Prizio Construction Inc

Our recent meeting between the Carpenters Union and southern California tilt-up contractors clearly anticipated today’s grim news.  We didn’t need a press release to tell that there simply isn’t any work or that thousands of good workers are not able to find construction jobs. We live it every day. But just in case there was a shred of doubt, it was quickly dispelled by the morning’s news.

 In press release from AGC today the doom and gloom just seems to get darker and deeper.  The February construction statistics show an unemployment rate of 27.1%.  If the whole economy mirrored that frightful number it would be 1932 again. Almost 2 million construction jobs have been lost since 2007, a staggering number indeed, but one that doesn’t even begin to tally the toll of human suffering that lies behind it. How many good, hard working people are out of work due to this downturn? How many people who have never missed a paycheck in 20 years are suddenly out in the cold trying to make house payments and car payments? We can’t even begin to know.

The anger with politicians in Sacramento and Washington DC is now palpable.  It is impossible to have any kind of conversation with another contractor without their barely-contained rage boiling up.  My desire is to keep my blogging non-political as much as possible, but the need to address this issue is impossible to deny. There is a great sense that no one in the state or national capitol is paying attention. How can they be fighting about health care reform or playing sneaky budget tricks when 2 million people have lost their jobs?  Why isn’t there any clear sign that these politicians understand what people are going through?  People may legitimately differ about the best solutions to the health care and budget challenges we face, but who outside of these clueless pols thinks that health care is our number one problem? No one I know! That’s for sure. We need some real leadership. We surely are not getting it.

Last week (March 3^rd), saw the first meeting of the year between the Southern California District Council of Carpenters and the signatory tilt-up concrete contractors.  The tone of the meeting was decidedly different than last year’s.  To be sure the contractors were unhappy, as they were last year (as they are almost every year when they meet with the Union). However, the tone was much more subdued and marked by a sense of we’re all in this together, rather than the more typical adversarial tack that such meetings usually take.  None of the contractors was doing well and most had little or no work, especially new tilt-up work.  Some were pursuing small jobs such as commercial remodeling, while others, such as ourselves, were pursuing mostly public works jobs. The union was acutely aware of our plight, because they had a hall full of men looking for jobs and nowhere to send them.

This was not a meeting to decide what to do, but it was a meeting to voice our concerns and bounce some ideas around.  The need to compete with non-union contractors reared its ugly head early and often in the discussions.  The cost gap between union and non-union workers of some $15 per hour seems insurmountable, but all agreed, at least in principle, that the union needs to find a way to narrow the gap, at least for the coming year. Everyone left the meeting quietly knowing that the coming year was going to be a tough one, no matter what sort of agreement they eventually hammer out.

Recent articles by AGC and Reuters note a drop in construction spending in January to the lowest point in nearly seven years. Our problems continue to be caused by banks refusing to make commercial loans and by money drying up for state and locally funded public works projects, not to mention at least a temporary hiccup in federal spending.

Banks, even though many of them are awash in cash and treasury notes, simply will not take risks on commercial loans in this economy. They are refusing to relent until things improve, which ironically they can’t until banks start lending money. The lack of funds is not only affecting construction directly, but it also impedes the start-up and expansion of private businesses, which would, in turn, be likely customers for underemployed contractors. As an example, my brother in law has a company that depends on setting up franchised retail stores.  He says he has many new potential businesspeople ready to go, but they can’t get financing to start up their new businesses. A friend, who was until recently a successful commercial mortgage broker, says she simply can’t place a commercial real estate loan with a willing lender, no matter how solid the deal is.  These bankers are all waiting with bated breath for the soon-to-come commercial real estate crash, which they seem to be doing everything in their power to precipitate.

Non-federal public works projects are also running out of available funds.  Most of them, even local ones, depend on at least partial funding from their respective states.  State governments, almost without exception, have less money to work with than they expected due to the poor economy. Thus, even cities and school districts with their portion of the funding can’t get matching money from their cash-strapped states.

Federal spending is still going at a brisk pace, or at least it was until this week, when a Senate filibuster by Kentucky’s Jim Bunning brought the extension of transportation spending to a halt. The Senate’s newly updated pay-as-you-go legislation mandates spending cuts somewhere else to fund new transportation spending and extension of unemployment benefits, so Bunning is calling the chamber on this by demanding to see the matching spending cut legislation. (see LA Times article for more) . In the meantime, contractors performing federal transportation work are near apoplectic about the delay.

