More Like a Worm than a Hockey Stick

By Ty Gable

If you’re in precast and you have found a way to weather this deep trough of the last few years, you’ve likely learned a few things along the way.

Economists have labeled the financial turbulence of the last two years The  Great Recession. But if you’re in construction or a related trade, it’s more like a Depression. Look at the numbers. Unemployment in construction is  nearly triple the overall unemployment rate in many states. In California,  where unemployment is 12.4 percent in the general population, construction unemployment is more than 30 percent down from the high  water mark in 2006. California has lost nearly one of every three  construction jobs. Nationwide, in spring 2010, we’re sitting at 9.7 percent unemployment in the general population and 24 percent in construction. In the construction trades, that’s a Depression, folks.

But in keeping with my pledge to avoid the gloom and doom, I think it’s fi  nally safe to report that we’re coming out of it. This won’t be a recovery like  we had after the recessions in the early ’80s and early ’90s. Those were  “hockey stick” recoveries. If you graph the growth after those two down  cycles, you’ll come up with a pattern shaped like a hockey stick – some slow months down at the bottom, followed by an extended upward line as the rally continued over the coming years.

No, this recovery is going to look more like an earthworm. We’ve been underground and now we’re emerging from the subterranean levels of 2009  and into the sunshine. However, we’re not going to climb out of this in hockey stick fashion with double-digit gains. Instead we’ll inch upward, fighting for percentage gains in the low single digits in a more tedious, but steady, recovery over the coming years.

Look for 2010 to finish that way, followed by more of the same in 2011. There are positive signs emerging with the endof-month reports. The U.S. construction industry gained 15,000 jobs in March, the fi rst net gain since June 2007. Most of those jobs were in the northeast, which looks like it is coming back faster than the Sun Belt states, which still can’t seem to shake the housing doldrums.

The American Recovery and Reinvestment Act will have a growing impact for our industry. At the end of March, just 26 percent of the total highway funds have been dispersed, according to a recent report from PCA Economic Research. That means we’ve got 74 percent left, and this is spending that appears to be going to real highway projects – road widening,
bridge replacement and new route construction. That’s real work for the precast industry, not the asphalt topping projects that dominated the early release of stimulus money last year as states jumped onto the “shovel ready” bandwagon. In addition, the U.S. DOT is making $48.8 billion in highway funds available to state DOTs for federal projects through the Restore Employment (HIRE) Act. The provision should enable states to make longer-term plans for roadwork and should increase hiring as some of the larger highway projects ramp up.

There is evidence of that type of highway work right down the street from NPCA’s headquarters, where a project to widen the Interstate 465 loop around Indianapolis includes precast girders, retaining walls, reinforced concrete pipe, and a precast tunnel and wingwalls on the rail trail that runs under the Interstate. It does the heart good to see all that precast stacked up on the sides of the roads near the NPCA office.

There’s more, too. I hear regularly about precasters who have gone out and aggressively taken work away from other materials by pointing out the many benefi ts of precast construction. It’s so much faster, so much more  effi cient on the job site and offers designers multiple ways to earn LEED points.

The worm has turned, and it looks like we’re headed in the right direction. The future offers many possibilities. If you’re in precast and you have found a way to weather this deep trough of the last few years, you’ve likely learned a few things along the way. And what you’ve learned will help you  immensely as we inch our way back toward prosperity. We’ll be highlighting more of the good news in months to come, and keeping our fingers crossed that the worm doesn’t start once again burrowing underground.