Some Good Nonresidential NewsFMI’s nonresidential construction index (NRCI) index for the fourth quarter 2009 is 47.7, a positive move from the third quarter 2009 reading of 44.8.
While the near-term outlook for most construction markets remains weak, healthcare, education and “other” show some relative growth potential next year. Since the inauguration of the NRCI in the autumn of 2007, panelists have been optimistic about markets coming back strong 3 years out. That optimism has dimmed since the second quarter, as nonresidential contractors realized the American Recovery and Reinvestment Act (ARRA) would not add much to their backlogs. At this time, for commercial and lodging markets, panelists believe it will take all of 3 years to make a comeback. One market that has remained relatively strong throughout the downturn is the miscellaneous mix of utility, infrastructure and sundry niche markets. Some contractors serve these markets on a regular basis, and others are beginning to seek them out because it appears that associated projects either have secure funding or are so necessary to the community that they must be built – recession or no recession.
For current focus this quarter, FMI, management consultants to the construction industry, took a break from questions about financing and the effects of stimulus funding to examine its panelists’ approach to strategic planning in the face of unprecedented uncertainty in the markets. It found that 62 percent of panelists still value long-range planning, and some credit those strategies for helping them prepare to thrive in the current downturn. For about 38 percent of panelists, looking beyond the next year was a stretch as they scramble to shore up declining backlogs and do what they can to keep their companies in business until the markets make a comeback.
Fourth Quarter 2009 Highlights:
- Overall Economy: Panelists are seeing significant
improvement in the overall economy, with the index for this category moving
from 43.5 last quarter into positive growth territory at 52.1.
- Overall Economy Where Panelists Do Business: The sense that the
overall economy is improving also is reflected in the improvement at the local
and regional levels to move this component of the index from 37.1 last quarter
to 44.5 – a stressed indicator, but a great improvement on the first quarter
results of 12.4.
- Panelists’ Construction Businesses: Last year, we noted how well
panelists’ businesses were performing relative to the downturn in the overall
economy. Now we see the other side of that lag, and only a slight improvement
over last quarter – from 35.7 to 37.3. Indicators still are moving in a
positive direction, but at this rate, it looks like it may take at least a
couple more quarters to move into growth territory.
- Cost of Materials: The cost of construction materials is up slightly.
Therefore, FMI’s index gauging the effect on contractors is down slightly, from
63.8 to 59.4. Statistically, this is an improvement from a material supplier’s
point of view, but it is a sign that either supply has decreased or demand has
- Cost of Labor: The cost of labor is slightly lower than last month,
and appears to be stable from quarter to quarter at this time, with the current
component index at 53.1.
- Productivity: The productivity component index is slightly lower
this quarter, moving from 62.4 to 61.0. This may be a sign that contractors are
reaching the maximum efficiency that can be attained by working harder with
- Delays and Cancellations: Delays and cancellations have remained stable
since the first quarter of 2009, but this is not a good sign, as delays
continue to affect 20 percent of projects, and cancellations are running at 10
percent, or more than three times what used to be considered “normal.”
- Strategic Planning: While 62 percent of panelists still think long-range planning is both necessary and valuable to keep their firms on track, 38 percent saw little value for long-range planning at a time when they are struggling to find enough work to keep the doors open. Some simply are “hunkering down” and waiting for markets to return. Nearly 58 percent are focusing on their core businesses and stressing better execution, while others are looking at new markets (21 percent), new businesses or services (6.5 percent), or taking more radical steps to prepare the firm for new markets and customers (14.5 percent).
Geothermal Drillers' CourseThe Illinois Association of Ground-water Professionals is sponsoring a 3-day International Ground Source Heat Pump Association (IGSHPA) accredited driller’s program January 27-29 at the Parke Conference Center in Bloomington, Ill.
The lead instructor will be Dominique Durbin, an IGSHPA-accredited trainer with more than 10 years of experience as a geothermal loop installer. Other IGSHPA trainers will be on hand to share their field experiences.
Course registration ($850 for members; $950 others) includes IGSHPA training manuals, study guide with sample exam questions, exam processing, a 3-year IGSHPA membership, pipe-fusion training certificate, and lunch and refreshment breaks each day.
Complete details of this educational opportunity, as well as the necessary registration form, are available by telephoning 800-990-2209.
New Ground Water Modeling ReportThe U.S. Geological Survey (USGS) has just released the report, “A Ground-water-Management (GWM) Process for MODFLOW-2005,” the latest version of the USGS modular three-dimensional ground water model. GWM can solve a broad range of ground water-management problems by combined use of simulation- and optimization-modeling techniques. These problems include limiting ground water-level declines or streamflow depletions, managing ground water withdrawals, and conjunctively using ground water and surface-water resources. Local grid refinement allows for the simulation of one or more higher resolution local grids (referred to as child models) within a coarser grid parent model. Local grid refinement often is needed to improve simulation accuracy in regions where hydraulic gradients change substantially over short distances, or in areas requiring detailed representation of aquifer heterogeneity.
Expand Your Marketing HorizonsYour drilling expertise is in high demand in many markets – geothermal, geotechnical and environmental chief among them. Decision-makers in those industries are turning to findadriller.com to locate the drilling professionals they need to succeed. If one of your New Year’s resolutions is to boost your marketing efforts, findadriller.com offers a fast, easy and economical way to make your services available to those who need them.
DFI Board Members AnnouncedElections for trustees to the board of the Deep Foundations Institute were held in advance of the 2009 Annual Conference and Members’ Meeting. Four of the six board members whose terms expire at the end of 2009 were nominated for re-election, and two new nominations were made to fill the positions previously held by Tracy Brettmann of Berkel & Company Contractors Inc., Richmond, Texas, and Rye, N.Y.-based consultant James Graham.
On Jan. 1, 2010, incumbent trustees Patrick Bermingham (Bermingham Foundation Solutions Inc., Hamilton, Ontario), Rudolph Frizzi (Langan Eng-ineering and Environmental Services, Elmwood Park, N.J.), Mat-thew Janes (Isherwood Associates, Mississauga, On-tario), and James Morrison (Kiewit Corp., Omaha, Neb.) will begin their third terms (Janes his second). James Johnson (Condon-Johnson & Associates Inc., Oakland, Calif.) and Arturo Ressi di Cervia (Kiewit Corp.) will begin their first.