Reshaping the Construction Industry

Millennium Tower in San Francisco is still leaning. We called it the Leaning Tower of San Francisco in an earlier post when we explained that the tower, completed in 2011, has sunk about 16 inches after six years, two times the amount expected over the 50 year life of the project. It is leaning 2 inches.

It is built over landfill, and in an apparent effort to reduce development costs, the piers under the building do not reach bedrock. Additionally, an adjacent transit station being developed has been accused of contributing, if not causing, Millennium tower to lean.    Read more » about Leaning Tower Gains Lawsuit

Construction input costs outpace new building PPIs; more price hikes appear imminent

Editor’s note:  Construction Citizen is proud to partner with AGC America to bring you AGC Chief Economist Ken Simonson's Data DIGest. Check back each week to get Ken's expert analysis of what's happening in our industry.

The producer price index (PPI) for final demand in January, not seasonally adjusted, increased 0.5% from December and 1.6% year-over-year (y/y) from January 2016, the Bureau of Labor Statistics (BLS)  reported today. AGC posted tables and an explanation focusing on construction prices and costs. Final demand includes goods, services and five types of nonresidential buildings that BLS says make up 34% of total construction. The PPI for final demand construction, not seasonally adjusted, climbed 0.3% for the month and 1.3% y/y. The PPI for new nonresidential building construction—a measure of the price that contractors say they would charge to build a fixed set of five categories of buildings—rose 1.4% y/y. Changes ranged from 0.8% y/y each for industrial and school building construction to 0.9% for health care buildings, 1.9% for office buildings and 2.0% for warehouses. PPIs for new, repair and maintenance work on nonresidential buildings ranged from 0.8% y/y for electrical contractors to 0.2% for plumbing contractors, 2.0% for roofing contractors and 4.1% for concrete contractors. The index for inputs to construction—excluding capital investment, labor and imports—comprises a mix of 59% goods (including 5% for energy) and 41% services (including trade services, 26%; transportation and warehousing, 4%; and other services, 10%).    Read more » about AGC's Data DIGest: February 6-14, 2017

The following article was written by Jennifer Woodruff, Marketing Director of ABC Houston, and originally published in ABC's BuildHoustonOnline

With the passage of House Bill 5 (HB5), there is a renewed emphasis on Science, Technology, Engineering, and Math (STEM). The bill has been a much needed shot in the arm to re-energize the pursuit of Career and Technical Education (CTE) around the Gulf Coast region. However, with the increased demand on CTE programs comes higher material costs, subject matter expert/speaker needs, and basic equipment underwriting for ISD budgets that are already stretched thin. Currently, 22 area ISDs who represent 43 area high schools are partnered with Construction & Maintenance Education Foundation (CMEF), using the NCCER curriculum to deliver accredited craft training. Students who attend these sponsored schools get a head start on their craft training so that they are ready to enter the industry as they graduate from high school.    Read more » about Local ISDs in Need of Industry Sponsorship, Consumables and Equipment

The following article originally appeared in the February 2017 newsletter to clients of Kiley Advisors, now a part of FMI Corporation.  Reprinted with permission.

Milestone events, like our acquisition by FMI, prompt a period of reflection and optimism.  You look to the past for conclusions and lessons; you look to the future with expectations and possibilities.  While I was in this period of pondering, I heard Tim Cook, Apple’s highly respected CEO, on the Charlie Rose Show.  Responding to the question about Apple’s continuing ability to innovate, he said, “We will always do it. Steve [Jobs] put innovation in our corporate DNA.”

That interchange made me think harder and deeper as I looked to the past.  For the past 33 years, from a very privileged perch, I have been observing commercial construction contractors in the Greater Houston Area.  This period per statistics and records has been the most volatile in history.  Adapting to frequent, often extreme, changes has been imperative for those companies that survived and prospered.   Read more » about Leadership and Lifelong Learning – Lessons from the Past; Keys to the Future

A construction company in Washington state faces stiff fines for "numerous repeated safety violations" that reportedly "exposed workers to potential falls and other hazards at a residential construction site." The Washington State Department of Labor & Industries slapped J&I Construction with fines resulting from multiple violations. Now the company owes more than $200,000.

More from the Insurance Journal:

The three violations, each with a penalty of $42,000, were for not providing proper fall protection to three employees who were working on the top edge of a wall nearly 20 feet off the ground, and the company has been cited two other times for the same issue, according to L&I.

J & I was also cited for three repeat violations for not having a plan outlining the fall hazards on the specific job, exposing workers to unguarded wall openings that they could fall through and for not ensuring that workers didn’t stand or step on the top of a self-supporting ladder. Each violation carries a penalty of $21,000.

