Construction News Tracker is presented by Caterpillar and produced by ForConstructionPros.com.
Within a matter of days after Washington lobbyists said any chance of an infrastructure bill this year was fruitless, President Trump has decided to take up the major issue, this time as part of his coronavirus response. The President told lawmakers he wants $2 trillion for infrastructure as long as interest rates stay at zero.
The surprise announcement was based on the need to put Americans back to work after the COFID-19 virus issues abate, and he wants a big bold plan to carry that out. Treasury Secretary Steve Mnuchin has been talking with House democrats about an ambitious package. In response to Senate republicans' clear opposition to a House infrastructure bill, though, Speaker Nancy Pelosi is considering withdrawing democrats' infrastructure priorities in support of a new bipartisan stimulus measure.
The Labor Department reports that some 16.8 million applications for unemployment payments had been received through last week. Now one in 10 Americans is jobless, the largest pileup of unemployed since 1948. Just a tip of the iceberg, according to economists who expect the nation's unemployment rate of 3.5% to skyrocket possibly as high as 15% once all the unemployed are accounted for.
Paycheck Protection Program
The Paycheck Protection Program initiated as a result of the virus crisis provides a popular means for construction firms to obtain more cash flow for businesses struggling to cope with the pandemic. Under pressure from AGC, among other groups, the Treasury Department has ordered the SBA to amend its final rules covering workforce size and annual revenue before being eligible for the government funds. AGC Chief Executive Steve Sandherr said the changes will help smaller firms continue to operate and retain staff.
Transportation revenue losses
AASHTO is asking the Congress for a emergency stimulation of funds to offset an estimated 30% loss of state transportation revenues over the next 30 months. The State Highway and Transportation Association seeks $50 billion distributed to state DOT’s via formula funding which amounts to $16 billion for revenue loss in the remainder of fiscal year 2020 and an additional $33 billion for fiscal year 2021.
The AASHTO request outlines the need for the federal backstop to prevent cancellation and delays of projects as well as potential DOT job losses.
Some 500 contractors and over 31,000 workers participated in an AGC sponsored national stand down last week. Staged on April 9th the action was to emphasize the critical need for contractors to implement the latest coronavirus safety measures at jobsites. AGC Vice President of Communications Brian Turmail emphasized that contractors need to continue to operate dependent on worker protections and the public assurance without any margin for error. Its essential that the industry adhere to a strict code of conduct when working jobsites as construction is the only U.S. industry left operating with few restrictions nationwide.
Caterpillar shuts down some operations
The COVID-19 crisis has caused Caterpillar to shut down some of its operations in the U.S. Cat has not specified which of its manufacturing plants, product categories or parts distribution centers will be affected. The company also announced it was withdrawing its 2020 financial outlook. The magnitude of the pandemic of any impact on Cat's business’s cannot reasonably be assessed at this time due to the fluidity of the situation.
Microsoft founder Bill Gates says his foundation will build factories to manufacture a coronavirus vaccine. Gates says he will pay for seven factories for vaccine candidates and in the end run will select the two best promising ones. Gates says his foundation can mobilize faster than the government to fight the outbreak because it has deep expertise in infectious diseases. It's expected to cost the foundation billions.
The 2020 outlook for homebuilding nationwide has been moved from stable to negative as a result of the COVID-19 crisis. Moodys Investor Service issued the negative report, which reflects expectations for fundamental building conditions over the next 12 to 18 months. Moodys says it sees no improvement over home sales through the remainder of this year and further sees a 2% decline in the nation's GDP for the year including a 4.3% decline in the second quarter.
Moodys is also calling for a decline to 19% for the homebuilding industry gross margin. The big question is how fast the devastated employment sector rebounds, and when.
In closing, since praise reassures individuals, it helps them neutralize doubts they have about themselves.
This is Construction News Tracker looking over the industry that makes the world a better place, presented by Caterpillar and produced by ForConstructionPros.com.
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