the pit and the pendulum - agc · 2015. 5. 28. · by: anirban basu. sage policy group, inc. may...
TRANSCRIPT
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By: Anirban BasuSage Policy Group, Inc.
May 27th, 2015
The Pit and the Pendulum
On Behalf of
Viewpoint
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Dawn of the Dead
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Jobs 0.3%
Incomes 4.7%
Profits 61.0%
Housing -6.8%
Stocks 33.5%
-70%
-50%
-30%
-10%
10%
30%
50%
70%
2008 2009 2010 2011 2012 2013 2014
Perc
ent c
hang
e si
nce
end
of 2
007
What Lies Beneath
Source: BEA, BLS, S&P Case-Shiller, Yahoo! Finance
*Through June 2014
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Average Hourly Earnings: Construction WorkersMarch 2007 – April 2015
Source: Bureau of Labor Statistics
$10.5
$11.0
$11.5
$12.0
Mar
-07
Jul-
07N
ov-0
7M
ar-0
8Ju
l-08
Nov
-08
Mar
-09
Jul-
09N
ov-0
9M
ar-1
0Ju
l-10
Nov
-10
Mar
-11
Jul-
11N
ov-1
1M
ar-1
2Ju
l-12
Nov
-12
Mar
-13
Jul-
13N
ov-1
3M
ar-1
4Ju
l-14
Nov
-14
Mar
-15
Apr. 2015:$11.6
*1982-1984 Dollars, S.A.
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Change in Equipment and Material Technology versus Changes in Labor Productivity, 1977-2004
Source: Construction Industry Institute
Technology Characteristic Change in Labor Productivity
Equipment Technology characteristic No Change in Characteristic Change in Characteristic % Difference
Energy 3.6% 39.8% 36.2%
Control 14.9% 46.6% 31.7%
Functional Range 13.5% 51.8% 38.3%
Informational Processing 21.0% 56.4% 35.4%
Material Technology Characteristic No Change in Characteristic Change in Characteristic % Difference
Modularization 8.1% 24.2% 16.1%
Reduction in Unit Weight 10.4% 48.6% 38.2%
Installation Flexibility 8.7% 23.1% 14.4%
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Invasion of the Body Snatchers
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-1,000
-800
-600
-400
-200
0
200
400
600Ja
n-02
May
-02
Sep-
02Ja
n-03
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-03
Sep-
03Ja
n-04
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-04
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04Ja
n-05
May
-05
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05Ja
n-06
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-06
Sep-
06Ja
n-07
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-07
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07Ja
n-08
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-08
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08Ja
n-09
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-09
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09Ja
n-10
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-10
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10Ja
n-11
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-11
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11Ja
n-12
May
-12
Sep-
12Ja
n-13
May
-13
Sep-
13Ja
n-14
May
-14
Sep-
14Ja
n-15
Thou
sand
s
Source: U.S. Bureau of Labor Statistics
April 2015: +223K
Net Change in U.S. Jobs, BLSJanuary 2002 through April 2015
-
National Nonfarm Employmentby Industry SectorApril 2014 v. April 2015
-21
55
64
66
151
180
280
434
555
564
654
-200 0 200 400 600 800
Mining and Logging
Information
Government
Other Services
Financial Activities
Manufacturing
Construction
Leisure and Hospitality
Trade, Transportation, and Utilities
Education and Health Services
Professional and Business Services
Thousands, SA
All told 2,982K Jobs gained
Source: U.S. Bureau of Labor Statistics
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April 2015:+45K
-200
-150
-100
-50
0
50
100
Apr
-00
Aug
-00
Dec
-00
Apr
-01
Aug
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Dec
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Dec
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Dec
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-11
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-11
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-14
Aug
-14
Dec
-14
Apr
-15
Mon
thly
Net
Ch
ange
(th
ousa
nds
)National Construction Employment Monthly Net ChangeApril 2000 through April 2015
Source: U.S. Bureau of Labor Statistics
Industry Sector 15-Apr 15-Mar 14-Apr 1-net 12-net 12-%Construction 6,383.0 6,338.0 6,103.0 45.0 280.0 4.6
Residential Building 693.6 690.8 652.4 2.8 41.2 6.3Nonresidential Building 711.4 719.2 694.8 -7.8 16.6 2.4Heavy & Civil Engineering Construction 944.7 936.3 911.6 8.4 33.1 3.6Specialty Trade Contractors 4,033.0 3,992.0 3,844.5 41.0 188.5 4.9
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State-by-state Growth in Construction JobsApril 2014 v. April 2015
Source: U.S. Bureau of Labor Statistics
*Construction, Mining, and Logging are included in one industry.
