Economic Growth Stronger than GDP Figures Suggests

Positive news for the economy as both real gross domestic product (GDP) and nonresidential fixed investment expanded during the third quarter, according to an analysis by Associated Builders and Contractors (ABC) of today’s  release from the Bureau of Economic Analysis. GDP expanded 1.5 percent (seasonally adjusted annual rate) during the third quarter while nonresidential fixed investment expanded by 2.1 percent during that period, both building on positive results from the previous quarter.

The bureau estimated that GDP expanded 3.9 percent during the year’s second quarter, while nonresidential fixed investment was revised upward to a 4.1 percent increase from an initial estimate of a 0.6 percent decrease. This marks the second consecutive release in which the previous quarter’s nonresidential fixed investment figure was amended from negative to positive. Investment in nonresidential structures fell by 4 percent after growing by 6.2 percent in the second quarter.

“The U.S. economy is not quite as bad as the headline GDP number suggests,” said ABC Chief Economist Anirban Basu. “Private final demand, an indicator that represents sales to nongovernmental domestic purchasers, expanded by 3.2 percent in the third quarter. Many economists consider this the most telling and persistent aspect of GDP, suggesting that the economy is healthier than some might suspect.

“The current quarter was heavily impacted by a foreseeable inventory adjustment, a stronger dollar and a weakening global economy,” said Basu. “The fact that the recovery remains in place is reflected in fixed investment data, including the categories that relate most directly to nonresidential construction. While it is true that investment in structures slipped 4 percent, this largely appears to be a statistical give-back from the second quarter’s better than 6 percent performance. Other data indicates ongoing momentum in nonresidential construction, which should be more apparent during ensuing GDP releases.

“The recovery will continue to be led by consumers,” said Basu. “Interest rates will also feature prominently in terms of determining the extent to which the recovery will be sustained in 2016 and beyond. For now, ultra-low interest rates are inducing people to invest in order to generate financial yields. This has been a bonus for nonresidential construction, but potentially may be triggering over investment in certain construction segments.”

The following segments highlight the third quarter’s GDP release.

• Personal consumption expenditures added 2.19 percent to GDP after contributing 2.42 percent in the second quarter.
• Spending on goods grew 4.5 percent from the second quarter.
• Real final sales of domestically produced output increased 2.9 percent for the third quarter after a 3.7 percent increase in the second quarter.
• Federal government spending increased 0.2 percent in the third quarter after remaining unchanged in the second quarter
• Nondefense spending increased 2.8 percent after decreasing by 0.5 percent in the previous quarter.
• National defense spending fell 1.4 percent after inching 0.3 percent higher in the second quarter.
• State and local government spending expanded 2.6 percent during the third quarter after an increase of 4.3 percent in the second.

Private Companies Continue Capital Investment and Hiring

Private companies have voiced optimism about the U.S. economy for nine  consecutive quarters, with 70 percent currently expressing a positive outlook, according to the latest PwC US’s Trendsetter Barometer®.  This represents an increase of 59 percent in 2Q 2014. This sustained level of confidence is resulting in more companies planning major investments, including new capital projects and hiring, reports.

“This report coincides with the increase in capital investment in manufacturing projects,” said Brian Gallagher, Director of Marketing for O’Neal, Inc., an integrated design and construction firm specializing in industrial and chemical projects. “Most of our clients are privately-held firms and we’ve certainly experienced an increase in capital investment activity.”

The PwC quarterly report, which tracks the economic sentiments and business outlook of America’s leading privately held companies, shows this optimism being mirrored by private-company performance, with 34 percent reporting improved gross margins, the highest number in more than a decade. Roughly five out of six (87 percent) private companies expect their revenue to grow in the next 12 months, nosing back toward pre-recession levels.

