1: Doug Irvin of the Lockton Companies said profitability for surety businesses in recent years had carried many organizations through the downturn. | 2. If the free market won't support green-energy initiatives, the government shouldn't either, said Jeff Reisberg. | 3. Joe Privitera expressed concerns that too many people setting policy in Washington had little understanding of the impact their decisions have on business in that sector.

 


Jim Delaney noted that with 30 percent unemployment in the construction industry, it seems counter-instinctive to add new people.

As Mitch Hoefer sees it, the recovery will be sufficiently incremental that companies will be able to adapt either through training programs or the lure of a well-paying job. “I would love to say we are all going to have a problem adding 20% to our work force, but I don’t think that’s going to be the case.”


Green Jobs

As Biondo explained, there is a study being done by the University of Missouri–Kansas City about green jobs and how to define them. “As we looked at it,” she added, “we’ve been doing green jobs in the electrical industry as long as we’ve been in it.”

“I think Rosie is right,” affirmed Rick Maniktala. “It is difficult to define what a green job is.” However defined, Maniktala noted that green projects, whether privately funded or federally funded, helped sustain the industry through the recession.

John Foudray saw the “marketing motivations” behind much of the green movement. “If I’m renting an apartment to a 25-year old, and I have an Energy Star-rated apartment, and my utilities are lower than that guy who does not, I’m going to get that tenant.”

Jeff Riesberg objected to the arbitrariness of it all. “Unless the fundamentals are there and the finances support it, [green jobs] should not happen,” he said. “They shouldn’t be supported or driven by government. There shouldn’t be a falseness to it.”

Surety Market

Doug Irvin of the Lockton Companies addressed the effect of the downturn on the surety business. As he noted, written premiums in the past two years had been down for the simple reason that there had been less work in the construction economy.

What surprised Irvin is that failures by bonded contractors were much less than anticipated. The result is a “healthy and stable surety market.” Fortunately, too, the industry had been profitable enough the past five years, and the major players prudent enough, that there had been no major upheavals.

“There aren’t any solvency issues,” added Teresa Martin. There was a good deal of absorption in the 1990s, and many surety companies were bought or went out of business. “We aren’t seeing that now,” said Martin. “We haven’t had that happen for a while now.”

Regulation/Litigation

Biondo asked her colleagues whether any new regulatory burdens had been added to the growing stockpile of the same.

John Foudray cited new EPA regulation on storm-water runoff. “It’s extremely onerous,” he noted. “It’s going to affect development costs tremendously.” He also had no idea how the EPA could ever hope to enforce the detailed reporting it now requires.

Also in the “onerous” department, David Kendrick pointed to lead renovation certification. Kendrick’s description of what had to be done on even a routine job left his colleagues’ heads spinning, and the penalties for non-compliance are brutal.

Joe Privitera compared the threat of non-compliance in the lead arena to a game of Russian roulette. “It is such an unknown situation,” added Rosie Privitera Biondo, “you don’t know if you should train your entire company.”

New financial accounting standards in regard to leases, Tom Vrabac explained, will have the effect of causing businesses to show less net worth and, as a result, slow construction down.

“Everyone will want a short-term lease now instead of going to a bank and saying ‘I want to buy this building,’ ” added John Foudray.

Rulings from bankruptcy court in Missouri on the subject of mechanics liens, Susan McGreevy pointed out, had made it harder for contractors to know whether they would be able to collect or not on money owed.

“The biggest problem we have in government,” said Joe Privitera, “is we don’t have a government full of contractors that know our issues.” The result, Privitera explained, is regulation by people who do not understand the way business works.

Rosie Privitera Biondo nicely summed up the essence of private enterprise: “We are here to make a living and make sure other people continue to work, and we can only do that by making good wages and making a profit.”

 

 

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