Small Business Finance News
Construction Facing New Challenges
Written by Tim Morral
Published: 5/2/2014
Construction is experiencing a mixed bag of challenges and opportunities as legislative uncertainty about the Highway Trust Fund looms over the industry.
Today's construction industry is in the middle of a good new, bad news scenario.
First, the good news: construction jobs are being added in nearly every area of the country. According to Associated General Contractors of America, construction-related employment has grown in 197 out of 339 metropolitan areas over the past year.
Although construction employment still hasn't rebounded to pre-recessions levels, increased employment is welcome news for both employers and workers--and a sign that construction firms are once again experiencing increased demand for new projects.
Now the bad news: the positive trend in construction could soon come to a grinding halt if Congress allows funding the Highway Trust Fund to expire.
The Department of Transportation estimates that the Highway Trust Fund will be depleted before the end of the government's fiscal year. It's predicted that the fund could run dry as soon as August, requiring Congress to appropriate additional funds, during the same time it will be working to reauthorize federal highway and transit programs that expire on September 30th.
The root of the problem seems to lie in the fact that gasoline taxes are no longer sufficient to support the amount of construction authorized by Congress. More fuel-efficient vehicles and Congress' unwillingness to raise the gas tax since 1993 are driving the lack of funding.
"It would be an economic travesty to put thousands out of work and undermine the construction industry's recovery because Washington officials don't fix a problem they've known about for months," Stephen Sandherr, CEO of Associated General Contractors of America told The Business Journals. "This isn't the kind of summer break hard-working craftsmen and women expect or deserve."
Like other businesses, construction companies rely on effective goal setting and planning to achieve business growth. But external factors (like the Highway Trust Fund) make it difficult for construction firms to establish realistic goals and even more difficult for them to achieve meaningful business growth.
If the funding issue isn't addressed in time, the impact could be devastating for construction firms -- and for many other types of small businesses that depend on a strong construction industry to survive.
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