Construction outlook improving in Massachusetts

Construction outlook improving in Massachusetts

Massachusetts construction firms say the public sector offers the best growth opportunities for their businesses, although two consecutive years of hardship have left many hesitant to add workers or invest in new equipment.

That’s according to a new study by the Associated General Contractors of America, a Virginia-based industry group boasting some 33,000 member firms in the United States.

Overall, Bay State respondents were mostly in line with their peers nationally, although there were some notable exceptions. Foremost, local construction workers see particular promise within the hospital/higher-education segment (40 percent expect revenue to increase year-over-year) as well as the public-building segment (38 percent predict revenue growth). Massachusetts contractors also were positive about public-school billings, with 29 percent predicting growth this year.

The national outlook for those business lines was far-less rosy. For example, only 32 percent of ACG’s members said hospital/higher-education billings are likely to increase this year, while 20 percent predicted growth in public-building bookings. Likewise, only 16 percent said public-school billings are likely to increase.

Among the reports other findings, relative to Massachusetts respondents:

  • the local labor market is stabilizing, if not improving. Some 40 percent of Massachusetts respondents said they will add jobs this year, while 8 percent said they’re likely to cut. In 2010, 36 percent of local firms cut jobs.
  • the downturn is hurting smaller firms more so than their larger brethren. Firms that cut workers last year employed, on average, five people. Firms that added positions last year averaged 16 full-time workers. A similar differential exists among firms that plan to either add or cut workers in the months ahead.
  • firms are still hesitant to invest in new capital and equipment. Only one out of every three respondents said they either bought or leased new equipment in 2010. That ratio has remained unchanged, relative to respondents’ plans to buy or lease new equipment in 2011.
  • 44 percent of respondents said the dollar volume of private-office contracts will increase this year. Twenty-five percent said it will decrease.
  • 35 percent of respondents said they won stimulus contracts last year. Local firms said fewer than 22 percent of their workers were involved in stimulus projects. A majority of respondents, some 58 percent, said they are unlikely to win stimulus-funded projects this year.
  • profitability is sinking statewide. Sixty percent of respondents said they lowered their rates in 2010. More than half, 56 percent, said they expect rates to remain flat in the months ahead. Twenty percent said they will raise rates this year, while another 20 percent expect to cut.
  • few expect to see a recovery this year. Some 84 percent of respondents said the market will not see growth until after 2011, with roughly a third (32 percent) saying it won’t recover until after 2012.

Read more: Boston Business Journal

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