In the midst of one of America’s toughest debates on economic recovery, Construction Digital explores the state of the US construction industry, and asks who or what will lead the recovery during Barack Obama’s second term.
It is a landmark year for US construction. There are choices to be made and paths to be taken. 71 percent of Construction bosses polled earlier this year gave their support to Republican Mitt Romney, whose plan to axe regulatory ‘red tape’ and curb union favouritism has gained him a great deal of popularity.
On the other hand, Obama’s once lampooned Construction stimulus package is starting to trickle its way across the industry, promoting the green shoots of growth that the trade so badly needs.
President Obama in his second term will surely have a large say in which path to recovery the construction industry will eventually tread, however America is the birthplace of industry innovation, and construction has always been one of the nation’s most independent sectors – rest assured it has a few ideas of its own.
An industry in limbo
The recent economic downturn in the United States has delivered a hard hit to the construction industry. With the economy down, construction projects have been delayed and sometimes scrapped, making it hard for companies to maintain a steady line of work. It is an all too familiar story for many bosses.
Although renovations comprise a larger-than-normal chunk of today’s construction business, there are still new projects going up every day. Part of the credit for this goes to a government stimulus package that set aside $27 billion of funding for the construction of roadways, schools, educational facilities and hospitals.
The forecast for 2012 is slightly better than previous years, too – commercial building is up by 8 percent, and multi family units up by 17 percent, however the levels are still not what those in the industry would consider overwhelmingly positive.
What is abundantly clear from talking to those in the industry is that a change in tact is required to set Construction on a distinct course.
Michael J. Musto is an example of the change being made. The President and Founder of U.S. Pavement Serviceshas pioneered a ‘Made in America’ innovation aimed at using all US products. He says, innovating in this way has helped his company become one of the success stories of the US industry of late:
“The construction recovery is all about job creation, and that’s why we launched ‘Made In America.’ We are confident that our campaign will help put more Americans to work and keep our country competitive,” Musto told Construction Digital.
“I would love to see some type of tax benefit for all businesses who make the pledge to buy American. It would be great if the government did more to promote buying American made.”
The Construction battleground:
Although not traditionally considered a standard battleground for the US Presidential election, Construction encompasses many of the concerns and desires of this election. Industry regulation, tax benefits, stimulus packages and the ‘right to work’ are just some of the issues held dear to Construction workers and bosses alike.
In his February speech to the Associated Builders and Contractors National Board of Directors, Romney made his platform for Construction clear: “If I become president of the United States, I will curb the practice we have in this country of giving union bosses an unfair advantage in contracting.”
Barack Obama has hit back in his own way, defending the whopping $750,000,000,000 government stimulus package – much of which has gone to help innovative construction projects and designs. So, four years on, how is it working?
90 Billion shades of Green:
Obama’s stimulus package, $90 billion of which went towards funding green energy and the green construction movement, has been a resounding success, according to McGraw Hill’s 2012 survey. So much so that the report credits the green revolution as being ‘the silver lining in the downturn.’
Green building jobs represented 33 percent of the market in 2011, but will rise to 44.6 percent by 2014 – a near 10 percent rise. Perhaps most astonishingly, the green share of the construction market in 2005 was just two percent, rising to 48 percent in 2015 – nearly half of all work by 2015 will be energy, resource or water efficient.
With green technology and an eco-conscious construction philosophy increasingly shaping how construction projects are executed, many project managers are finding that earning a construction management degree is a logical step in preparing for this evolving field of work. Despite its current trendiness, green construction is only expected to become more popular as consumers realize the economic benefits of going green – such as the tax and energy incentives levied in European countries for having residential solar panels.
Solar energy is one of the main beneficiaries of the Obama construction stimulus. Take the example of Heeler Bend, Arizona, where the biggest Solar Power plant in the world is well underway. The project, which will create 1,500 jobs and bring in an estimated $1 billion for the local economy, has an air of the Hoover Damn about it, in terms of economic recovery through construction muscle.
On the other hand, Mitt Romney has been critical of grants and tax incentives for solar and wind technology, claiming it is a slight on competitiveness. Where his removal of government regulation in some areas would certainly increase job creation in the industry, the approach may stifle the fledgling, successful green construction industry that has blossomed under Obama.
In the conclusion of the widely respected McGraw Hill Survey of 2012, there sits an apt quote from one Joseph Schumpter: “Overall, industry specific innovation does not follow, but creates expansion.” Is the rise of the green revolution in America’s construction industry indicative of that process? Has the unprecedented Obama stimulus package laid the first bricks on that long, arduous road to full recovery? Only time will tell – but it is clear that American construction has reached a crossroads. Obama now has another crack at the whip. Only time will tell what effect the Democrat will have.