AGC: 27 percent of construction firms plan to hire in 2011; bid levels to remain 'very competitive'

More construction firms are planning to hire workers this year than are planning to make layoffs, according to the results of an industry-wide survey released Jan. 24 by the Associated General Contractors of America and Navigant. The survey, conducted as part of the Construction Industry Hiring and Business Outlook, shows the industry might finally be emerging from a severe downturn that has left millions of skilled workers unemployed.

According to the survey, 27 percent of construction firms report they plan to add staff in 2011, while only 20 percent report planned layoffs. Expanding firms plan to hire an average of 23 employees, while contracting firms plan to lay off an average of 16 employees. In 2010, 55 percent of firms laid off staff and only 20 percent of firms added employees.

Despite the improving employment outlook, more contractors expect the construction market to shrink in 2011 than expect it to grow. Contractors are most pessimistic about the private office market, where 56 percent expect activity to decline, followed by the retail, warehouse and lodging market, where 52 percent expect less activity. Contractors are most optimistic about the hospitaland higher education market, where 32 percent expect growth.

Bid levels will remain very competitive this year. According to the survey results, 29 percent of firms report they plan to lower bid levels in 2011. That follows a year when 74 percent of firms reported lowering bid levels, including seven percent who reported lowering bid levels to the point they lost money performing the work. Adding pressure to firms' bottom lines, 71 percent of firms report their health care costs are expected to increase in the wake of the new legislation enacted last year, the survey reveals.

"In the face of tough market conditions, many firms are focusing on operating efficiencies and expense reduction, positioning themselves well to take advantage of a resurgent construction market," said Michael Feigin, Navigant's managing director for construction, in the release."Construction firms are doing this, in part, by adopting new technologies and new techniques like BIM and Lean Construction."

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