The Associated Builders and Contractors, Inc. Western Michigan Chapter (ABC WMC) presented its 2019 Construction Economic Forecast events on Tuesday, December 4. ABC’s national chief economist, Anirban Basu, spoke to more than 400 commercial construction professionals and community stakeholders in Kalamazoo and Hudsonville — a record attendance.
In a 2019 economic outlook published in Construction Executive magazine, Basu said, “U.S. economic performance has been brilliant of late. Sure, there has been a considerable volume of negativity regarding the propriety of tariffs, shifting immigration policy, etc., but the headline statistics make it clear that domestic economic performance is solid.”
Norm Brady, ABC WM’s president and CEO, agrees with Basu that 2019 should be a strong year for construction in West Michigan. Key indicators considered in the forecast include ABC’s data on construction backlog and the Architectural Billings Index.
“His predictions and my beliefs are founded on pretty good data,” Brady says. “Members are polled about the amount of backlog work. The latest national figures put this at 9.8 months. If the world stopped today, construction employers would have 9.8 months of work left to do. This is the highest since 2000. Architects are upstream from us. The amount of billing they produce is a good indicator of future construction activity.”
Brady notes that when the Architectural Billing Index is at or above 50, a positive construction outlook is predicted. Currently, the numbers are 54 nationally and 47 in the Midwest. He says that the strongest building sector is commercial lodging (a 50.2 percent increase), with foreign investment being a prime mover. He is hopeful that education will be a strong segment, as well.
“The segment that I am most interested in is education. A few months ago, Michigan repealed its 50-year-old prevailing wage law that contractors pay union scale rates on required state-funded projects like schools,” Brady says. “That drove up cost of construction on public schools. I’m hopeful that schools will be able to move projects ahead with prevailing wage being repealed.”
According to Indeed estimates of Construction Worker Salaries in Michigan, “The average salary for a Construction Worker is $14.67 per hour in Michigan, which meets the national average.” Employment numbers in the construction sector indicate a labor shortage may be a concern in the future. Other concerns post-2019 include rising materials costs and interest rates.
“We’re just coming off from a really strong 10-year period, especially the past seven years, where growth has been exceptional. The result might be somewhat of a slowdown. I don’t think there will be a recession but the growth rate that we’ve had is not going to be so robust in the years that follow,” Brady says. “The real story of construction is a story about great wages, opportunity, the pride that you have when you improve your community when you build a building. That’s our mission.”
Written by Estelle Slootmaker, Development News Editor
Photos courtesy Associated Builders and Contractors, Inc. Western Michigan Chapter