Construction industry analysts are in agreement that President Barack Obama's economic stimulus plan will provide precisely the boost Illinois' building economy needs.
According to a recent study by the Associated General Contractors of America, for every billion dollars invested in new infrastructure projects statewide, Illinois' gross state product will increase by $63.1 billion. Personal earnings statewide will increase by a total of $19.5 billion for every billion that is invested, the study reports.
Stephen Sandherr, chief executive officer for the AGC, says the comprehensive new data - which is based on economic research conducted for the association as well as federal data and economic impact estimations - demonstrates the "unmistakable" benefit of including infrastructure investments as part of the stimulus package.
"Investing in infrastructure will create jobs, will increase earnings and will stimulate economic growth," said Sandherr. "As important, these investments will give our economy a global competitive edge for decades to come."
For every billion invested in Illinois construction, some 20,000 jobs will be created or saved; of these jobs, about 6,800 would be construction jobs, according to Ken Simonson, chief economist for the AGC.
"Another 3,200 of these jobs would be directly and indirectly associated with construction supply materials and services," Simonson said. "And 10,000 of these jobs would be created when construction, supplier and service providers spend their incomes," he added.
At the Leadership Council Southwestern Illinois' Labor Management Committee summit in mid January, Simonson said that nationally speaking, the fastest-growing sectors of nonresidential construction spending during 2008 (January through November) were manufacturing and power. Compared to the same time period a year earlier, manufacturing construction spending increased 61 percent, he said, followed by industrial construction, which saw a 27 percent increase.
"Construction of the Prairie State Energy Campus and ConocoPhillips' expansion in this region are examples of major nonresidential construction projects - projects in the power category - that buoyed the construction economy in 2008 and should continue to do so in 2009," said Simonson.
On the materials side of the economic equation, Simonson says that for the fifth consecutive year, the construction PPI (Producer Price Index) increased. "From December 2003 - the month that steel prices jumped - until July 2008, the materials and components PPI increased 36 percent," the economist said. "It rose two times that of the CPI (Consumer Price Index)."
In 2009, Simonson predicts a decrease in the materials and components PPI of 4 percent but says come 2010, the construction industry could see a repeat of 2003 to 2008.
The loss of construction jobs across the U.S. during 2008, according to Simonson and the AGC report, was sobering. A total of 2.4 percent of the nation's construction workforce - some 2.8 million people - lost their jobs during the past 12 months. In contrast to this decrease in the number of jobs, he said those who held onto their construction jobs experienced, on average, a wage increase of 5.8 percent.
Patrick McKeehan, executive director of Leadership Council Southwestern Illinois, hopes the president's stimulus package includes key capital projects across the area which remain "shovel-ready" but are in need of additional funding.
"From our perspective - having just completed our organization's annual Market Review and Investment Update - we show that there are a significant amount of projects either under construction or planned for our region," McKeehan said. "What we hope is that the federal stimulus package will continue to fuel our long-term growth. There are hundreds of worthwhile projects, many dealing with public safety issues, and we definitely hope the focus of their dollars will help grow Southwestern Illinois."
The expansion of Illinois 255 to connect with U.S. 67 is one such capital project, McKeehan added.
Simonson cautions that as each new version of the stimulus package makes the rounds in Congress, the portion relative to expanded thoroughfares and other transportation needs continues to be reduced.
"The infrastructure piece is steadily shrinking, and we hope it can be restored," he said.
U.S. Rep. Jerry Costello, a Democrat representing Illinois and the senior member of the Illinois Congressional Delegation, said he won't stop fighting for a greater level of infrastructural funding in the president's stimulus bill.
"We've been raising a lot of hell with the administration, saying the package devoted to infrastructure should be much bigger than it currently is," Costello said, noting that of the total $850 billion stimulus package, only $100 billion is dedicated to infrastructural needs across the nation.
Tim Garvey, executive director of the Southern Illinois Builders Association, says Illinois has got to get its act together and pass a new capital spending program. Not to accomplish this, he says, is to impede the usefulness of the federal funding that will come via economic stimulus package.
"The main difference between Illinois and Missouri, when it comes to the construction economy, is that Illinois has an ongoing, worsening crisis in Springfield," said Garvey. "The inability of the legislature to function based on what's taking place in the governor's office is hampering critical progress such as that of a new capital spending program."
Garvey says the good news in terms of nonresidential construction is that projects in the industrial sector - such as U.S. Steel Corp.'s construction of a new coker at its Granite City Works plant, despite its temporary closure of the plant - are helping to maintain construction employment levels for Southwestern Illinois at a much higher level than in other areas of the country.
"We're really hoping that the infrastructure package by Obama is going to come to fruition and soon," Garvey said, "otherwise we're talking unemployment rates of 30 percent."
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