According to Simonson at AGC, new contract awards are likely to remain at pre-ARRA levels in early 2011. "ARRA funds will quickly be depleted, and large cutbacks in activity and employment are likely by late 2011 unless there is a new surface transportation act by then," he says.
"We need long-term, well-funded legislation," adds Basso. "Until we get it, numbers will continue to head south. AAA now supports a gas tax to help fund a bill. So does the U.S. Chamber of Commerce, as do we and a number of other organizations."
Ed Sullivan, chief economist for the Portland Cement Association (PCA), says he expects construction to remain flat in 2011, at best. "The ARRA stimulus package will have less of an impact in 2011 than it did in 2010, not to mention the passage of a highway bill is questionable for 2011. At the state level, deficits will continue to impact street and local road construction," he says.
On a brighter note, a new highway bill and pent-up demand for new roads and streets bode well for concrete contractors and producers in 2013 and beyond. "We are optimistic that both the highway and FAA bills will be passed in the year ahead," Wathne says. "When the programs are enacted, we believe this will have a stabilizing effect on road builders and agencies alike."
Despite the general consensus that 2011 will not bring significant improvement in road and highway construction, Simonson says it will be a turnaround year in some sectors. "There will be improvement at various points during the year, starting with hospitals, multifamily and warehouses; followed by universities and hotels; and, lastly, some signs of life in retail, office and manufacturing," he predicts. "But markets that held up well in 2010, such as highway and military base construction, will flatten or begin to decline. Other transportation, power, water and wastewater construction should remain healthy. Public schools and other state and local government projects will stay moribund."
Improvement within any sector will be a boon to equipment rental businesses, Simonson says. "Most contractors will lack the financing or the certainty about future work to afford new equipment, at least in the first half of 2011," he says. "That means they’ll turn more to rentals as work begins to pick up."
Business greening up for landscape contractors
As it does for all contractors, the economy remains a challenge for landscapers. The good news is many professionals have adjusted accordingly to the new normal. "The good contractors have now had a couple of years to dig in and reconfigure their budgets and strategies to navigate these tough times," says Gregg Wartgow, editor-in-chief of Yard & Garden and Green Industry PRO magazines. "Maintenance services remain strong. In fact, nearly 60% of contractors expect to grow sales in 2011."
He continues, "On the installation and landscape enhancement side, business conditions are beginning to improve. New construction and housing starts are still sluggish, but homeowners are starting to loosen up again when it comes to renovating existing landscapes, installing backyard living spaces complete with hardscapes, water features, kitchens, firepits and lighting," says Wartgow.
Despite signs of improvement, competitive and pricing pressures remain top concerns for landscape contractors. "Everyone is fighting for a more limited amount of business than they had to fight for in the mid-2000s," he says. "Most contractors say customer retention and controlling overhead to stay profitable are by far the biggest challenges. Everyone is scrambling for a point of differentiation without adding cost for both the client and themselves."
Wartgow says many maintenance contractors are looking to procure new mowing, trimming and debris cleanup equipment again in 2011, as most contractors have remained busy in these service sectors, so equipment is wearing out at a normal pace of anywhere from one to three years. "With respect to installation equipment such as compact track loaders and related attachments, contractors are still touch and go," he says. "There is still a lot of uncertainty in this area of the business, due to a housing market that seems to be refusing to correct itself. That said, contractors are on the lookout for additional services they can provide a client, and renting tools like attachments, compact excavators, track loaders and aerators makes sense."