Issue link: http://read.dmtmag.com/i/358154
August 2014 | Construction Equipment Distribution | www.cedmag.com | 37 Construction Overview +RDUGLQJ4XDOLÀHG:RUNHUV Until recently, many contractors were able to absorb an increased volume of projects by using their existing workers more. The fact that employ- ment dropped less (30 percent) than spending (38 percent) in the recession is a sign that companies were "hoarding" workers – keeping their most valued employees on the payroll even when they didn't have full-time jobs for them. As workloads picked up, some employees moved from the shop or training room to the field. Part-time employees started working full-time again. Overtime increased. Indeed, since employment bottomed out in January 2011, aggregate hours worked in construc- tion have risen by 15 percent, compared with an 11 percent rise in number of employees, implying that employees are working almost one-and-a-half more hours per week than at the low point. Clearly, such expansion of hours cannot go on forever. In the past year, employment has risen faster than aggregate hours as contractors have either chosen to reduce overtime or found their workers unwilling to put in as many hours as before. Whatever the explanation, more employers will be posting help-wanted notices if the volume of projects continues to increase. But employers worry that nobody qualified will answer those ads. To see which construction segments are most likely to have problems finding qualified workers, it is helpful to analyze monthly data from the Census Bureau on construction spending by project type. In the first five months of 2014 combined, nonresi- dential construction spending increased 6 percent from the same period in 2013. While not stellar, that perfor- mance was better than the 1 percent decline that private and public nonresidential construction registered in all of 2013. 3RZHUIXO6HFWRU The most dramatic turnaround occurred in the series the Census Bureau calls "power." This category comprises all types of conventional and renewable power generation, transmission and distribution. In addition, it covers all activity associated with oil and gas drilling (other than the wells themselves, which count as mining, not construction) and pipelines. In 2013, power construction spending decreased 7 percent. In January through May 2014, power construction increased 30 percent over the same months of 2013. Much of the gain relates to ever-expanding hydraulic fracturing (fracking) and the abundance of oil, natural gas liquids and "dry" natural gas that is being produced. Fracking is generating demand for construction at well sites, pipelines and gas-fired power plants. In addition, it is bringing workers to areas without sufficient housing or services, such as the Bakken formation in western North Dakota, the Eagle Ford in south Texas, the Permian basin in west Texas, and parts of Wyoming, Colorado, New Mexico, Pennsylvania, Ohio and other states. Fracking is boosting other categories of construction as well. Railroads have been adding tracks and yards for trains to haul crude oil from areas lacking sufficient pipeline capacity to terminals and refineries in distant parts of the country. Petrochemical plans and export terminals for liquefied natural gas are beginning construction, as are truckstops and central fueling facilities for natural gas- powered heavy trucks and buses. 2IÀFH:RUN Another category that has performed well so far this year is office construction, which is up 16 percent year-to-date through May after ending 2013 unchanged from the year (continued on next page)