Construction Firms Plan Fewer Layoffs in 2012

Significantly fewer construction firms are planning to make layoffs in 2012 than at any point in the past few years according to survey results released today by the Associated General Contractors of America and Computer Guidance Corporation. The survey, conducted as part of the 2012 Construction Industry Hiring and Business Outlook, shows many firms expect key private sector market segments to expand this year even as the overall outlook remains mixed.

"While there are some promising signs, especially when it comes to construction employment, the outlook for the industry is mixed," said Stephen E. Sandherr, the association's chief executive officer. "More than four years after demand for commercial construction began to plummet, economic conditions remain difficult."

Sandherr noted that far fewer firms are planning on making layoffs this year, only 9 percent in 2012 compared with 37 percent last year and 55 percent in 2010. He added that 32 percent of firms report they plan to add new staff in 2012. Even more positive, half of those firms report plans to add 6 or more new employees during the next 12 months.

Among the 29 states with large enough survey sample sizes, 57 percent of firms in Wisconsin plan to hire new staff this year, more than in any other state. Only 16 percent of firms in Virginia plan to add staff this year, the least amount in any state. Meanwhile, 18 percent of firms in Missouri plan layoffs for this year, the highest percentage of any state. No firms working in South Carolina reported plans to make layoffs this year. (See state-by-state survey results.)

A majority of firms expect the dollar volume of projects they compete for to either grow or remain stable in every market segment. In particular, roughly three-fourths of contractors expect the power and the hospital and higher education markets to expand or remain stable this year. In contrast, contractors working on a number of market segments typically funded by the public sector are more pessimistic. Forty-four percent of contractors expect the market for new public buildings to shrink, 41 percent expect the market for K-12 school construction to shrink and 40 percent expect the highway market to contract.

In addition, many contractors report they continue to be impacted by tight credit conditions. Nearly half - 49 percent - of responding firms report that tighter lending conditions have forced their customers to delay or cancel construction projects. Perhaps related to the tough credit environment, 60 percent of firms expect demand for green construction projects to either stagnate or decline in 2012.

"There are definitely some conflicting trends when it comes to contractors' expectations for 2012," said Ken Simonson, the association's chief economist. "The construction industry will improve this year but we are going to have to wait until at least 2013 before contractors experience the kind of recovery this industry needs."