Tri-State Contractors’ Outlook Predicts More Growth for your Business
Late last year, the Associated General Contractors of America (“AGC”), the construction industry’s leading association, conducted a survey of over 1,000 of its members in an attempt to understand the industry’s outlook for the remainder of 2018. In its report titled Expecting Growth to Continue: The 2018 Construction Industry Hiring and Business Outlook, we see that contractors are optimistic as we continue through 2018. They expect to win more jobs, hire more people, and improve workplace innovations. The AGC reported not only national results, but regional and state results, as well. From these more focused findings, we can see that construction companies in the tri-state area, which includes Ohio, Kentucky, and Indiana, generally follow Federal trends, but with a few small differences.
About the Survey
To better understand the results, let’s first look at the makeup of the survey’s participants.
- 44% of respondents were general contractors, and 37% were specialty or subcontractors.
- 53% of respondents were open shop, and 24% employed union workers for all of their projects last year.
- 63% made less than $50 million, and 30% made less than $10 million in 2017.
- 85% had less than 500 employees, and 54% had less than 100 employees.
There were enough respondents to report statistically significant state results for Ohio and Kentucky. Unfortunately, Indiana did not have the same participation, so to learn about Indiana and the tri-states overall, we analyzed both state and regional reports.
Tri-State Survey Results
Tri-state construction companies have a fairly positive outlook for revenue growth in 2018, similar to what we see at the national level. 53% of all contractors expect to make more money this year than last year. While Indiana and Kentucky fall in line with the national outlook, Ohio respondents were much more optimistic – 80% expect to bring in more revenue this year. To help with this potential revenue growth, almost all tri-state respondents expect to increase their employee headcount by at least one employee this year, but because of the Ohio contractors’ optimism, a third expect to increase their workforce by more than 25 employees in 2018.
While revenue growth is a good thing, contractors are worried about being able to staff all of these new jobs. Workforce shortages are causing the industry some worry. Most tri-state respondents anticipate having a difficult time filling both salaried and craft worker positions. Last year, tri-state contractors increased their workers’ base pay, offered more incentives and bonuses, and increased employee benefits in an attempt to improve employee satisfaction. They will continue with these strategies throughout 2018 in an attempt to retain the employees they already have.
Tri-state respondents’ top three sources of anxiety are similar to that of the national trends.
|Tri-State Top 3 Concerns
|National Top 3 Concerns
|1. Increased competition for projects
|1. Worker shortages
|2. Growth in federal regulations
|2. Increased competition for projects
|3. Worker shortages
|3. Growth in federal regulations
While the worker shortages we discussed above are certainly a big concern for tri-state-based construction companies, contractors are more apprehensive about competing for work and the changing federal regulations.
The last trend we are seeing in construction companies in the tri-state area is the openness to technology. Similar to the national results, almost half of tri-state respondents reported that they plan to invest more in IT this year than last year, namely on network management and disaster recovery. Both Ohio and Indiana construction companies have formal plans that support their goals for IT growth, but those in Kentucky do not. With or without a plan in place, these contractors share some of the same few challenges with IT:
- Time needed to implement and train on new technology.
- The connectivity to remote job sites and field offices.
- Keeping data secure from malicious users.
- Employee resistance to new technology.
While the outlook for 2018 is more favorable for construction companies than it has been in years past, there are still several challenges that tri-state-based contractors must face. The Trump administration’s efforts to improve regulatory compliance for construction companies do not have proven results just yet, but they have the potential to alleviate many of these concerns; time will tell if the administration’s changes will truly be a benefit. If you have questions about this survey or need to talk to team member experienced in helping those in the construction industry, Barnes Dennig can help! For additional information please call us at 513-241-8313, or click here to contact us. We look forward to speaking with you soon.