STATEYear-over-year Ch.
(‘000)STATE
Year-over-year Ch.
(‘000)STATE
Year-over-year Ch.
(‘000)CALIFORNIA 42.6 IDAHO 4.4 ALASKA 0.8FLORIDA 32.2 TENNESSEE* 4.1 MONTANA 0.7TEXAS 25.3 NEW YORK 3.7 CONNECTICUT 0.6WASHINGTON 18.7 KANSAS 3.6 NEW HAMPSHIRE 0.4MICHIGAN 14.8 ARKANSAS 3.3 DELAWARE* 0.4ILLINOIS 14.1 NORTH DAKOTA 3.3 DISTRICT OF COLUMBIA* 0.4NEW JERSEY 13.9 MARYLAND* 3.2 HAWAII* 0.1NORTH CAROLINA 13.9 GEORGIA 3.1 INDIANA 0.0COLORADO 13.8 LOUISIANA 3.0 OREGON 0.0PENNSYLVANIA 13.0 OKLAHOMA 2.7 VERMONT 0.0WISCONSIN 8.2 ALABAMA 2.4 MAINE -0.2VIRGINIA 6.8 MASSACHUSETTS 2.1 NEW MEXICO -0.7UTAH 6.0 KENTUCKY 1.7 RHODE ISLAND -0.8SOUTH CAROLINA 5.8 SOUTH DAKOTA* 1.6 NEBRASKA* -1.1NEVADA 5.7 ARIZONA 1.5 OHIO -3.0IOWA 5.6 MISSOURI 1.4 MISSISSIPPI -3.2MINNESOTA 5.1 WYOMING 1.0 WEST VIRGINIA -4.4
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U.S. Year-over-year Percent Change: 2.2%
Employment Growth, U.S. States (SA) April 2014 v. April 2015 Percent Change
RANK STATE % RANK STATE % RANK STATE %1 UTAH 4.0 18 INDIANA 2.0 33 NEW YORK 1.22 FLORIDA 3.6 19 MASSACHUSETTS 1.9 36 ILLINOIS 1.12 WASHINGTON 3.6 20 KENTUCKY 1.8 36 MAINE 1.14 NEVADA 3.4 20 NEW MEXICO 1.8 36 NEBRASKA 1.14 OREGON 3.4 20 WISCONSIN 1.8 36 OKLAHOMA 1.16 IDAHO 3.1 23 TENNESSEE 1.7 36 PENNSYLVANIA 1.17 GEORGIA 3.0 24 DELAWARE 1.6 41 NEW HAMPSHIRE 0.98 CALIFORNIA 2.9 24 MINNESOTA 1.6 41 RHODE ISLAND 0.98 SOUTH CAROLINA 2.9 24 SOUTH DAKOTA 1.6 43 ALASKA 0.810 COLORADO 2.6 27 MARYLAND 1.5 43 KANSAS 0.810 NORTH CAROLINA 2.6 28 ALABAMA 1.4 43 MISSISSIPPI 0.810 NORTH DAKOTA 2.6 28 CONNECTICUT 1.4 43 VIRGINIA 0.813 TEXAS 2.5 28 OHIO 1.4 43 WYOMING 0.814 MICHIGAN 2.4 31 DISTRICT OF COLUMBIA 1.3 48 LOUISIANA 0.715 ARIZONA 2.3 31 IOWA 1.3 48 MISSOURI 0.715 VERMONT 2.3 33 HAWAII 1.2 48 MONTANA 0.717 ARKANSAS 2.1 33 NEW JERSEY 1.2 51 WEST VIRGINIA -0.7
Source: U.S. Bureau of Labor Statistics
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Nightmare on Elm Street
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Source: The American Institute of Architects