Increased spending and cautious expansion into new markets prevails

In the second quarter of 2015, 36 percent of companies said they planned to spend on new capital projects in the next 12 months (up from 29% the prior quarter). Information technology is the top area where private companies plan to increase investment (31 percent), followed by marketing and sales promotion (22 percent). However, there is some growing concern among private-company leaders about higher interest rates (18 percent, up from 8 percent a year ago) and about a stronger dollar (19 percent, up from 8 percent a year ago). And with their current operating capacity at the highest level since 2007 (92 percent say they have reached at least three-quarters operating capacity), private companies’ appetite to spend may be curbed somewhat until greater capacity opens up.

“While we’ve seen high post-recession optimism levels among private companies before, only in the past couple of years have those levels been sustainable. This is an encouraging indicator for a long-term U.S. economic revival, with the private sector and the American consumer firmly at its core,” says Ken Esch, a partner in PwC’s Private Company Services practice. “Despite increased optimism, it’s encouraging to see private companies making prudent business decisions about their capital plans. They’re investing more, but they are doing it carefully. While we saw a slowdown into new markets this past quarter, international expansion will remain a firm part of any long-term strategy.”

Hiring remains a top priority, but high-quality talent is scarce

“While the hiring picture is certainly brighter, companies are still struggling to find the right talent to move their businesses forward. Companies need new employees with specific skills in engineering and technology, and they’re having difficulty finding them here in the States,” says Margaret Young, a partner in PwC’s Private Company Services practice. “There are longer-term solutions to be had in education or immigration reform, but that won’t help companies that are wrestling with this issue right now.”

Construction Industry Shows Optimism for 2015

Overall, the U.S.  construction market has experienced steady growth for the last few years as it recovers from the recession of 2008. Leading industry indicators point to a strong market in 2015.

“We are certainly seeing an increase in interest in construction projects from manufacturing companies, ” said Brian Gallagher, Director of Marketing for O’Neal, Inc., an integrated design and construction firm based in Greenville, SC. “Several of our clients are moving forward with capital investment in expansions and greenfield projects.

According to a recent study  by ENR, construction executives believe that growth will continue. ENR’s Construction Industry Confidence Index (CICI) survey for the fourth quarter of 2014  indicates that, of the 328 executives of large construction and design firms responding to the survey, most see the market as stable or growing. The CICI index remained steady at a record 77—on a scale of 100, an indicator of a growth market—in the fourth-quarter survey.

Key Industry Associations Forecast Growth in 2015

“The Associated Builders and Contractors (ABC) forecasts nonresidential construction spending will expand by roughly 7.5 percent next year,” said ABC Chief Economist Anirban Basu. “The segments that will experience the largest growth in construction spending in 2015 include power (e.g. natural gas-related construction), lodging (leisure and business spending), office space (professional services employment creation) and manufacturing (rebounding industrial production).

Construction job growth is another indicator of a solid construction market growth. “Construction job growth remains positive overall but volatile,” said Ken Simonson, the the Associated General Contractor’s (AGC) chief economist. AGC officials said the best way to ensure more stability in the construction market was for Congress and the Obama administration to work together to fund needed repairs to aging roads, transit, clean water and other infrastructure systems.

The latest Confindex survey from the Construction Financial Management Association (CFMA also reports growing optimism about 2015. CFMA polls 200 chief financial officers in general contractors, subcontractors and civil contractors. “Our Confindex rose by five points, to 132 [on a scale of 200], for the third quarter,” said Stuart Binstock, CEO of the CFMA.

Job Outlook Positive in the Upstate

Article from The Greenville News

Companies say they're seeing more reasons to hire

When Chad Richardson was laid off from his position as a structural engineer in Harrisburg, Pa., last October, he expanded his job search as far south as Greenville. That’s where it ended.

Richardson said he feels “fortunate” to be a senior structural engineer at O’Neal, a Greenville-based design and consulting firm.  “My wife and I call it ‘going where the food is,’” he said. “As long as the economy here in the Upstate is strong, as we see with the number of firms in the area, this is home.”

Rob Evans, recruiting manager for O’Neal’s offices here and in Raleigh and Atlanta, said engineers are seeing “more opportunities in the Upstate. It seems like things in general are healthier and the economy as a whole is stronger.”

