As a whole, the construction industry represented by the publications in the Scranton Gillette/SGC Horizon organization—including Roads & Bridges magazine—hit bottom in 2011. What remains to be seen is whether the slight uptick in expectations for this year plays out into a recovery.
Respondents rated 2011 as a “poor” year, the lowest ranking available, yet only forecast 2012 to be an “off” year. Homebuilding was the exception, forecasting another “poor” business year. Expectations do not appear to be affected by region, as each of the nine geographic areas forecast an “off” year for 2012.
Expectations are likely tainted by economic and political factors as much as by their own business forecasts.
Revenue should increase this year, as the net percentage of respondents is 12.5% (36.4% expecting an increase minus 23.9% expecting a decrease). This compares to a net of -15.3% reported for 2011 (27% increased volume minus 42.3 decreased).
Each market expects revenue to grow in 2012, except transportation. Here, 26.6% say revenue will increase and 30.4% say it will decrease for a net of 3.8%. Remodeling respondents reported the greatest net increase, 23.2%, with 42.9% expecting an increase in revenue minus 19.7% expecting revenue to decline in 2012.
Of course, with fewer projects in the market, competition has intensified over the past few years. This year will continue that trend. Nearly 75% of respondents across all regions describe their market as “intensely competitive” or “very competitive.” Respondents hope to counter this trend in their bid prices, though: 41.6% expect bid prices to increase and 12.9% expect them to decrease, for a net of 28.7%.
Materials pricing will help drive up bid prices, based on responses to the survey. Overall, the net is 67.5% (70.5% anticipating an increase in material prices minus 3% expecting a decrease). The low end was homebuilders, reporting a net of 62.6% (65.1% increasing minus 2.5% decreasing). Water infrastructure respondents expect the greatest price surge, with a net of 73.3% (75.5% anticipating an increase minus 2.2% a decrease).
Asked to rate the overall health of their firm, half of respondents said they were in “very good” or “good” shape. About 18% reported health as “very weak” or “weak.”
Vocational weakness is seen among home builders, where 35.4% reported “very good” or “good” health. Firm health was “very good” or “good” for 44.6% of remodelers, and 49.7% of nonresidential respondents. On the other hand, 50.8% of transportation respondents rated firm health as “very good” or “good,” along with 53.4% of fleet managers and 57.7% in respondents involved in water infrastructure.