Architecture Billings IndexJanuary 2008 through April 2015
30
35
40
45
50
55
60
Jan-
08M
ar-0
8M
ay-0
8Ju
l-08
Sep-
08N
ov-0
8Ja
n-09
Mar
-09
May
-09
Jul-
09Se
p-09
Nov
-09
Jan-
10M
ar-1
0M
ay-1
0Ju
l-10
Sep-
10N
ov-1
0Ja
n-11
Mar
-11
May
-11
Jul-
11Se
p-11
Nov
-11
Jan-
12M
ar-1
2M
ay-1
2Ju
l-12
Sep-
12N
ov-1
2Ja
n-13
Mar
-13
May
-13
Jul-
13Se
p-13
Nov
-13
Jan-
14M
ar-1
4M
ay-1
4Ju
l-14
Sep-
14N
ov-1
4Ja
n-15
Mar
-15
April 2015: 48.8
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Nonresidential Construction Put-in-PlaceDecember 2006 through March 2015
0
100
200
300
400
500
600
700
800D
ec-0
6
Mar
-07
Jun-
07
Sep-
07
Dec
-07
Mar
-08
Jun-
08
Sep-
08
Dec
-08
Mar
-09
Jun-
09
Sep-
09
Dec
-09
Mar
-10
Jun-
10
Sep-
10
Dec
-10
Mar
-11
Jun-
11
Sep-
11
Dec
-11
Mar
-12
Jun-
12
Sep-
12
Dec
-12
Mar
-13
Jun-
13
Sep-
13
Dec
-13
Mar
-14
Jun-
14
Sep-
14
Dec
-14
Mar
-15
SAA
R ($
bill
ions
)
Public
Private
Source: U.S. Census Bureau
Dec. 08: $697.4 billionMarch. 15: $611.8 billion
-12.3%
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National Nonresidential Construction Spending by SubsectorMarch 2014 v. March 2015
-17.6-15.7
-9.1-8.5
-5.3-3.0
-0.22.3
9.212.312.8
19.619.8
22.023.8
50.3
-25 -15 -5 5 15 25 35 45 55
ReligiousPower
Public safetyCommunication
Highway and streetEducationalHealth care
Water supplyTransportation
Conservation and developmentCommercial
Sewage and waste disposalOffice
LodgingAmusement and recreation
Manufacturing
12-month % ChangeSource: U.S. Census Bureau
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Top U.S. Nonresidential Permanent Modular Construction MarketsAnnual Value Put in Place, 2013*
Source: Modular Building Institute 2014 Permanent Modular Construction Annual Report
*Building categories that align with industry key markets are: lodging, office, commercial, healthcare, educational and religious. These categories totaled $231.3 billion for 2013, according to the U.S. Census Bureau. The permanent modular construction market in the U.S. is roughly $3.0 billion and therefore is 1.3 percent of construction put in place in these markets.