South Carolina’s unemployment rate fell a tick to 9.6 percent in August, while Greenville County’s rate dropped from 7.9 percent to 7.6 percent, second-best in the state. Pickens’ rate of 8.5 percent was second-best in the 10-county Upstate.

Alec Friedhoff, a research analyst at the Brookings Institute, said the Greenville metropolitan area’s employment growth rate fell from the first through second quarters. As a result, the Greenville metro fell from 21 to 32 in Brookings’ quarterly performance report among the nation’s top 100 metros.
“Greenville is in this period of sort of leveling off of the recovery and actually starting a bit of a decline,” he told GreenvilleOnline.com. But Chrystal Metz, 50, of Greenville, feels the economy is looking up. Metz, who is trying to re-enter the job market by taking a manufacturing course at Greenville Tech, said, “I see hope. I see jobs.”

Brian Gallagher, marketing director at O’Neal, has a similar view. His firm has seen, in the past couple of months, “a number of new and existing clients invest in capital projects, maintenance programs, expansions and even some greenfield activity. We’ve been encouraged by that and that has driven us to expand our employment base.”

Other Upstate companies see a brighter future as well. For example, Michelin North America’s plan to hire 2,000 new employees across its manufacturing plants is “on target,” said Brian Remsburg, spokesman for the Greenville-based company.

Evans said O’Neal has about 250 employees now, and by the end of the year, “We expect to be pushing near 300.” “Historically speaking, we would see a little bit of a slowdown with our clients, with recruiting or with business in general as you get to the end of the year,” Evans said. “This year, that appears to be moving in the other direction. We’re actually ramping up and hiring.”

Just about every Monday morning, O’Neal has two or three new employees sitting in its lobby, ready to start their first day of work, Gallagher said. “That’s been pretty consistent throughout this year and probably will continue,” he said.

Read More

FMI Releases Nonresidential Construction Index for the First Quarter, 2012

FMI (www.fminet.com), the largest provider of management consulting and investment banking to the engineering and construction industry, announces the release of its Nonresidential Construction Index report for the first quarter of 2012.
The NRCI gained 7.8 points over last quarter to 58.1 this quarter. This positive move to start the new year is not exactly the sign of a bull market for construction, but continuing confirmation that panelists believe that the construction activity is following the lead of the slowly improving economy. There are good signs in hiring plans for 2012, as well as construction-put-in-place predictions. However, panelists indicate that low project pricing and high competition are still driving the market place.

• Hiring: A five percentage points increase over this time last year, 42 percent of panelists indicated a zero to five percent increase in full-time direct employees. Additionally, fewer panelists indicated a reduction in salaried employees.

• Construction Put In Place: Expectations for CPIP are positive but cautious, as 41.3 percent of panelists expect growth of 0.5 to 2.5 percent for 2012.

• Overall Economy: The component for the overall economy showed the strongest improvement of all index components with a jump from 43.6 last quarter to 68.7 in the first quarter, a 25 point gain. This score reflects the improvement in many economic indicators including the unemployment rate.

• Nonresidential Building Construction Market Where Panelists Do Business: At just 54.9, the local markets for nonresidential construction are inching ahead. However, panelist responses reflect a perception that their own business is performing a bit better than the overall nonresidential construction market. This indicates that local markets are still very competitive.

• Cost of Materials: Despite a slow economy, material costs continue to rise, with no panelists indicating material costs were lower than last quarter. The cost of materials component moved down nearly 5 points to 26.2. This factor is continuing drag on the overall index and is likely to raise the cost of projects while lowering profit margins for contractors.

• Cost of Labor: The cost of labor improved just slightly to 41.5, indicating little change over the score of 40.0 last quarter. However, no panelists indicated they were experiencing lower labor costs.

• Productivity: Contractors are continuing to make moderate gains in productivity. However, at 52.9, this component is still too weak to offset rising costs for labor and materials.

To download a copy of the full report, click here. For reprint permission or to schedule an interview with the author, please contact Sarah Avallone at 919.785.9221 or savallone@fminet.com.