The company was cited for two additional repeat violations for not having railings on open-sided stairs to protect employees from falls ($5,600), and for not ensuring that employees wore hard hats where there was a danger of flying or falling objects ($4,200).    Read more » about Construction Firm Hit with Major Fine for Safety Violations

The following article originally appeared in the February newsletter to clients of Kiley Advisors, now a part of FMI Corporation, for the purpose of providing the latest leading indicators and industry issues to those clients.  Reprinted with permission.

Houston managed to squeak through 2016 with a net job growth of 14,800 jobs. For what many economists have stated is the worst recession to hit Houston in decades, that is a major achievement for our region and a testament to the diversification of our city.

Thanks to our ever-growing Port of Houston and Texas Medical Center, and the heavy industrial boom on the east side of town, Houston was buffered from a more severe downturn. However, companies were also quicker to act. Right-sizing and making the difficult decisions early. Breaking the bone to ensure it resets itself right the first time.   Read more » about Houston’s Monthly Metrics: February 2017

Associated Builders and Contractors (ABC) announced yesterday that more than 170 of the top construction apprentices and trainees in the country will compete in the 30th annual National Craft Championships, March 1-2 during ABC’s Workforce Week ’17 in Fort Lauderdale, Florida.

Competitors from 29 states will contend for gold, silver and bronze medals and a safety award in 13 competitions representing 11 crafts.  The two-day competition includes a written exam and a hands-on, practical test where competitors will demonstrate their high-level craftsmanship and best safety practices.

“The National Craft Championships is a great opportunity to show off the exceptionally skilled and well-trained craftsmen and women that work on Associated Builders and Contractors member jobsites,” said 2017 ABC National Chair Chuck Goodrich, president of Gaylor Electric Inc. Indianapolis.  “ABC looks forward to showing off the very best the merit shop construction industry has to offer, including six Gaylor Electric apprentices, and drawing needed attention to the terrific career opportunities available in the construction industry.”   Read more » about More Than 170 Top Construction Pros to Compete at ABC’s 2017 National Craft Championships

You might think that your company or jobsite is secure and protected from risk. Don’t bet on it. If you think that you have everything covered and you have shifted your risk, think again. Whatever you might be doing to protect your company, the potential risk is much higher than you might think. We took a look at the Kroll Global Fraud and Risk Report and found that the stats were shocking.

According to the 2016/2017 Kroll Global Fraud and Risk Report, 82% of executives surveyed reported that they had an incident of fraud over the previous 12 months. The report, which examines major global theaters and industries, found that most responding companies have seen an increase in fraud, cyber and security breaches.

The study, completed by Forrester (Nasdaq: FORR), “one of the most influential research and advisory firms in the world,” includes “10 in-depth interviews and an additional online survey with 545 senior executives worldwide across multiple industries.”    Read more » about Fraud, Cyber and Security Risks Rose in 2016

Through their various trade associations, construction executives from all over Texas are letting state lawmakers know what they think about issues that impact the industry. The Texas Construction Association, the Associated Builders and Contractors of Texas, and other groups have compiled lists of reforms and proposed changes to state laws that they hope will be enacted during this legislative session. As you may know, the Texas Legislature only meets in regular session for five months every two years. 

There are some fairly complex policy questions involved, which is part of why lawmakers must first hear from those who are directly affected before any changes can be made during a limited time frame. 

This past week, I had the honor of speaking to contractors gathered in Austin for the Texas Construction Association’s bi-annual Walk on the Capitol. I've been pleased to be part of this great event for three legislative sessions in a row. This session, the TCA has prioritized reforms to the state’s lien laws, worker misclassification legislation, and other things.    Read more » about Construction Executives Weigh in on Issues at the Texas Capitol

Employment rises in January; spending slips in December; recent pay trends are mixed

Editor’s note:  Construction Citizen is proud to partner with AGC America to bring you AGC Chief Economist Ken Simonson's Data DIGest. Check back each week to get Ken's expert analysis of what's happening in our industry.

Nonfarm payroll employment in January increased by 227,000, seasonally adjusted, from December and by 2,343,000 (1.6%) year-over-year (y/y), the Bureau of Labor Statistics (BLS) reported today. The unemployment rate inched up to 4.8% from 4.7% in December. Construction employment (6,809,000) increased by 36,000 from the upwardly revised December total to the highest level since November 2008 and rose by 170,000 (2.6%) y/y. Average hourly earnings in construction increased 3.2% y/y to $28.52, or 9.7% higher than the average for all private-sector employees ($26.00 a y/y gain of 2.5%).   Read more » about AGC's Data DIGest: Jan. 30-Feb. 3, 2017


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