Market $ Billion 2012 v. 2013 (%)
Lodging 16.7 31.0%
Office 41.3 6.0%
Commercial 54.7 19.7%
Healthcare 40.3 -1.9%
Education 75.1 -8.2%
Religious 3.2 -7.2%
Total 231.3 3.5%
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Percent of Project Work Currently Accomplished Using Prefabricated Assemblies
Source: FMI’s Prefabrication and Modularization in Construction 2013 Survey Results
26% 26%
19%
13%
16%
0%
5%
10%
15%
20%
25%
30%
1% to 5% 6% to 10% 11% to 20% 21% to 25% >25%
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Inputs to Construction PPIApril 2001 – April 2015
-10%
-5%
0%
5%
10%
15%
Apr
-01
Aug
-01
Dec
-01
Apr
-02
Aug
-02
Dec
-02
Apr
-03
Aug
-03
Dec
-03
Apr
-04
Aug
-04
Dec
-04
Apr
-05
Aug
-05
Dec
-05
Apr
-06
Aug
-06
Dec
-06
Apr
-07
Aug
-07
Dec
-07
Apr
-08
Aug
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Dec
-08
Apr
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Aug
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Dec
-09
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-10
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-10
Dec
-10
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-11
Aug
-11
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-11
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-12
Aug
-12
Dec
-12
Apr
-13
Aug
-13
Dec
-13
Apr
-14
Aug
-14
Dec
-14
Apr
-15
12-m
onth
Per
cen
t Ch
ange
Source: U.S. Bureau of Labor Statistics
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Construction Materials PPI12-month % Change as of April 2015
Source: U.S. Bureau of Labor Statistics
-70% -60% -50% -40% -30% -20% -10% 0% 10%
Crude petroleum
Natural gas
Crude energy materials
Iron and steel
Steel mill products
Softwood lumber
Nonferrous wire and cable
Prepared asphalt and tar roofing & siding products
Fabricated structural Metal Products
Plumbing fixtures and Fittings
Concrete products
-50.4%
-47.9%
-42.2%
-14.5%
-8.7%
-4.7%
-2.8%
-1.9%
0.8%
1.5%
5.1%
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Index of Construction Labor ProductivityBased on Various Deflators, 1964-2012
Source: Paul Teicholz, Professor Emeritus, Department of Civil and Environmental Engineering, Stanford University
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Source: Paul Teicholz (Stanford University) using data from U.S. Department of Labor and U.S. Bureau of Economic Analysis, published by AECbytes, March 2013
Construction ProductivityValue Added per Employee (2005 dollars), 1998-2011
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Source: Chart created by Matt Stevens (Stevens Construction Institute) using data from U.S. Department of Labor and U.S. Bureau of Economic Analysis, published by the National Society of Professional Engineers, June 2014.
U.S. Construction Productivity Value of Construction Put in Place per Employee 1993-2013
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Average Hourly Earnings, Select IndustriesJanuary 2005 through April 2015
Source: Bureau of Labor Statistics
$19.00
$21.00
$23.00
$25.00
$27.00
$29.00
Mar
-06
Aug
-06
Jan-
07
Jun-
07
Nov
-07
Apr
-08
Sep-
08
Feb-
09
Jul-
09
Dec
-09
May
-10
Oct
-10
Mar
-11
Aug
-11
Jan-
12
Jun-
12
Nov
-12
Apr
-13
Sep-
13
Feb-
14
Jul-
14
Dec
-14
Mining and Logging Construction
-
Nonresidential Profit Margins Subpar
Source: SageWorks
• In 2013, nonresidential construction firms averaged 2.52% net profit margin, up from 2.15% in 2012
• The average for all industries is above 6%• The top industry, Accounting, Tax
Preparation, Bookkeeping, and Payroll Services, had a profit margin of 19.8%
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Source: IT Key Metrics Data 2014, Gartner Benchmark Analytics
IT Spending as a Percent of Revenue, By Industry
1.0%1.1%1.3%1.3%1.5%1.7%1.9%2.5%2.6%2.8%3.2%3.2%3.8%4.2%4.2%4.7%5.0%6.3%6.7%3.3%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%
Construction, Materials, & Natural ResourcesEnergy
ChemicalsFood & Beverage Processing
Retail & WholesaleIndustrial Manufacturing
Consumer ProductsIndustrial Electronics & Electrical Equipment
TransportationUtilities
InsurancePharmaceuticals, Life Sciences & Medical Products
TelecommunicationsProfessional ServicesHealthcare Providers
EducationMedia & Entertainment
Banking & Financial ServicesSoftware Publishing & Internet Services
Cross-Industry Average
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Source: JBKnowledge, 2014 Construction Technology Report
Limits to Adoption*
*Percentages do not round to 100 (respondents could select multiple responses)
Other Responses Time to investigate and approve Data security concerns Data integration and compatibility with existing systems Lacking proof of ROI
0% 10% 20% 30% 40% 50% 60%
OtherNA-We try everything
Employee HesitanceManagement Hesitance
Learning CurveMaturity of Tech
Lack of Support StaffBudget
% of Respondents Citing Reason
“What prevents your company from adopting new technology most often”?