Debt Deal Does Little For Construction

Now that the great debt deal of 2011 has been consummated, what does it mean for the construction industry? Despite all of the press and attention the Debt Ceiling debate garnered, the impact on the construction industry will not be very positive. The leadership in Washington did not do enough of the right things to spur confidence and investment.

The country needed closure, but we got another extension. The deal formed a "Super Congress" that will meet later this year to determine what programs to cut. This alone creates more uncertainty as we must wait to see what programs are cut. The administration and Congress don't seem to understand that business leaders need certainty to invest and run their businesses.

Construction projects are likely to suffer. When the Super Congress meets, numerous programs are going to be cut in order to meet the deficit reduction mandates set. Infrastructure and other construction projects are likely to be reduced or cut. The Super Congress is expected to make recommendations by Thanksgiving, with the full Congress voting on the recommendations by the Christmas holiday.

Not enough was done. After weeks of build-up, debate, and controversy, little was done. In the end, the Debt Ceiling was raised, and minimal cuts were made. Hardly enough to boost confidence and get spending under control. In addition, the president and Congress failed to get to the $4 billion in cuts needed to maintain the country's AAA rating. In the coming weeks, don't be surprised if the U.S. is downgraded for the first time in our history.

FMI's Construction Index Released for 2nd Quarter 2011

FMI recently released its Nonresidential Construction Index (NRCI) report for the second quarter of 2011. The report indicates a continued increase in construction activity. The NRCI moved up 1.4 points to 58.7 for the second quarter, depite of adjustments made to accommodate the rising cost of materials, For the fifth quarter in a row, the Index has been slightly positive.

Nonresidential construction continues its slow recovery. The report cites an increase in consumer spending, rising material costs, skyrocketing gas prices, an increase in auto sales, and the impact of the Japanese disasters has had on the supply chain as impacts to the construction economy.
Read More


Log on to FMINet.com to download a complimentary copy of the full report: NRCI 2Q 2011

AGC Reports That Construction Not To See Recovery In 2010

According to a report recently released by the Associated General Contractors (AGC) of America, nine in ten contractors say there will be no recovery in 2010. many of the contractors I have talked with would agree with the AGC report. Most contractors are struggling to find work, and build a backlog. The survey of AGC members also found that fewer contractors plan to purchase construction equipment and doubt they will be able to hire new staff this year. To view the report, visit AGC.

"Unfortunately for the industry and for our economy this year's construction outlook is far from positive," said Stephen E. Sandherr, the association's chief executive officer. "As long as the construction industry remains mired in its own depression, broader economic and employment growth will continue to lag."

One of the most telling elements of the report was that most construction firms believe that they will be unable to hire employees in 2010. In addition, the AGC report reveals that most firms will delay capital investments and purchasing new equipment. According to the report, 73 percent of firms said they laid off employees in 2009, averaging 39 layoffs per firm. For 2010, however, 60 percent of firms say they are unsure whether they will be able to add new staff, or be forced to make further cuts.

The report also details the impact the stimulus has had on the construction industry. Contractors reported that the stimulus drove up expectations for highway, sewer and public building work. Thirty-one percent of contractors say they were awarded stimulus funded projects. Of these, 46 percent say the stimulus helped them retain an average of 24 employees each. Another 15 percent say the stimulus helped them to add an average of 10 new employees per company while 12 percent cite the stimulus as driving new equipment purchases.

The stimulus is finally beginning to have a measurable, but limited, impact on the construction industry,"" Sandherr noted. "The full impact of those investments has sadly been tempered by the inability of Congress to put a host of multi-year infrastructure funding plans in place."

While 2010 looks like another difficult year, Sandherr noted that construction costs are at low levels which is positive for those seeking to build.

Will You Be Ready?

I recently attended an Economic Summit focused on commercial real estate and construction. Like the other attendees, I was eager to hear what the panel of experts had to say about the economy. As expected, uncertainty was the common theme relayed by each speaker. In reality, no one knows what the future holds for the AEC industry. The stimulus package has not really had the impact on construction many had hoped for when it passed Congress. While we cannot predict how soon the construction industry will rebound, we can start to plant the seeds to position our companies for business when the rebound happens.

