Nevada Chapter of the Associated General Contractors speakers say construction outlook positive with a few bumps

Steve Hill, executive director for the Governor's Office of Economic Development, speaking at the AGC Construction Economic Outlook Breakfast held Wednesday, Dec. 14.

Steve Hill, executive director for the Governor's Office of Economic Development, speaking at the AGC Construction Economic Outlook Breakfast held Wednesday, Dec. 14.

The construction industry is expected to continue to grow heading in 2017 but at a slower pace then in recent years, said economists at the Nevada Chapter of the Associated General Contractors Construction Economic Outlook Breakfast held Dec. 14.

“It is good to be back here when there is so much good news here in Reno,” Ken Simonson, chief economist for AGC of America, said.

In 2015, the construction industry contributed $7 billion of Nevada’s GDP of $141 billion. Furthermore, construction wages and salaries totaled $3.8 billion in Nevada in 2015.

Simonson said that the state construction employment change between October 2015 and October 2016 was an increase of 13 percent.

While the national construction industry has regained health from the days of the Great Recession, Simonson said that it is still not at the peak levels seen prior to the recession.

“I think we are going to see the construction industry make a slow and somewhat unsteady recovery,” he said.

According to AGC’s Data DiGest, there were a reported 205,000 construction industry job openings nationally at the end of October 2016.

“What companies have not been able to do is hire unemployed experienced workforce,” Simonson said. “The challenge is finding qualified workers.”

Based on a national survey conducted by AGC, the top five hardest positions to fill in the construction industry are currently all hourly craft positions, carpenters, electricians, plumbers and roofers, and concrete workers.

Simonson said that some of the ways that firms are working to address this is by raising base pay, providing incentives or bounces, increasing contribution and benefits, paying overtime to their current employees and hiring sub-contractors.

The need for construction in northern Nevada will increase as more people come to the region. This will create a demand for more housing and schools.

“Manufacturing should still be a strong contribution in northern Nevada” as we head into 2017, Simonson said.

He anticipates that national construction for retail will focus more on renovating exciting buildings and doing tenant improvement than building brand new construction. He also said that he expects construction of healthcare facilities to be paused until it is seen what the new presidential administration will do with Obamacare.

He anticipated that construction spending will slow in 2017.

“Construction spending is growing but much less than it did (in 2015),” Simonson said.

Businesses in general feel more optimistic heading into 2017.

Wells Fargo conducts a quarterly survey that measures the optimism of small business owners. Their third quarter report after the election showed optimism was up four percentage points from the previous quarter.

“I was astounded by how optimistic small business were for next year,” Sanjoy Varshney, senior vice president and investment strategy specialist for Wells Fargo Private Bank, said.

He said that the Job Openings and Labor Turnover Survey (JOLTS), is reporting that there are more job opening then people to fill them.

“We are seeing the best labor market in the past decade,” Varshney said.

However, there are many challenges that face the global, national and local economy as we head into 2017.

Steve Hill, the executive director for the Governor’s Office of Economic Development, identified three obstacles that northern Nevada faces. The first being workforce.

“We are going to have to work hard to solve that,” he said.

He also said that finding funding for teachers is also a challenge. While Washoe passed the WC-1 measure in the last election cycle to help repair and build schools this does not provide money to hire more teachers. The third challenge he identified was the cap on property taxes in Washoe County.

There continues to be a lot of activity for the construction industry in the Tahoe-Reno Industrial Center.

“The combination of Switch and Tesla are attracting other businesses,” Hill said.

Hill was optimistic about the outlook for the construction industry in northern Nevada heading into 2017.

“I am not sure that there is a better place in the construction industry than in the Reno-Sparks MSA,” Hill said.

The Nevada Chapter of AGC is one of more than 90 chapters across the nation. For more information about the Nevada Chapter of AGC, go to


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