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Construction Sluggish But Big Projects Starting to Pop

Although folks in the electrical construction business seem more optimistic than they have been in years, the market is still struggling to gain momentum in 2012's first quarter.

“There were some positive signs for construction during 2011, such as a stronger volume for multi-family housing, a record high for new electric utility starts, and even gains for a few commercial structure types (hotels and warehouses),” said Robert Murray, vice president of economic affairs for McGraw-Hill Construction. “However, these positives were offset by declines for single-family housing, public works and institutional building. For 2012, both public works and institutional building will continue to be affected by diminished federal funding, as well as by tight state and local budgets.”

Construction employment data also seems to point toward a sluggish start for the industry in 2012. The U.S. Department of Labor said that in December electrical contractors employed 722,000 workers, roughly the same as Nov. 2011 and a year earlier, but still approximately 23% below the recent peak of 943,000 workers in Oct. 2007.

Two construction market segments that appear to be entering 2012 with some real momentum include the manufacturing facilities that produce computer/electronic/electrical equipment and electric utilities. According to Dec. 2011 data on the value of private construction from the U.S. Department of Commerce, at $13.24 billion (seasonally adjusted annual rate), construction of factories in those sectors was up 52.4% over Nov. 2011 and up an astounding 228.7% percent over Dec. 2010. At approximately $73.15 billion, construction by electric utilities in Dec. 2011 was up 19.9% over Dec. 2010 and up 3.6% over Nov. 2010.

Quanta Services Inc., Houston, was the beneficiary of some of this utility work, as it recently won a $300 million contract from American Electric Power (AEP) to rebuild or replace more than 900 miles of existing transmission lines and related infrastructure and signed a contract with Southern California Edison for a new 153-mile, 500-kV electric transmission line in an existing corridor.

Other big construction jobs either already started or scheduled to break ground in 2012 include the 61-mile SunRail, a $1.3 billion commuter line in central Florida that will run from DeLand, Fla., to Poinciana, Fla.; a $1 billion stadium for the NFL's San Francisco's 49ers that's set to break ground this July in Santa Clara, Calif.; and the $320 million town center project Rock Spring Centre in Bethesda, Md., expected to begin construction in a few months.

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