Ken Simonson, chief economist for the Associated General Contractors, Washington, D.C., opened the meeting with his outlook for construction. According to his prepared briefs, two worries have appeared on the construction scene: a plunge in housing activity and the soaring costs of materials. The concern with the recent downturn in residential housing is that it may begin to pull down other types of construction such as commercial.
Simonson said that though single-family housing is weak, the U.S. economy generally looks robust. Unemployment is unusually low, industrial production in manufacturing is rising, and manufacturing capacity utilization, at 81 percent of capacity, is above its long-term average for the 10th straight month. Private nonresidential construction spending was up 24 percent and public construction was up 10 percent in the 12-month period ending August 2006.
The nonresidential market sectors showing the greatest strength have been lodging, up 46 percent; multiretail, up 38 percent; hospitals, up 26 percent; manufacturing, up 24 percent; multifamily housing, up 19 percent; and warehouses other than ministorage, up 16 percent.
Construction materials have been hit heavy with price increases, and Simonson expects that trend to continue, albeit not as severe. “Over the next several months, as residential demand for materials diminishes and the 12-month comparison shifts to months most affected by Hurricanes Katrina and Rita, the upward pressure will be still less,” he said.
However, the industry should expect that materials cost increases will usually outpace the 3 to 4 percent annual rate of increase in the consumer price index (CPI) or overall producer price index (PPI). Simonson reasoned that building contractors are constrained to use generally fixed quantities of materials for which there is worldwide demand and often a slow-growing supply, and they must pay to have the materials physically delivered.
WORKSHOPS IN ATLANTAIn addition to the informative general session, the two-day conference included a slate of educational sessions, a product showcase, and plenty of networking time for commercial contractors. Most of the educational sessions were conducted by successful HVAC contractors sharing best practices from their own companies. Attendees could attend up to five complete sessions as they chose from 15 that were offered in a concurrent format.
Twelve corporate sponsors hosted the product showcase and several rolled in a mobile product demonstration in the parking lot.
According to ACCA spokesperson Kevin Holland, “This event is a great opportunity for our commercial membership to focus on those topics of most importance to their business, and to spend valuable time networking with each other.”
The 2007 ACCA Conference and Indoor Comfort Air Expo will be held March 6–8, at Disney’s Coronado Springs Resort in Lake Buena Vista, Fla.
For more information, visit www.acca.org.
Publication date: 12/11/2006