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Wednesday, October 9, 2002 Is construction slowing?
Majority of Georgia contractors find activity down in 2002, survey shows The state's main economic engine is sputtering. Worse, a large majority of the state's construction professionals believe Georgia may be headed toward a "double dip" recession. Those findings were contained in a survey released recently by one of Georgia's largest construction organizations. According to a review of economic conditions among industry professionals, Associated Builders & Contractors of Georgia found that 74 percent of the state's contractors have seen their business decline over the past year. Meanwhile, roughly 15 percent say their business is about the same as last year, while only 12 percent have seen business increase. ABC of Georgia which represents the broadest segment of the state's construction industry, including general contractors, subcontractors, specialty contractors, suppliers and allied groups contacted its entire membership of almost 500 construction-related companies, in compiling the survey. "We expect a slow recovery based on our clients' feedback," said Alpharetta's Dan Stephens of Georgia Blue, one of the state's largest blue print providers. Stephens is among the 68 percent of industry professionals who say Georgia is "possibly" headed into a back-to-back recession in the months ahead. With 12 percent saying the state is "very likely" to face a new recession, almost 80 percent of those involved with the state's largest industry expect economic recovery to be slow and delayed until sometime in 2003. Meanwhile, 21 percent predicted that renewed recession is "not likely." Regardless of Georgia's economic prospects, it is clear that the state's contractors are running harder than ever in the chase for new work. The survey found that 85 percent of the state's contractors are regularly seeing an abnormally high number of bidders on the jobs available, a traditional indicator of slow economic times. While intense bidder interest means usually means lower construction prices, it typically signals low contractor profit margins as well. "We are finding that people are only using overhead with little or no profit (in bidding) and we are sure this will pose problems with companies staying in business," said Linda Clark, sales manager of Nations Fence, a Lovejoy fencing contractor. Nevertheless, the economic appraisal contained some good news for the industry. Inflation is not a problem for the state's construction industry. Approximately 58 percent of the contractors say prices for construction materials have remained "about the same" through 2002, though 27 percent have reported spot price increases of around 5 percent for certain materials. "I believe we would see construction starts increase dramatically if some of the major material suppliers, most notably steel and concrete, get in step with the rest of the industry and give us more aggressive pricing," said Mike Dominy of All-Steel Buildings, Inc., a Buford building contractor. Further, not one contractor expected 2003 to be worse than 2002; at least 58 percent expect the next year to be about the same as the past 12 months, while 42 percent predict improving business conditions in the new year. Mark Shearon of Qore Property Sciences, Inc., a Duluth geotechnical and environmental sciences firm, is among those seeing signs of a faster than expected turn-around. "The ongoing construction this year has been roughly steady over the summer," he said. "However, we are working on numerous projects that are in the land acquisition or pre-design stage, indicating a possible uptick in new starts in early 2003." The Associated Builders and Contractors of Georgia (ABC) is a construction trade association representing the commercial and industrial markets with nearly 500 member companies. ABC is the only construction association that represents equally the entire construction team general contractors, subcontractors, specialty contractors, suppliers and construction-related firms. The statewide organization is one of 81 chapters of the National Associated Builders and Contractors based in Washington, D.C., which represents more than 23,000 general and specialty contractors, suppliers and associate members. Fortune Magazine recently named ABC to its list of top fifty most influential trade associations in the United States.
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