For AEC marketers, this should involve developing and implementing strategic marketing plans and tactics. Previously, I’ve written about the importance of marketing in a down economy. Investing in marketing is even more critical as we start a recovery. While I doubt we will come out of this economic downturn as quickly as we have in the past, I believe it will be faster than most expect. Marketing has a critical role in an AEC organization. The role is being a strategic thought leader, and that includes vision. Firms need to invest in activities to build awareness, deliver messages and position the firm. These activities are even more important in a soft economy.

Now is a great time to invest in marketing. Many companies have cut back on marketing investments and activities. Just look at any industry trade publication and see that advertising is down. When advertising is down, there’s an even greater opportunity for you to stand out as you are competing with fewer messages. Trade show attendance is down significantly. However, by cutting out key industry shows, you may be conspicuously absent and send the wrong message to your customers. An interesting fact I’ve observed is that show attendance may down, but those attending the shows seem to be serious buyers.

Social media and digital marketing are also effective ways to maintain your company’s presence in the market place. All digital and social efforts, however, need to be part of the overall marketing communications strategy.

Consider using direct response tools to remind and inform your prospects and customers about your services. Share completed projects, news and resources with them. This can be effective to remain relevant, maintain your brand position and generate leads.

Most importantly, keep your sales team in front of customers. Your sales assets are your best link to the customer. While the customers may not be buying today, they will buy from those who continued to call on them.

Invest now in marketing to raise your image and provide your clients with good information, resources and advise. No one knows when we will rebound, but by continuing to invest in marketing you will be ready.

AGC Unveils Blueprint For The Construction Industry

On Wednesday, the Associated General Contractors (AGC) unveiled a blueprint for the construction industry. The plan, "Build Now for the Future: A Blueprint for Economic Growth," was developed to help spur growth in the construction industry.

The AGC plan details a mix of incentives, tax cuts, policy revisions and infrastructure investments to reverse the decline in construction activity nationwide. The plan was announced by AGC at a construction site in Sparks, Nevada, which has been one of the hardest hit construction markets in the United States. According to AGC construction employment declined in 324 of 337 U.S. metropolitan areas between August 2008 and 2009.

To read the AGC plan, click here.

Investment in construction will spur economic activitiy and create jobs, according to the plan. In a press release, Stephen Sandherr, AGC CEO, plan’s primary goal is to stimulate new private-sector construction activity, which accounts for 70 percent of the construction market.

The plan suggests doubling federal spending on the nation's transportation infrastructure and renovating federal facilities. The plan also calls for investments in clean water, flood control and navigation projects. AGC's plan recommends encouraging public-private partnerships and green construction. Also included in the plan are recommendations on streamling regulation and environmental reviews, restoring the gas tax's "lost purchasing power," repealing the alternative minimum tax, and increasing and extending a number of tax credits and cuts.

According to the AGC website, the association represents more than 33,000 construction-related firms.

Reed Business Announces Closing of 13 Construction Pubs

The economy claimed 13 of 14 of Reed Business’s construction publications. Reed announced on Tuesday that it was ceasing publication of the regional construction titles published under Associated Construction Publications.

Reed will continue to publish Construction Equipment and Minnesota Construction Bulletin, as well as several websites.

Advertising in construction trade publications has steadily declined over the last several years. ACP’s regional construction publications and McGraw Hill’s publication have been significantly impacted as more people are seeking their information from the internet and other sources.

CMO's To Cut Spending, According To Adweek

According to a recent article in Adweek, CMO's are significantly cutting back on ad spending. Marketers are shifting advertising dollars to other areas or cutting marketing dolars all together. Several of the CMO's interviewed, cited reallocation of funds to social media, paid-searches, and even investing in new people to serve their customers.

Where Will The Stimulus Money Go In Construction?

A recent article in ENR, identified over $159 million in projects included in the proposed economic stimulas package. Read Article ENR reported that over $43 million will be spent on transportation projects, and $36 billion in energy related projects.