On the question of whether we’ve arrived at a “new normal,” Forbes responded with, http://www.ocmetro.com/t-forbes_balboa_bay_03012010.aspx

I’ll close with one last happy thought. Steve Forbes yesterday, while addressing a group of local business people, was asked if this current economic state was the “new normal.” His reply was, “It’s not the new normal. It’s going back to normal. What’s happened was abnormal.” In other words, there will not be a return to the economic conditions of the mid 2000s. They were the aberration.

In an attempt to address a longstanding problem with concrete floors that are to receive floor covering, especially resilient or wood coverings, the American Society of Concrete Contractors (ASCC) has released a position statement that begins to address this concern. The position statement, officially entitled Division 3 versus Division 9 Floor Flatness Tolerances, Position Statement #6, addresses the incongruity between the F-number flatness standards typically used by concrete contractors, whose specifications are shown in Division 3 of most jobs and the straightedge standards preferred by flooring contractors that are typically described in specification Division 9.

Some history is in order for those who may not be familiar with the problem. The older straightedge standard says that if a ten foot straightedge is placed anywhere on a floor and one end is pressed down, the other end shall not have more than 1/8 inch or perhaps ¼ inch between the raised end and the surface of the floor, depending on the specified tolerance.  This standard is most likely to give the flooring contractor a surface that will make his product present itself as expected. The problem with this standard is that there is no ASTM-approved test method for determining whether or not a contractor has complied with it. The measurements are also taken immediately before the flooring is applied, which may be months after the concrete contractor has finished his work. Concrete contractors hate this standard because of these problems.

Contractors prefer the F-number standard because it is easily measured according to an ASTM test procedure, and it is measured within 72 hours of the placement of the floor slab. The immediate feedback that this test gives allows concrete contractors to make any necessary adjustments in their placing methods before the whole job is completed. The results are clear, quantifiable, and immediate. Concrete contractors love this test.  Unfortunately a floor with a wonderful F-number at the time of placement may not be so flat when it comes time to place flooring over it. This is primarily because of curling —  the tendency of concrete to dry out more quickly on the surface that on the bottom and thus curl up like the mud left in a puddle after it dries up. Concrete contractors maintain that poor design is the primary cause of curling and is therefore not their fault. They are at least mostly right, but they get blamed for curling anyway.

The ASCC position statement, reflecting the concern of concrete contractors, says that engineers should specify a minimum slab reinforcing of 0.5% of the cross-section area of the slab in each direction to combat likely curling. This is fairly heavy reinforcing equivalent to #5 bars at 12 inches on center both ways in a 5 inch thick slab. Whether or not this recommendation will be accepted by engineers remains to be seen.  There is, needless to say, a substantial cost associated with this recommendation. In any case, it is a start in the process of reconciling the concerns of concrete contractors and flooring contractors, and that is a good thing. If you refer back to one of my previous blogs you will see the results of some field tests that are being done to examine this problem and some possible solutions. Although I applaud the efforts of the ASCC, I am hopeful that some more cost-effective solutions may soon present themselves.

The Tilt-up Concrete Association (TCA) has just released their new brochure entitled, Take Pride in Your Structure.  It is the latest edition of their effort to familiarize builders, owners, and designer with the advantages of tilt-up construction.  The focus is on the creating a building you can be proud of, as demonstrated through a selection of sharp pictures of interesting projects.   Text that hits the high points is kept to a minimum.

California builders may find the idea that you must sell tilt-up as slightly amusing, but I can assure you that much of the rest of the country still needs to be convinced that tilt-up is the best way to go for many commercial low-rise applications.

Over the years, the tireless efforts of the TCA have made real progress in spreading the word about tilt-up to much of the country, but the effort needs to be sustained and greater expertise developed nationwide to bring this durable and flexible construction method to all markets.

You can get copies of this attractive brochure for $2.00 each through their web site.

The first results from the field test showcased at World of Concrete this year are now available from Concrete Construction magazine.  This is an ongoing effort to evaluate shrinkage and curling in a 60,000 square foot industrial floor employing a number of different mixes.  Fiber reinforcement received special attention in this test conducted by Scurto Cement and Concrete Construction magazine.

It is worth mentioning that the mix with 7.5 pounds of fiber per cubic yard of concrete did not produce any normal curling to speak of. The typical pattern of raised slab edges at construction joints is clearly visible with many of the other mixed, however.  All of us whose business it is to place large industrial slabs await further test results anxiously.  Next to cracking, curling is probably the biggest complaint we deal with related to industrial floors, and of course, curling and cracking are related in that curling often leads to cracking and joint spalling.

