Monthly Archives: August 2012

Tunnels dominate local infrastructure scene


The DJC’s special section on Puget Sound Infrastructure has a heavy focus on tunnel projects, thanks to the need to put traffic, light-rail and wastewater underground. But, former WSDOT head Doug MacDonald brought up some interesting points about maintaining what is already built instead of showcasing new projects. Some of those thoughts were echoed by WSDOT regional administrator Lorena Eng, who wrote about the state’s deteriorating highways. What do you think?

Construction Confidence Wanes in the Second Quarter

Associated Builders and Contractors (ABC) today released its newest construction industry economic measure, the Construction Confidence Index (CCI). The CCI is a diffusion index that reflects three aspects of the U.S. nonresidential construction industry – sales prospects, staffing levels, and profit.

During the second quarter of 2012, all three indices declined, undoing much of the first quarter’s progress and indicating that nonresidential construction momentum is waning. However, index values remain above 50, indicating that construction spending is still poised to expand, just at a slower pace.

Sales expectations fell from 68.3 to 62.3
Profit margins fell from 57.9 to 53.5
Staffing levels fell from 64.3 to 59.8

“Despite data indicating that the nation is now in its fourth year of economic expansion, the nonresidential construction industry continues to struggle to establish sustained momentum,” said ABC Chief Economist Anirban Basu. “In recent months, nonresidential construction spending levels have barely managed to edge higher, disappointing many contractors.”

“Nonresidential construction firms have become unnerved by the possibility of the nation falling off a fiscal cliff—due to a number of tax increases and spending cuts that take effect at the end of the year—leading the economy back into recession in 2013,” Basu said. “This would limit private nonresidential construction, which is among the nation’s most cyclical industries.

“A recession also would hammer away at already weak federal, state and local government finances, likely leading to further declines in public spending,” said Basu. “For contractor attitudes to improve further, it likely will take some resolution of the fiscal cliff and positive economic data,” Basu said.

Among the most interesting findings is that the proportion of contractors expecting substantial deterioration in business performance has risen from just 2 percent during the first quarter to nearly 13 percent in the second quarter.

CCI is a diffusion index. Like many of these indices, readings above 50 are favorable and indicate growth, while readings below 50 are unfavorable.

Let’s Do “Diversity” the Right Way

READER WARNING: I gave up being politically correct because it gets in the way of working on important issues in a useful and timely manner. Once trust and understanding have been established that all parties are honorable and pursuing the same goal, even if suggesting different methods to get there, then reasonable people ought to be able to have a forthright discussion without so much “pussy footing around” that they never mention the “elephant in the room.” (Two metaphors in one sentence, sorry.)

A meeting was held at ABC’s EdCenter last week, hosted by the newly forming Entrepreneurial Institute of Washington, whose purpose is “assisting Washington State’s small businesses to increase capacity resulting in increased profits and job creation.” While EIW’s focus isn’t solely construction firms owned by minorities and/or women, many in the room last night were just that.
Later in the evening the discussion got around to that old subject, set asides, which got me to thinking. Set asides for construction contracts whether they be goals, requirements, or however they are worded, were suggested, legislated, regulated and administered by well-meaning people with good intentions. Now, these many years later (and with Initiative 200 ending “preferential treatment” in November 1998 but various versions of “aspirational goals” still being used on public contracting), it seems to me we ought to get serious about diversifying the construction community to include everyone and do it the right way this time.
That means, not carving out a percent of a project for women and minority-owned firms. Because when you talk to “WMBE” contractors from “back in the day,” they were used to fulfill that requirement, but too often their capacity, knowledge, ability, finances, etc. were not enhanced as a result of that experience. So, years later, they were still in the “set aside ghetto” (Definition: a part of a city in which members of a minority group live because of social, legal or economic pressure, or a similar situation conferring inferior status or limiting opportunity) and hadn’t fully been integrated into the larger construction community.
Finding some meaningful way to assist women and minority-owned firms to grow their capacity, increase profits so they are eligible for sufficient financing, and participate fully in the industry isn’t just the right thing to do, it makes good business and economic sense for the preservation and growth of our industry. Since many contractors begin in the trades, and having a bigger vision for their lives, start their won firms, the construction company owner world will be increasingly people of color or women.
So, what’s “the right way?” It looks like “diversity” programs sponsored by associations and contractors. It looks like mentoring.  It may look like company-sponsored subcontractor programs to “adopt” subs and bring them along over time.  It looks like commitment in many different forms. I don’t have the answers. I just know the way we did it, and to some extent, are still doing it, doesn’t work. The Entrepreneurial Institute of Washington is seeking a new way. The ABC Diversity Committee has been hard at work for more than a decade and has been recognized by our National organization for their efforts. There probably isn’t one right way, just lots of committed people working on it in their own way. Your thoughts?