A recent press release by the AASHTO, stress that the federal government should strongly consider states that have "Ready to go" projects. "State DOTs right now are moving to advance thousands of projects, so that contracts can be let in 120 days, as the House bill has proposed," said John Horsley, Executive Director of the American Association of State Highway and Transportation Officials (AASHTO). "Those projects will enable the transportation industry to keep people at work, and bring construction workers back on the job very quickly. As late as last Friday we asked the state DOTs if they are prepared to have 50 percent of the $30 billion under contract within 120 days, as the House bill stipulates. They responded, "Yes, we can!" Read Press Release or Watch Video.

A new article by the Associated Press reports that President Obama's $825 million economic stimulus package likely create 670,000 construction jobs by the end of 2010. AP conducted an interview with Moody's Chief Economist Mark Zandi. According to Zandi, proposed stimulus package would would direct $70 million to the nation's infrastructure. Read Article

Recruiting Branding Helps Attract Top Talent

Although the news about our economy and the job market seems to be troubling, many in the design and construction industry are still actively seeking qualified individuals to fill positions. Job seekers have become increasingly savvy and the Internet has given them an opportunity to learn a great deal about a company before ever having an interview. In fact, many learn about a company before deciding to interview. Often a hot topic in marketing circles, branding is coming up more in discussions of recruiting skilled employees. Smart firms recognize that branding your company goes far beyond marketing your products and services. In fact, branding can play a big role in both attracting and retaining employees.

The brand promise
Products and companies have a brand that tells consumers about the company and helps set the expectation for their experience with that product. This same principle applies for recruiting. Recruiting branding should clearly communicate ideas and expectations associated with your company and help create a desire for candidates to work at your firm. One of the key principles of effective recruiting is creating an image where you are viewed as the “employer of choice.” This is another method for differentiating your company from others.

So, how do you begin to differentiate your firm? The first place to look is within your company. Begin by surveying employees to determine what they value the most about working in your firm. Sit down with your top performers and discuss what they like about their jobs, why do they stay, what do they think will make the company appealing to outsiders, and more. Use the results of the survey to identify four to five value points for your company. As with branding a product or service, you should then turn these value points into key messages about your company. These messages will serve as the key selling points about your firm to perspective employees and should be clear and compelling. Consider engaging your marketing team to help develop messages and strategies.

Beyond surveying, use exit interviews of employees as an opportunity to uncover hidden or emerging issues within your firm. An exit interview is a strategic tool to understand what people value and what issues they have. It is crucial to learn why an employee is going to work for a new firm, because it can provide insight to what your firm can do to retain more employees. Are your salaries much lower than the competition? Is your benefits package not as comprehensive? Do you need to reevaluate your firm’s culture? Exit interviews can help you determine if there is a gap between what you perceive and what your employees perceive. If one is identified, it needs to be fixed promptly to eliminate a flood of employees leaving. This process can also assist with identifying key messages by learning what prompts employees to select a firm. Use the information to refine or drive home points in your key messages.

Once the messages are developed, they should be tested internally. Share them with your team members and determine if they agree with the statements or have any ideas for improvement. After they have passed the internal testing, develop a plan to communicate the messages. Everyone from on-campus recruiters to hiring managers and interviewers must be on the same page and emphasizing the same points. Interviewees should be hearing from several different levels why your firm is different and why it is the place to work. Consistency is key when delivering key messages or beginning branding efforts.

We are all recruiters here
Similar to the philosophy that everyone in your firm is a marketer, everyone is also a recruiter. This is why it is critical to develop an elevator speech so employees can quickly and clearly articulate information about your company. The 30-second speech should explain the real benefits to working at your firm and how you are different from other firms. Each interaction your employees have with people – trade shows, industry events, projects, etc. – provides opportunities to network and get the word out about your company and employment opportunities. To encourage employees to seek out referrals, regularly post your positions internally, and consider offering referral incentives. Ultimately, it is the job of all team members to market your company and sell candidates on the opportunity.

