Construction Monkey

Construction Monkey Blog

Well 2010 is finally here.  It couldn't come quick enough with the difficulty and challenges we all had to deal with in 2009, it feels good to have a "fresh" start on a new year.  I am aware that just because the calendar changed from 2009 to 2010 it doesn't mean that the world is a different place, it does however feel good to be starting new.

So what can we expect in 2010?  Here are a few of my predictions throughout the year:

Residential Construction
I believe that there is artificial demand in the current market.  With low interest rates (which cannot continue forever given the national debt scenarios) and the federal governments first time home buyer's tax credit it appears that whatever possible demand was in the market has been shifted to current times.  Even though it is difficult to say that residential construction cannot go much lower, I would not expect a rebound of any magnitude.  Recent months of home sales and inventory numbers suggest that we will be pulling out of the market, but I believe that is a shift in demand to get a good deal.  Additionally the top end of homes (anything where the loan will be greater than $417k) is a very weak component and will continue for the foreseeable future.  The banking industry calls these large loans "jumbo loans" and right now, no one is taking a chance on offering jumbo loans so the anticipation of house prices moving up is constrained by this invisible ceiling.

Government Projects
If you can print your own money and have the ability to orchestrate your own re-election, well then there will be more government projects.  A quick look at the stimulus package reveals that not only has very little of the money approved been spent, but very little has been put out to contract.  There is talk of additional stimulus which might have more of a chance of passing than you think.  Politically there is a need to create as much economic progress as possible as that is the largest concern of most Americans and a well positioned stimulus could make that happen.  I would expect the government to spend as much money as possible between now and the election to try and hold up the economy.

Private Commercial Jobs
Good luck.  Outside of very large projects that take time from companies that need the facilities internally, I would expect 2010 to look like 2009.  Not too many people will be out there dropping money (or getting money) for speculative projects.

Industrial Projects
There is some good and bad news here.  With Cap and Trade and other green initiatives hanging over every industry it becomes difficult to support building new manufacturing or industrial projects, but given the economy and the time to bring these on line the economy could not be at a better point.  I would expect that any industry that has to be located close to the consumer (i.e. power plants) will move forward, while industries that can be off shored will be delayed.  If Copenhagen was a sign of what is coming, it appears like the Kyoto that developing nations will get more of a pass on Carbon Emissions which will push industry to those countries.

Commodities
Expect them to go up.  More construction as a whole for 2010, thus more domestic demand.  A continued weak dollar and in today's world almost every commodity is a world wide product like oil.  China and India are going nowhere.  China had a bad year last year and their economy grew by nearly 10%, so I would expect more of the same from the population capitals of the world which will once again grab up steel, copper, and oil and bigger rates that will put pressure on our local businesses.

No matter what happens in 2010, I think we can all agree that we want it to look a lot better than 2009 did and hopefully will be more positive in attitude.  No matter what, best of luck to you, your family, and your business.

About the Author

Craig Pierce

Craig Pierce has been working in the construction industry for the past 25 years helping subcontractors master their trade. Currently he is President of Atalanta Enterprises which provides consulting services to contractors And software solutions through ConstructionMonkey.com.