budget, and Rep. Virginia Foxx (R-N.C.), chairwoman of the U.S. House Committee on Education and the Workforce, will join Josh Kraushaar, political editor of National Journal, as the headline speakers for the Legislative Breakfast on Wednesday, June 27. 

Prior to his appointment to the Trump administration in 2017, Mulvaney served as U.S. Representative for the 5th District of South Carolina since 2010, and was a member of the Budget Committee, Joint Economic Committee, Small Business Committee, Financial Services Committee and the Oversight and Government Reform Committee. During the 114th Congress, then-Rep. Mulvaney sponsored ABC’s staple legislation to prevent government mandated project labor agreements (H.R. 1671, the Government Neutrality in Contracting Act).

Chairwoman Foxx has represented North Carolina’s 5th District since 2005, and is the first Republican from North Carolina to chair a House committee in more than 65 years. Prior to her appointment as committee chairwoman, Rep. Foxx served as the chair for the subcommittee with jurisdiction over higher education and workforce development, and in 2014 led the first comprehensive overhaul of the nation’s workforce development system in more than a decade (the Workforce Innovation and Opportunity Act). 

ABC is honored to have these respected, merit shop champions address our members during Legislative Week. 

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ABC’s Eastern Pennsylvania Chapter and Orleans Technical College recently announced that they are working together on a new apprenticeship training center in Philadelphia County. Their goal is to help create more apprenticeships in the region and more diversity in the construction and trades community. The facility will also and provide employers with the chance to advance their employees’ skillsets through the state-approved NCCER merit-based training curriculum.

The program will help prepare new apprentices for career paths in electrical, carpentry, HVAC and plumbing. Orleans will use the NCCER curriculum, which is approved in all states, and NCCER-certified master trainers for will train Orleans Tech instructors to deliver NCCER classroom training in a hands-on, interactive format at the Orleans training facility.

“Associated Builders and Contractors is proud to partner with Orleans/JEVS,” said Joe Perpiglia, chapter president and CEO of ABC’s Eastern Pennsylvania Chapter. “It is our goal to provide world-class training opportunities and a path to a lucrative career in construction. ABC Eastern Pennsylvania is happy to add Philadelphia to our growing training network.”

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Despite ongoing concerns regarding labor force availability and rising interest rates, and emerging concerns regarding tariffs and construction materials prices, construction contractors emerged from the first quarter of 2018 with tremendous confidence, according to the ABC Construction Confidence Index (CCI). Each of the three indices—sales, profit margins and staffing levels—increased during the first quarter and remain well above the threshold reading of 50. 

·       The CCI for sales expectations increased from 67.1 to 72.2 during the first quarter of 2018.

·       The CCI for profit margin expectations increased from 60.7 to 63.4.

·       The CCI for staffing levels rose from 65.1 to 70.2. 

“For now, contractors remain in high demand and generally have significant pricing power relative to prior years,” said ABC Chief Economist Anirban Basu. “This should not come as a surprise. Backlog remains elevated by historic standards, both public and private construction spending continue to increase, and the economy has added jobs for a record-breaking 92 consecutive months, triggering demand for many types of nonresidential construction, whether in the form of office buildings, hotels or data centers. 

“That said, the CCI survey was conducted during the first quarter of 2018, when tariffs were being discussed more theoretically, and prior to a recent surge in materials prices,” Basu said. “More recent events suggest that a trade war among the United States and other trading partners, including China and Canada, is becoming more likely. Borrowing costs are also on the rise, with the Federal Reserve continuing to raise both the Fed Funds and discount rates. It is therefore conceivable that we have seen the peak in contractor confidence or that a peak is approaching.  

“On the other hand, nearly 60 percent of surveyed firms expect profit margins to expand over the next two quarters, while less than 13 percent anticipate a decrease. Only 6 percent of surveyed contractors anticipate a decrease in sales volume, while nearly 80 percent expect an increase. This is especially remarkable given the inherent lumpiness in construction spending, with contractors often experiencing sharp decreases in construction spending volume as important projects draw to a close. The most recent survey results are consistent with the notion that the marketplace is so active presently that contractors, including subcontractors, are able to flow from project to project. Not coincidentally, just 4 percent of contractors anticipate decreasing staffing levels over the next six months.” 

The implication is that construction spending data should be quite solid during the next two or three quarters. Importantly, nonresidential construction spending downturns generally begin a year or more after broader economic performance begins to wane. While many economists warn of emerging storm clouds on the horizon in the form of rising inflationary pressures and greater asset price volatility, contractors and their peers can fully expect that 2018 will end up being a very fine year.

CCI is a diffusion index. Readings above 50 indicate growth, while readings below 50 are unfavorable. 

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ABC released the following statement from Sam Melamed, CEO of the ABC Insurance Trust, following the U.S. Department of Labor’s release of its final rule on Association Health Plans (AHPs): 

“Associated Builders and Contractors (ABC) applauds the Trump administration’s action to undo the harmful impacts of the Affordable Care Act (ACA) by promulgating a new final rule on association health plans (AHPs),” said Sam Melamed, CEO of the ABC Insurance Trust, which offered ABC members comprehensive and affordable health care coverage through an AHP for more than 40 years until incompatible state laws made it too expensive to provide coverage in 1999. “AHPs are a common-sense solution to expand access to affordable health coverage and lower the cost of health care for small businesses.” 

“Since the implementation of the ACA, ABC members no longer have the choice or flexibility to structure health care coverage options that meet the needs of their workforce. The AHP rule released today is a great starting point to provide small businesses with the opportunity to reduce health insurance costs by banding together to obtain the same economies of scale, bargaining clout and administrative efficiencies available to employees in large employer plans.”

