Construction Equipment Owner

On December 4 editors, publishers, and salespeople from Cygnus Business Media’s Construction Owners’ Group met for a 5-hour session to share information on the state of our individual markets. While we don’t pretend to be economists to any degree at all, we each do have our finger on the pulse of at least part of the industry we work in.

What we learned, to no one’s surprise, is that the economy has affected all our markets — and your markets. Contractors across the construction spectrum were happy if they could say they were able to tread water in 2008 and will most likely feel the same if they can tread water again in 2009. Manufacturers, those folks who try to reach you through the ads in our magazines and their presence at our trade shows, apparently feel the same way. They are expressing concern as 2009 begins, in many cases delaying advertising decisions until the year gets going. Suppliers of pavement maintenance materials are expecting 2009 to be as “good” as 2008 and possibly better as property owners continue to delay costlier work by letting maintenance bids, and early indications are they will market accordingly. And while equipment manufacturers appear more hesitant (their sales have fallen more sharply than those of material suppliers), they too are discussing and planning ad spending–while still holding back at the start of the year. But more than one equipment manufacturer indicated his company wasn’t likely to cut marketing spending any more than it already had, with the same company having some discussions about actually increasing its ad budget as we get deeper into 2009.

Many contractors put off buying new equipment in 2008 and might even try to delay large purchases in 2009. But eventually people in business have to reinvest in their business; as one manufacturer told me, “No fleet gets younger.” So just as contractors know they need to have a presence in their local market if they are going to succeed, manufacturers know they need to maintain a presence in the industry if they are going to succeed, and most are going to market accordingly.

Interesting economic indicators, for sure. Because what is often the first thing that gets cut in times of budget crunch? Marketing. That despite the fact that it’s marketing that can actually carry a company through a difficult period.

The importance of surety bonds in construction and specifically for the contractor is the latest topic of discussion on the Construction Business Podcast. Bill Maroney, president of the National Association of Surety Bond Producers and Senior Vice President with City Underwriting Agency Inc., joins this episode to talk about the key aspects that contractors will need to know about surety bonds and how they fit into today’s economic climate.

Contact Bill Maroney

Click here to go the National Association of Surety Bond Producers website

Click here to go to the Surety Information Office website

 Surety Bonds in the Construction Industry [15:00m]: Play Now | Play in Popup | Download (778)

The Small Business Administration is hosting a live chat session with AICPA Vice President of Taxation, Thomas P. Ochsenschlager from 1-2 p.m. EST.

During the web chat, small business owners are able to ask questions about tax law changes, mistakes to avoid, and tax savings tips, as well as receive key input on year-end tax planning and steps they can take to reduce their 2008 tax bills.

The chat only lasts an hour and participants will receive, live, instant feedback from Ochsenschlager. It’s unclear if a transcript or archive of the web chat will be available for those who are unable to attend live, but I would have to imagine the SBA would make this available.

If interested in joining the live web chat, visit www.sba.gov, and click on “Online Business Chat.”

Heather Jones, construction economist with FMI, checks in with the Construction Business Podcast to discuss the latest Construction Outlook report from FMI. In this podcast we talk about the current status of the market and the construction forecast for 2009 and beyond.

Download FMI’s Construction Outlook Fourth Quarter 2008 Report

 Construction Outlook 4Q 2008 [5:56m]: Play Now | Play in Popup | Download (489)

One of the great things about hosting the conference programs for NPE West and NPE is I have an opportunity to meet and spend time talking with a lot of contractors from all across the country. I learn a lot about a lot of businesses, and a lot about how people view their market.

Contractors I talked with at NPE West were overwhelmingly content with their 2008 season. “We have a bullet-proof industry,” one contractor told me, and there’s something to that. I’ve always viewed the paving and pavement maintenance market as “recession resistant” and the 2008 year supports that idea. Property managers who could afford to pave, paved. Those who couldn’t afford it (as HMA costs climbed all summer) shifted many of their dollars to maintenance — and many of the contractors I talked with were the beneficiaries of that shift.

Almost all contractors I talked with said their 2008 was equal to or better than their 2007, though many admitted their margins were a little tighter. Many contractors said they had a “typical” amount of work on the books already for 2009, while some said that partly because of good weather they were able to burn through their 2009 jobs late in the 2008 season. So as news came out yesterday that the U.S. has now officially been in a recession for a year, we will get an even better chance to see how bullet-proof this industry really is. I’m optimistic.

On Thursday I’m headed to a Cygnus editors-only “Economic Summit” to compare notes about the construction market. I’ll let you know what I learn, but if you want to let me know how your 2008 went and what you foresee for 2009 I’d appreciate it. You can call me (708-354-7039), you can send me an e-mail at allan.heydorn@cygnusb2b.com, or you can just post a comment to this blog.

Last week Stephen Sandherr, CEO of the Associated General Contractors of America, was invited to meet with President-elect Barack Obama’s transportation transition team to offer AGC’s insight onto what the new Administration should do in its first year. AGC made a pitch for a healthy amount of transportation infrastructure investment, and I think Sandherr and AGC are right on the money.

From the standpoint of this industry, infrastructure work, especially work on roads and highways, gets the big pavers back on the big jobs and frees the rest of the paving community up to work on commercial and industrial jobs as well as on low-volume roads. The long-line stripers get more work as more lane miles are paved, and the rest of the paving and pavement maintenance community can settle back into their respective niches — without being pestered by the big guys foraging for any work they can find. So from an industry-specific perspective increased infrastructure investment is a no-brainer.

But looking at it from a bigger picture, investment in infrastructure is more than a short-term economic fix (employing more people, generating more personal income and taxes, keeping people off government subsidies), it’s a long-term fix in that what is constructed or repaired (whether we’re talking about roads, bridges… levees) will last for years or decades. It’s an investment in the future in more ways than one, and I while I’m certainly not the first to call for increased infrastructure investment, now might just be the time where it will — and has to — happen.