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Psycho
-
-22.0%
-3.5%
-1.3%
1.2%
1.5%
2.1%
4.1%
4.2%
4.5%
5.3%
6.3%
6.4%
8.5%
-30% -25% -20% -15% -10% -5% 0% 5% 10% 15%
Gasoline Stations
Electronics & Appliance Stores
General Merchandise Stores
Clothing & Clothing Accessories Stores
Furniture & Home Furn. Stores
Food & Beverage Stores
Building Material & Garden Supplies Dealers
Miscellaneous Store Retailers
Motor Vehicle & Parts Dealers
Health & Personal Care Stores
Internet, etc. Retailers
Sporting Goods, Hobby, Book & Music Stores
Food Services & Drinking Places
12-month % change
Sales Growth by Type of Business April 2014 v. April 2015*
Source: U.S. Census Bureau
*April 2015 advanced estimate
-
Conference Board Leading Economic Indicators IndexAugust 2007 through April 2015
Source: Conference Board
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%A
ug-0
7
Dec
-07
Apr
-08
Aug
-08
Dec
-08
Apr
-09
Aug
-09
Dec
-09
Apr
-10
Aug
-10
Dec
-10
Apr
-11
Aug
-11
Dec
-11
Apr
-12
Aug
-12
Dec
-12
Apr
-13
Aug
-13
Dec
-13
Apr
-14
Aug
-14
Dec
-14
Apr
-15
One
-mon
th P
erce
nt C
hang
e
April 2015 = 122.3 where 2010 = 100
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Tell-Tale Heart
• Economy gained momentum over the course of last year;
• Tailwinds included booming stock market, lower gasoline prices, stabilizing global economy, and consumer expenditures on interest rate sensitive durable goods like autos;
• Unlikely to attain 3 percent GDP growth this year – sorry – just too few economic drivers in place;
• Private construction leads the way – many publicly financed segments continue to falter;
• Construction productivity gains have been tiny relative to many other industries; and
• This creates conditions consistent with the notion that there will be big winners and big losers going forward –expect market concentrations to rise in the future.
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Slide Number 1Dawn of the DeadSlide Number 3Slide Number 4Change in Equipment and Material Technology versus Changes in Labor Productivity, 1977-2004Invasion of the Body SnatchersSlide Number 7National Nonfarm Employment�by Industry Sector�April 2014 v. April 2015National Construction Employment �Monthly Net Change�April 2000 through April 2015State-by-state Growth in Construction Jobs�April 2014 v. April 2015Employment Growth, U.S. States (SA) �April 2014 v. April 2015 Percent ChangeNightmare on Elm StreetArchitecture Billings Index�January 2008 through April 2015Nonresidential Construction Put-in-Place�December 2006 through March 2015National Nonresidential Construction Spending by Subsector �March 2014 v. March 2015Slide Number 16Slide Number 17Inputs to Construction PPI�April 2001 – April 2015Slide Number 19Slide Number 20Slide Number 21Slide Number 22Average Hourly Earnings, Select Industries�January 2005 through April 2015Nonresidential Profit Margins SubparSlide Number 25Slide Number 26PsychoSlide Number 28Conference Board Leading Economic Indicators Index�August 2007 through April 2015Tell-Tale HeartThank You