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Cianbro Corporation of Pittsfield, Maine, a member of ABC’s Maine Chapter and five others, has been awarded Accredited Quality Contractor (AQC) status by ABC.

The AQC program recognizes and honors construction firms that document their commitment to excellence in five key areas of corporate responsibility: quality, safety, employee benefits, training and community relations.  A company that meets the criteria set forth in the program and has earned Safety Training Evaluation Process (STEP) Gold, Platinum or Diamond status, is formally designated an “Accredited Quality Contractor.”      

Companies selected as an Accredited Quality Contractor receive:

• Wide recognition within the industry and business community and with the public 
• Authorization to use AQC language in bid documents
• Permission to use the AQC logo on letterhead, business cards and jobsite signs
• Access to AQC marketing materials such as hard hat stickers, membership plaques, etc. 
• Recognition in FindContractors.com, ABC’s searchable tool to identify fellow ABC members by company name, chapter, CSI and NAICS codes and other designations
• Points on ABC National Excellence in Construction^® award submissions
• Mention in the December issue of ABC’s magazine, Construction Executive, as well as eligibility to purchase specially priced packages for half-page, full-page and two-page designs

For more information, visit abc.org/aqc or contact aqc@abc.org.

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ABC reports that its Construction Backlog Indicator (CBI) contracted to 8.8 months during the first quarter of 2018, down 9 percent from the prior quarter. CBI is down 2 percent on a year-over-year basis.

“The Construction Backlog Indicator hit an all-time high during the fourth quarter of 2017,” said ABC Chief Economist Anirban Basu. “A number of factors pushed backlog lower during the first quarter of 2018, including an extensive winter. Only one region has experienced a decline in backlog on a year-over-year basis: the Middle States, which encompasses the Upper Midwest. There also was a significant uptick in survey participation during the first quarter, which may have helped shape the result. In sum, average backlog remains lofty by historic standards.  

“Given improved weather and normal seasonal factors, it is likely that backlog will bounce back during the second quarter. However, the level of improvement may be undermined by a combination of worker shortages and rapidly rising construction materials prices. Despite recent increases in the costs of delivering construction services due to rising human capital and materials costs, there is scant evidence of a decline in demand for construction services,” said Basu.

Highlights by Region 

·       Backlog in the South fell 8 percent during the first quarter, but remains 2.9 percent higher on a year-over-year basis.  Large metropolitan areas such as Tampa, Fla., Atlanta, Dallas and Austin, Texas, continue to generate significant construction activity. Expect backlog to remain lengthy as communities impacted by last year’s storms continue to rebuild. 

·       Backlog in the Northeast fell after expanding for five consecutive quarters. Large cities along the northeast corridor continue to attract commercial investment, including the suburbs of Baltimore. Despite the first quarter decline in backlog, the region’s reading remains elevated by historical standards.

·       Backlog in the Middle States is down 12.6 percent for the quarter (more than a full month) and 14.7 percent year over year. Weather played a role, but other factors are at work. Tariffs and threats of trade wars impact this region disproportionately given its central role in the nation’s industrial production. 

·       Backlog in the West surged to its highest level since mid-2014. Rebuilding from prior wildfires likely played a role, but the bigger reason relates to surging technology sectors in San Jose, Calif., San Francisco, Seattle, Portland, Ore., Los Angeles and San Diego.  

Highlights by Industry

·       Backlog in the commercial/institutional segment fell for the first time since the end of 2016. Despite the 8.8 percent quarterly decline, backlog in this segment remains 3.2 percent higher than the same time one year ago. However, this sector is vulnerable to further declines given its significant exposure to rising borrowing costs, higher materials prices and growing concerns regarding product saturation in a number of first-tier American real estate markets.

·       Average backlog in the heavy industrial category rebounded during the first quarter, expanding 13.5 percent. Despite this sizable increase, the segment remains roughly unchanged at historically low levels on a year-over-year basis. Construction spending related to manufacturing has been drifting lower for months. While there have been some highly visible announcements regarding large capital projects in this segment, concerns regarding trade wars are likely to suppress backlog to a meaningful degree. 

·       Backlog in the infrastructure category drifted back to Earth during the first quarter, declining by more than two months from levels observed during the fourth quarter of 2017. This reading may have been impacted by a sharp increase in survey participation. Weather likely played an even larger role. The expectation is that backlog in this category will expand for the balance of the year as improving state and local government finances spur more investment in education, public safety, highway/street and other publicly financed categories. 

Highlights by Company Size 

·       Large firms—those with annual revenues in excess of $100 million—experienced a sharp decline in backlog. This overlapped neatly with the decline in backlog related to infrastructure. Backlog for these large firms remains higher than any other classification considered in this release.

·       Backlog among firms with annual revenues between $50 million and $100 million increased 0.4 months during the first quarter and currently stands at its second highest level since the series began in 2008. This group is heavily impacted by certain construction segments that have experienced little interruption in construction spending momentum.

·       Firms with between $30 million and $50 million in annual revenues experienced a sharp decline in first quarter backlog. Enhanced survey participation likely explains part of this result. This group is significantly exposed to the energy sector, which stands to see an uptick in activity given recent trends in oil prices.

·       Backlog for firms with annual revenues of less than $30 million increased 0.3 months during the first quarter and remains remarkable steady. This stability is likely the product of a dearth of available subcontractors to do electrical, mechanical, glass installation and other forms of work.

CBI is a leading economic indicator that reflects the amount of construction work under contract, but not yet completed. CBI is measured in months, with a lengthening backlog implying expanding demand for construction services. More CBI charts and graphs are available on abc.org.

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