Construction Insider: Housing start rise, hardwood sector's push for trade war relief, more

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November Construction Insider: Housing start rise, hardwood sector’s push for trade war relief, more

November Construction Insider: Housing start rise, hardwood sector’s push for trade war relief, more

December 3, 2019

Construction Insider is a monthly roundup of the latest news and insights in construction.

Housing starts continue to improve

A 3.8% increase in US housing starts was reported by the Commerce Department for the month of October. CNBC

  • The Commerce Department reported a 5-month rising trend for single-family housing starts while multi-family housing also recovered from previous months’ slumps.
  • The report showed an increase in the number of home completions and a rise in building permits in the South region reaching a 12-year high record.
  • “This is [important] for future home buyers since one of the largest deterrents to entering the market right now is the lack of robust housing options,” said Bill Banfield of Quicken Loans in Detroit.

Construction jobs increase amid curbed spending growth

A reported 148,000 construction jobs have opened in the last 12 months despite the decline in construction spending due to ongoing global trade disputes. FCP

  • Construction annual employment growth rate improved by 2% while annual construction spending was reportedly down by 2%, according to US Census Bureau estimates.
  • The dip in construction spending growth could be traced to the trade disputes that have resulted in higher tariffs, according to the Associated General Contractors of America (AGC) data analysis.
  • “Resolving trade disputes and providing businesses with greater certainty about trade and tariff levels will help accelerate demand for new construction projects,” said AGC chief Stephen Sandherr.
  • Average hourly earnings for construction jobs have increased by 2.4% at $30.95 in the past year, which is comparably higher than the private sector hourly rate of $28.18.

Hardwood industry pushes for trade war relief

The Hardwood Federation is pressuring the US administration to provide a relief package as the US-China trade war continues to reduce the demand for US hardwood. Woodworking Network

  • The group of 28 hardwood associations submitted a relief package proposal in October to the US administration but the federation has yet to receive a response.
  • The tension between the US and China have resulted in 25% tariffs imposed on US export products. “We’ve seen about a 43 percent decline in volume being shipped to China,” said Hardwood Federation director Dana Cole.
  • The value of US lumber exports has reportedly decreased by 57% since the trade war started. Northwest Hardwoods, one of the largest hardwood suppliers, shut down two sawmills in November and laid off 225 employees since 2018.
  • “As China looks to other countries with less regulated and sustainable hardwood supplies to meet market demand, supply chains may be permanently disrupted,” said Northwest Hardwoods CEO Nathan Jeppson.

$7.6B budget cut on highways canceled as Trump signs CR

President Donald Trump signed a stopgap continuing resolution (“CR”) on November 21, effectively approving a provision that cancels a $7.6 billion budget cut on highway funding. ENR

  • The highway funding cut was set to take effect on July 1, 2020 but the American Association of State Highway and Transportation Officials (AASHTO) has been lobbying to get the highway fund cut repealed.
  • “If this happens next spring or summer at the peak of the construction season, the effect would be especially devastating,” said a letter signed by AASHTO members addressed to the Congress.
  • The House approved the “CR” rescinding the budget cut by a 231-192 vote, two days before the Senate cleared it and Trump signed it into law.

HVAC sub sues Skanska for $4M worth of unpaid change orders

Dynamic Systems Inc (Dyanamic) is suing New York construction company Skanska USA over $4 million worth of unpaid change orders. Construction Dive

  • Dynamic was a subcontractor in the Westchester Medical Center-Ambulatory Care Pavilion project. The original contract was worth $17.8 million but an additional $4.6 million was incurred due to change orders, according to Dynamic’s lawsuit complaint.
  • Dynamic has filed a lien on the property but Skanska responded by discharging the lien through a lien discharging bond.
  •  “I suspect — ​but do not know for certain — ​that Skanska will not approve the change order requests until [Skanska] resolves its dispute with the owner,” said Lawyer J. Scott Greer who represents Dynamic.
  • Change orders are a common source for payment disputes and delays in the construction, according to the Construction Dive analysis of the issue.