In addition to ensuring all team members are selling the firm in the same manner, there must be a consistent message on your recruiting materials, website, and other marketing venues. Carefully consider the tone of your messages. It is important to not be over the top and take a warm, friendly and welcoming tone. Consider including thoughts from current employees that span a wide demographic – a new hire, someone who has been with the company for year, etc. Develop profiles, Q and As, and even videos with team members. Let them help sell the experience of working at your firm.

Go beyond the traditional employment recruitment efforts to get the message out. In today’s electronic age, prospective employees will always search the Internet for information about a firm. Use blogs, social networking sites and other emerging tools to help attract team members and properly position your firm. Develop articles about your company and people to showcase how you are different. An often forgotten tool in recruiting efforts, public relations also is a great tool to get the message out about your firm. It provides third-party credibility that is hard to achieve with other mediums and gives you the opportunity to dispense your key messages to a wider audience. Also consider entering “Best Places to Work” contests. Fortune magazine runs their survey every year and most local business journals and even some specific industry publications have similar contests.

Share the story
Finally, never under-estimate the power of story-telling. People can easily relate to other people sharing a story. In recruitment efforts, it is critical to personalize the process and make a human connection with prospective employees. Career choices are some of the biggest choices we make as they affect nearly every other aspect of our life. People want to feel comfortable with their selection and know that their contributions will be valued. In either a good or bad economy, recruiting branding is critical to getting the right employees. This process helps drive people to your firm, which make you an employer of choice.

Crisis Creates Opportunities For AEC Firms

"When written in Chinese, the word "crisis" is composed of two characters. One represents danger and the other represents opportunity." -John F. Kennedy

The prognosis for the economy in the AEC Industry remains unclear. Uncertainty remains the biggest concern for the construction industry. However, when there's crisis and uncertainty, there's opportunity.

-Government stimulus package legislation is likely to be introduced and passed early in Obama’s administration. Infrastructure, institutional and community projects are likely to benefit the most. States are preparing “Ready To Go” Lists for projects.

-The credit market remains tight, which makes is difficult for companies to access capital for new construction, expansion and development projects.

-Prices for construction materials and commodities have plunges after a rapid rise in prices. As demand has dried-up, prices have fallen.

-Consumers spending is still tepid due to uncertainty, specifically a drop in there personal wealth, plunging housing values, and fear about job loss.

-Talent will become available from solid AEC firms.

While there is considerable uncertainty, there are several approaches and strategies AEC firms can take to weather the economic situation and be positioned for opportunities when the economy improves.

Focus on Key Customers- Continue to maintaining and developing customer relationships. Focus business development efforts on key clients and building loyalty. Also protect your key clients from competitors. Communicate regularly with your clients and convey a message of strength and stability. Customers want to work with a vendor they can trust and rely on in difficult times. Also consider offering more services and handling different projects for your key customers.

Communication- Communicate regularly and clearly with your employees. Your employees are barraged with negative media messages about the economy. You have an important role to communicate with your employees candidly about your business and marketplace. Consider engaging them in finding cost-saving strategies.

Change Your BD Strategy- Many companies have cancelled or delayed large capital and maintenance projects. Demand is shrinking. While your customers or prospective customers have financial constraints, this does not mean all projects will be cancelled. Your job is to understand their financial condition, verify funding sources, and understand how you can tap their budgets. Consider breaking a large project into smaller projects, offering some incentives or bundling work. Be flexible by working with your customer to create win-win solutions. Also seek to build diversity and consider other types of projects your firm may not have considered in the past.

Modify Your Marketing Messaging- The financial crisis has turned the business world upside down. Several long standing and trust financial companies are gone or have been acquired. Stability can no longer be assumed. If your company is fortunate to have a long history, focus on your stability in your marketing messages.

Focus on Effective Marketing- Many companies decrease marketing investments during tough economic times. In fact, marketing is one of the first things to get cut. This is a great time to invest in marketing. Publishers are typically willing to negotiate favorable terms. Fewer people are advertising so your ads and messages have a better chance to cut through the clutter. Also consider shifting dollars to web marketing initiatives such as SEO and Web 2.0 efforts.

