2010 Rural Partners Forum
Construction: the context
Construction develops the foundation on which other economic development can be mounted – providing the means to house services delivered through public and private sector operations, to transport goods produced, to shelter the workforce and to ensure the flow of public and private utilities. While construction activities may be financed by either the public or the private sector, the majority of construction jobs are private sector employment opportunities.
The federal Bureau of Labor Statistics indicates the construction sector contributes $16.6 billion to the state’s gross domestic product. In 2009, the construction industry included more than 28,000 establishments in North Carolina with an average weekly wage of $758. Two major divisions comprise the industry:
- New construction typically involves higher dollars and more jobs, but is of shorter-term benefit and less likely to be a recurring opportunity for economic stimulation. Each dollar in new construction generates an additional $1.28 in the community, and every $1 million spent locally is projected to create 35.9 jobs.
- Repair and maintenance construction, including upgrades and renovations, typically cost less per project but generates more jobs for the money spent. Every $1 million spent locally is projected to create 41.4 jobs. Furthermore, this work is more likely to be undertaken by local entrepreneurs, keeping wealth in the community. Each dollar spent on repair and maintenance construction generates $1.20 in additional spending.
The construction industry is one of North Carolina’s largest employers, with an average of 192,613 private construction workers in 2009. Throughout rural North Carolina, 5 percent of all workers were engaged in construction that year.
The recession, however, has hammered the industry. Construction suffered the largest percentage decline among major industries. Statewide, more than 75,000 construction jobs disappeared between 2007 and 2010. Moving forward, construction is more likely to react to economic recovery than to drive growth.
Trends and job potential
Water and sewer construction. North Carolina benefited from an infusion of federal and state funds in the most recent fiscal year. About $475 million from state and federal resources was invested statewide to address the state’s public water and wastewater infrastructure needs. Work under way is expected to generate 17,000 construction jobs, plus aiding in the creation of at least 1,200 additional jobs and retaining 1,300 jobs in other sectors benefiting from projects targeting economic development. State and federal support for water and sewer needs is expected to drop to about $170 million in 2011. This should create another 6,100 construction jobs.
Going forward, construction needs for water and sewer systems in North Carolina through 2030 exceed $16 billion. If fully funded, this equates to more than 570,000 jobs on construction projects over the next 20 years. Despite stimulus funding, however, the total amount of federal and state financial assistance for local water and sewer infrastructure has declined since 2008.
Transportation construction. North Carolina’s transportation plans target $23 billion to road and bridge projects over the next five years. At least $135 million for the current fiscal year is identified for projects in rural counties, potentially creating 4,800 construction jobs. In fiscal year 2012, rural highway construction projects should secure $147.9 million and generate 5,300 construction jobs.
The state’s need for road and bridge construction through 2030 is estimated at $64 billion. If full funding were available, the transportation construction needs would be expected to generate 2.3 million jobs over the 20-year period. On the other hand, revenues for such projects – currently tied to motor fuel use and vehicle miles traveled – have been declining.
Building construction. In the public arena, a growing population means North Carolina counties face significant needs for public school construction – $9 billion worth at the last estimate. This construction could generate more than 320,000 jobs. Counties also are responsible for constructing community college facilities to meet the increased attendance as residents retool to find work.
Military expansions are bringing significant growth in housing construction to counties near the bases. Elsewhere, private sector housing construction is not recovering as rapidly as federal policy makers hoped, despite extensive federal housing tax credit programs and historically low mortgage rates.
New office, industrial and commercial construction is under way in selected spots, but the inventory of vacant space remains high in rural North Carolina.
Green: a new building opportunity
While much of the large-scale activity has slowed, opportunities exist and are expected to grow for construction trades that target existing skills to address emerging markets in the green construction-energy efficiency areas. For example, building retrofit opportunities will create jobs for electricians, carpenters, roofers, insulation installers, and heating and air conditioning installers. The U.S. Green Building Council predicts that green building will support or create 7.9 million jobs between 2009 and 2013 and will contribute $554 billion to the U.S. economy. Furthermore, studies released in 2010 indicate that the U.S. home energy retrofit market will grow 15 percent each year, and the market for nonresidential retrofits could grow from $4 billion this year to $15 billion by 2014.
Two community college demonstration programs focus on green building techniques. A program in Graham County (in connection with Tri-County Community College) offers training in aspects of operating a business that specializes in green construction. A program at Haywood Community College provides experienced construction trades people with new skills for the green industry and has a green building certification program.
The state offers a special category of assistance through two revolving loan funds to help finance sustainable water and wastewater/stormwater system improvements.
- The Drinking Water State Revolving Fund Loan Program assists in the funding of capital projects that protect public health by providing clean, safe drinking water.
- The Clean Water State Revolving Fund assists in funding the construction of wastewater treatment facilities and projects associated with estuary and nonpoint source programs.
The N.C. Department of Administration provides an online directory of resources for historically underutilized businesses. The listing includes minority construction associations as well as statewide established groups. It is available online.
The Office for Historically Underutilized Businesses, housed in the state administration department, produces a construction report that lists construction and purchasing expenditures made by state agencies, community colleges, state universities, public school systems and other public entities. The report is available online.
The U.S. Green Building Council is a nonprofit organization that promotes cost-efficient and energy-saving green buildings. It comprises 78 local affiliates, three of which are based in North Carolina.
The N.C. Home Builders Association is a trade association consisting of builder and associate member firms throughout North Carolina. Through its programs and activities, the association encourages professionalism, provides a forum for industry views and advocates for the building industry.
Carolinas Associated General Contractors is the largest construction trade association in the Carolinas and the nation’s largest chapter of Associated General Contractors of America. The association helps its more than 3,000 members grow revenues, manage their workforce and navigate legal and regulatory issues.
Combined Report: State Funding for Public Water and Wastewater Infrastructure. FY 2010.
Employment Security Commission of North Carolina.
Michael Walden, Department of Agriculture, N.C. State University, “Measuring How Much Economic Change Will Mean to Your Community.”
N.C. Department of Transportation, State Transportation Improvement Plan.
N.C. Rural Economic Development Center, “Water 2030: Water, Sewer and Stormwater Capital Needs.” 2005-2030.
Rural Center and EPA information from the websites, including the Rural Data Bank, Building Reuse and Community Mobility programs.
SBI Energy and McGraw-Hill Construction studies, as cited in “4 Green Building Trends to Watch in 2010” by Justin Moresco.
U.S. Bureau of Labor Statistics.
U.S. Environmental Protection Agency.
U.S. Green Building Council, Green Jobs Study. November 2009.