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FMI: expect more delays, cancellations, and layoffs

FMI: expect more delays, cancellations, and layoffs


August 11, 2010

The first-quarter FMI Nonresidential Construction Index (NRCI) score remains in bearish territory with a reading of 35.6 with few panelists expecting business to return to growth before 2010. While a few companies represented in the NRCI have plans to hire in 2009, most continue to expect significant decreases in full-time employees. With project delays and cancellations rising, contractors are looking to the new stimulus bill to help make up for sharp reductions in private capital projects.

NRCI First Quarter 2009 Highlights

- Eighty percent of panelists reported the overall economy was worse than last quarter, but appears to be declining at a slightly slower rate than last quarter.
- With 76 percent of panelists reporting the local economy where they work is worse than last quarter, and 77 percent thinking the nonresidential building market in their region is worse than last quarter, we can see the problems in the broader market settling in on Main Street.
- While panelists continue to see their business as doing better than the overall and local economies, dwindling backlogs and difficulties finding new work are now hitting home with 58 percent of panelists reporting their local business is worse than last quarter.
- Seventy percent of panelists report the cost of construction materials is lower than last quarter.
- Eighty percent of panelists report their labor costs have remained the same with some signs of going lower.
- Delays are running at 20 percent, or four times the normal rate. Project cancellations have doubled since our last reading to 10 percent.
- Nearly 65 percent of panelists are planning reductions of full-time direct employees for 2009 or have already made significant reductions in the latter half of 2008. Twenty-five percent are planning to reduce full-time direct employees by more that 10 percent in 2009. The remaining companies are taking a wait-and-see approach or adding employees while anticipating the next market upswing.

To schedule an interview or discuss the findings in more detail, contact Kathryn Robinson at krobinson@fminet.com or 919.785.9211.

About FMI
FMI is the largest provider of Management Consulting and Investment Banking to the worldwide construction industry.

Founded in 1953 by Dr. Emol A. Fails, FMI delivers innovative, customized solutions to contractors; architects and engineers; construction materials producers; manufacturers and suppliers of building materials and construction equipment; private owners, managers, and developers; residential builders; utility companies; surety companies and industry trade associations.

FMI creates value through enhanced performance of companies, teams and individuals and by mitigating risk. FMI is headquartered in Raleigh, N.C., and has offices in Denver, Phoenix and Tampa, Fla.

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