Focus on Niches- Identify key niches or market segments where you have a strategic or competitive advantage. The reality of challenging economic situation is that there are more bidders on projects and prices typically go lower. Offering value-added services and having a clear focus on markets that are not solely price driven will help you weather the storm.

Upgrade Your Talent- For the first time in many years, talent supply exceeds demand in the construction industry. Talent, including engineers, project managers, and business development people, is available. This is a key time and opportunity to add key resources that will strengthen your firm.

Marketing in a Down Economy

As the economy continues its slow recovery, businesses in the construction industry face dynamic challenges. However, while many tighten their belts and cut their expenditures, in challenging economic times and competitive conditions, marketing is more important than ever. While dollars may be tight, studies show that a consistent presence in the marketplace now will pay dividends in the future. The challenging economy presents an excellent opportunity to review your marketing efforts and ensure you are acquiring new and retaining existing customers. Further, many have shown that marketing dollars invested in a down economy are actually more valuable than those spent in a good economy as you gain greater market presence.

Regardless of the economy, marketing strategies must be constantly reviewed to ensure business goals are being met. This is definitely true in a down economy, as it is a great time to take advantage of limited marketing spending by others, which improves your chances of getting noticed and standing out. In other words, turn the challenging economy into an opportunity. Although it may seem prudent or even appear to be a good business decision to cut back on marketing costs to “save money,” it is very important to maintain consistency and stay true to your marketing goals. After all, the need for building a brand and creating awareness, as well as generating leads for opportunities, doesn’t go away when the economy is sluggish. In fact, it is more important than ever.

Many would even argue that marketing during a downturn actually gets you more “bang for your buck.” In fact, marketing dollars invested during down economies when others are cutting back are more valuable than dollars spent in more vibrant economies. This is because that dollar spent represents a greater share of the total marketing expenditure. After all, when your competitors choose to cut back on their advertising and marketing budgets, such a scenario results in less of a presence from your competition in the marketplace and a greater impact will be realized with your efforts. For example, as competitors cut back marketing spending, they are likely cutting back on investments in search engine optimization and marketing. Take advantage of this and rise in the search engine result pages. Further, with decreased revenue, many publications may be willing to negotiate lower prices or value-added package deals, editorial opportunities, or even merchandising opportunities. It also is a great time to invest in public relations as publications may tighten their freelance budgets and are likely looking for article content. Another opportunity may be creative partnerships with vendors such as trade show hosts, printers, advertizing agencies and more as these firms want to keep their own staffs busy and may be willing to negotiate more than during the bustling times. Digital media is another opportunity. Be sure to take advantage of the efficiencies of digital which include lower costs and improved tracking opportunities.

Marketing and advertising during a sluggish economy also boosts the confidence that customers and potential customers have in your company as your consistent market presence will deliver the message that you are a strong, viable, stable company. Such a message contributes to long-term brand building and supports your differentiation strategy. And, when the economy builds again, the top-of-mind awareness you’ve built will result in a sustainable competitive advantage.

In sales, there typically is not a better source of future revenue then your current customers. And, this holds true in tight economic times. Your current customers already have a relationship with you, and hopefully you have performed for them. Marketing to your current customers is critical during downturns. Continue to invest in integrated marketing programs to maintain constant contact with your customers. Find more ways to add value by offering current customers a new or expanded offering of services and products. Offering complimentary services and products is an excellent way of providing more value to your customers. This can also be achieved by forming strategic alliances with companies that offer complementary products and services. Again, the goal is to find opportunities to provide more value and forge deeper relationships.

While downturns in the economy are challenging, they also force us to look at our activities and initiatives and make tough decisions. In reality, this is a very healthy process, and forces us to look at the return on marketing investment. A critical evaluation of marketing investments will result in greater efficiencies and more effective programs.

Consistency is important in marketing. Consistent investments in marketing yield consistent results in terms of lead, opportunities, closed sales and ultimately, profits. Resist the urge to slash marketing investment and seize the opportunity build your brand, generate more opportunities, and drive more profitable revenue.