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Slow construction growth predicted for this year

The California construction industry can anticipate a year of limited growth, according to a national hiring and business forecast released by the Associated General Contractors of America on Monday.

“The question we wanted to answer for this year’s outlook is whether the industry expects demand for new construction activity to rise again,” said Stephen Sandherr, CEO of AGC. “If so, will that new activity finally translate into significant increases in construction employment, robust demand for new equipment and a renewed sense of optimism among contractors?”

More than 1,300 AGC member firms were surveyed from across the United States, of which 87 came from California.

Forty-one percent of Golden State contractors said they would hire employees in 2013. Five percent said they would lay off staff.

Another 28 percent said there would be no change and 27 percent did not know whether there would be any layoffs or hires.

Of the 41 percent that said they would add staff, 39 percent said they would hire five or fewer people; followed by six to 15 people at 33 percent; and 28 percent said more than 16 people.

Seventy-seven percent of firms that reported they would cut staff, said it would be five or fewer people, and 23 percent of firms said they would lay off six or more people.

In 2012, 38 percent of firms surveyed said they increased staff and of those 57 percent added 15 or fewer people.

Also, 15 percent of those 87 California construction firms surveyed said they expect their industry to grow again in 2013; 40 percent said they expect growth in 2014; 29 percent believe it will be 2015.

“We have diverse results in this state,” John Nunan, president of Unger Construction. “Health care has been strong through the entire down turn in the ecnonomy. In Southern California you see a lot more construction related to bond funding for schools and transportation projects.”

Nunan also said that you are seeing more construction activity in the San Francisco Bay Area, but not as much farther north.

“If you go to San Francisco you would find labor shortages because of construction going on in the Silicon Valley with Apple and Google; the new football stadium for the 49ers, repairs and renovations to the Golden Gate Bridge … but if you drive to Sacramento it would remind you of the Dust Bowl since the area is still in recovery,” he said.

When it comes to the cost of projects this year, 28 percent of contractors surveyed said they plan to adjust their bids so that profits are greater than last year.

Twelve percent of firms said they would alter their bids so profits are smaller, and 60 percent of firms said they do not plan to adjust their bids to raise profits this year.

In 2012, 49 percent of contractors said they adjusted their bids so that profits are smaller, while 34 percent said they did not alter their bids. Four percent said they took a loss.

As far as spending goes, 37 percent of California construction firms surveyed said they would not make any construction equipment purchases this year; 35 percent said they would spend $100,000-250,000.

Contractors did say they would spend money on leasing and rental of equipment. Thirty-one percent said they would spend up to $100,000, 50 percent said they would spend more than $100,000 -- but 20 percent said they did not plan to spend any money on renting and leasing of equipment.

Firms were also asked if they expect the number of public-private partnership projects to increase or not.

Twenty-eight percent believe there will be more of these types of projects in 2013, while 65 percent believe the number will stay the same as last year, and 1 percent see there being a decrease.

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