We commend Scurto and Concrete Construction magazine for their efforts.

A Reed Construction Data article released today says that non-residential construction increased in January 1020 by 20% compared to January 2009. This is encouraging news indeed. However, further into the article it notes the continuing problems that commercial developers face in obtaining funding.  Institutional buildings also face tough times as construction funding becomes mired in the financial problems of many states and cities.

Working in favor of commercial builders is the veritable mountain of cash that many banks are sitting on right now.  Banks are loath to take risks on commercial projects when the economy is still weak, but they are facing the prospect of very low returns if they continue to hoard their cash.  This pressure will eventually become serious enough to get banks to spring loose with some of that money.  The timing of all of this is very much in question, but the fundamentals are undeniable.  Banks cannot continue to survive on the miniscule returns available on super-safe investments.

Locally (Southern California) we are seeing a significant decline in the amount of work there is to bid.  There is some activity in the commercial remodel segment and hospital work continues at a reasonable pace.  But new public works projects seem to be declining, and larger private commercial projects are few and far between.

Today’s AGC Smart Brief featured an article touting the benefits to the construction industry of the American Recovery and Reinvestment Act (ARRA) more commonly known as stimulus spending. Significant money, whatever that is these days, has been spent on infrastructure improvements with more on the way.  There is no doubt that parts of the construction industry have benefitted from this spending, but at some unknown cost to the rest of the economy.

A Wall Street Journal article mentioned later in the same brief takes a broader and more skeptical look at the same spending, mentioning the debate over how many jobs have really been created. The other problem with all of these claimed jobs saved is that the unemployment statistics have stubbornly refused to cooperate with the rosy projection and pronouncements of the White House and certain industry experts.

I would recommend reading Amity Schlae’s book, The Forgotten Man, to all who think that stimulus spending is really helping the overall economy.  I am as anxious as anyone to see the construction industry recover from this devastating downturn, but doing so at the expense of the rest of the economy is bound to be ineffective in the long run.

A meeting between the Carpenters’ Union and SoCal tilt-up contractors is set for March 3^rd, to discuss “issues of concern to both labor and management.” Needless to say, there is only one issue of concern, and that is the acute lack of work in general and tilt-up projects in particular for union signatory tilt-up contractors.

Tilt-up work in SoCal is, or rather was, so common that tilt-up contractors have their own agreement with the Carpenters’ Union.  Their wage rates for private work have traditionally been set at about 80% of the so-called prevailing wage rate.  When times were good this allowed union contractors to be reasonably competitive on private projects and still enjoy the benefits of being with the Union.  This reasonable accommodation made it fairly easy for the Union to organize contractors, which, for the most part, they successfully did. Harmony between the Union and contractors reigned for several years. However, that was in the good times.

Today work is scarce and the gap between the union carpenter under the tilt-up agreement and non-union carpenters is pretty big.  A union journeyman carpenter under the tilt-up agreement costs $37.95 for wages and benefits, not counting taxes, insurance, and other overhead items. A typical non-union carpenter can today be hired for $20 per hour with no benefits, making a gap of roughly $18 per hour. It is, as the old college professors like to say, intuitively obvious to even a casual observer that this is an unworkable situation for the union contractors.

Last year a $5 per hour wage cut was quickly dismissed by the Carpenters’ union as unsellable to the rank and file.  That issue is likely to come up again.  Also, last year there was a great deal of vitriol unleashed on the Union for allowing a Dr. Pepper facility to go to a non-union tilt-up contractor without even so much as a picket line being set up.  This year there will most likely be even more outrage about a huge 1.8 million square foot facility for Sketchers going non-union.

It promises to be a rather unpleasant meeting. Check back on March 4^th to see what happened.

An article today at ENR.com clarifies this year’s World of Concrete attendance numbers.  It appears that my previously speculation of a 30% decline is off a bit.  The drop from last year was 16% according to this article, but the decline from the peak year of 2007 was 40%.  That is a pretty big hit, to say the least.

Vendor attendance was also off, as many opted to not come, and many others scaled down their presence.  This made for a lot more elbow room in the convention halls, which I didn’t mind at all.

In the midst of this the mood was at least moderately upbeat.  Certainly I did not see the widespread “you look like your dog just died” kind of thing that is so prevalent in southern California. Maybe it was just because the most pessimistic people didn’t even bother to come, but it was nice to change the tone of the conversation to “how are we going to do things better,” from “I wonder if we will ever get any more work?”