UCON's Construction Outlook: Back in (the) Black
For the year ahead, “Back in the Black” for everyone’s bottom line is a very likely outcome. The road ahead looks like greater opportunities instead of the downturn that we had feared.
AC/DC was one of my favorite bands growing up. Rowdy. Unapologetic. They didn’t take themselves too seriously. It sounds just like our industry. I recall seeing them at one of their first shows in the U.S., where I could be close enough to reach out and touch Angus Young’s guitar arm. They were true Rockers singing Back in Black long before they sold out for Taco Bell commercials. That song quite accurately describes our industry economic conditions for the 2021-22 construction seasons. Back in the Black for everyone’s bottom line is a very likely outcome. In summary, the road ahead looks like greater opportunities instead of the downturn that we had feared – which would probably have looked like the Highway to Hell. The supporting data is coming from every angle to UCON.
First, with regards to UCON’s public works Liaison Committees across the state, the story is all the same. More work. The considerable challenges discussed regarding reduced tax revenues and capital budgets have abated. Cities, counties, agencies, the state, utilities, and related are all moving forward with solid programs and significant bid schedules.
Housing for our private works contractors is on fire. Today, the Wall Street Journal reported a shortage of 4 million units nationwide. Most of all, California is paying the price for many years of local and environmental opposition to building housing stock. That has changed rapidly.
The federal spigot has been opened pretty wide, and based on UCON’s analysis of the Infrastructure Bill; there is a ton of money that will hopefully arrive as a result – though with negotiations pending that money will probably hit in 2022 – not only sustaining the market but prospectively expanding it – especially in water, wastewater and bridges.
In discussions with UCON’s union partners, I have personally spoken to their senior leaders, and they surprisingly report that 2020 hours only had small dips. Some broke new records for overall hours during the pandemic. Thus far, all reports show solid hours in 2021 and project the same for the remainder of this construction year.
Office construction/campus work remains relatively uncertain. Informally I would estimate that around 80% of member firms have people back in offices as a sample. High tech companies are bringing people back but at much lower densities – and this impacts the demand and future projections for that market segment.
Traffic is back. If that is an economic indicator, then maybe it is worth the suck-factor.
UCON as an organization is seeing record-breaking growth. In the first couple of months of 2021, we have added 19 new contractors, and at this rate, the association might see a 20% growth rate for 2022. A lot of this came from the work we did on COVID, a singular focus on union relations, and a growing interest in our rapidly scaled education and training programs now offered free to all contractor members. A list of all our new members accompanies the article, and we welcome these leaders and thank them for their confidence.
So the difficulties of the pandemic have not entirely departed but the trend lines noted in this month’s magazine and the data we have examined indicate a vibrant and robust market across the state. As always, UCON intends to combine your talent, resources, leadership and focus on creating opportunities for all members, large and small.