July 2010 V.P. Report
Cayman Islands Management Trip
I would like to thank everybody who attended this year’s management conference at the Ritz-Carlton hotel in the Cayman Islands. This was a wonderful resort located on the white, pristine beaches of a beautiful tropical island, making it impossible for our members to not enjoy themselves. A special thank you goes out to our management sponsors, without whose help we would not have been able to put on the wonderful event; Cherry Companies, Rush Equipment, ACT Pipe & Supply, The Sprint Companies, Williams Brothers Construction, Century Asphalt, Oldcastle Precast, Insurance Alliance, WM Trucking, Waukesha-Pearce Industries, and Rinker Materials/Cemex. Thank you for your generous support.
Every management trip has a featured speaker for the event. This year Mr. Stephen Sandherr, Chief Executive Officer for the National AGC was our keynote speaker and gave a detailed presentation on what to expect from the Federal Government relating to utility construction over the next several years. A brief summary of his comments would have to be; hold on to your wallets because it is going to be ugly. According to Mr. Sandherr contractors can expect to see increased material prices on diesel, steel and cement, not to mention drastic changes to your healthcare policies. According to Mr. Sandherr, the Obama administration is looking to implement many of his changes through departmental regulations rather than through legislation. Expect to see the power of the EPA expanded and their enforcement of regulations increased. There will be a push to have the EPA begin issuing all building permits and act as a transportation planning agency. And if the thought of the EPA acting as a national urban planner and permitting agency doesn’t scare the pants off of you, how about if I add OSHA to the mix. Mr. Sandherr stated that the Obama administration is empowering OSHA and encouraging more aggressive inspections of worksites and offices. Issues that are on the OSHA agenda will be things such as ergonomics, silica exposure, safety and confined spaces issues. Now here is the scary part, Mr. Sandherr said that this country is one accident away from the “Protecting America’s Workers Act”. This is a union driven program that would increase civil and criminal penalties for OSHA violations, has the potential for criminal liabilities for officers and directors of companies and would require that any discussion of settlement would have to include the victim, victim’s family or a union representative. The act was filed back in April of 2009 and is currently being reviewed in the House by the Health, Education & Labor Subcommittee.
Mr. Sandherr also discussed an issue referred to as High Road Contracting. This is another union backed program that would change federal procurement rules and combine the living wage concept with blacklisting rules. Under this proposal the Federal Government could give preferential treatment to contractors that pay a “living wage” and provide other benefits such as healthcare and retirement packages to their hourly employees over those companies that do not. This action would clearly favor unionized companies and punish open shop facilities. The proposal would also allow for blacklisting of non-participating or “bad guy” companies. Discussion of this program was reported back in early February but so far has not seen much daylight, probably due to the problems that Card Check, another union backed policy, has faced in the Senate. And you thought that the healthcare debate was a problem.
Soft Economic Outlook
The Greater Houston Partnership put out numbers for May for the Houston area showing growth for the fourth consecutive month. The region gained 20,200 jobs in May, a .8% increase over the previous month. Half of the jobs created occurred in the Federal Government, census worker positions, however private sector employment grew by 10,800 in May and has increased by 31,000 since January. All employment sectors added jobs, however they are all down from this same time last year. In May the construction sector added 500 jobs. This is only the second month in the last 24 where employment has not fallen. Manufacturing added 1,100 jobs but remains 8,000 below the May 2009 numbers. Likewise retail added 1,200 new jobs, but is still 1,400 below this time last year, and wholesale trade is still down 4,000 jobs compared to 2009. On the bright side the numbers are considerably better here than they are in the rest of the country, and the positive growth is not just in Houston, but in every metro area of Texas.
While the employment growth numbers for the region are not great they are still in the positive. The area unemployment rate for May is at 8.3% dropping only a half of a percentage since January. The unemployment rate for Texas stands at 8.0% and the national figure is 9.3% for May. The national number fell in June to 9.5%. According to a report from the Associated Press, the private sector nationally only added 83,000 jobs in June and estimates that approximately one half million people have stopped looking for work altogether.
Experts said that the U.S. economy will need job growth at an estimated rate of 200,000 new jobs per month to begin to affect the unemployment rate, and nobody expects that to happen anytime soon. According to the report, the government has mostly exhausted its options to affect the economy. Interest rates are already near zero and there is little political will to push for another stimulus package, even amongst Democrats. National unemployment rates are expected to stay above 9% through the midterm election in November and the Federal Reserve predicts that the jobless rate could be as high as 7.5% two years from now.
American confidence in the economy is fading as well, creating a vicious cycle of slow job growth and a lack of consumer confidence. In June the consumer confidence rating was at 53, down ten points from the previous month and well below a typical reading of 90 seen in a healthy economy. Most big companies are reporting that they expect little to no job growth in the second half of the year, blaming weak demand for products.
Where is Gordon Quan?
I was talking with some other political pundits recently when the topic of the Harris County Judge’s race came up. We discussed the race and the candidates. There were one or two in the group that didn’t know who the Democrat party candidate was, a good sign for Judge Emmett I must say. I reminded them that Gordon Quan was Dem. candidate, but followed that up by saying that no one has seen or heard anything from him since the official announcement back in January. Granted, campaign season doesn’t really get going until after the summer is over, but we still should be hearing something about him. Well now I know why, Gordon Quan had multiple bypass heart surgery in late May.
Found only in a few obscure blogs buried in the web was a short interview with the candidate where he stated that he had known about the heart disease for some time, but decided to have the surgery now to recover in advance of the fall campaign season. Quan, who is 62 stated that he will use the six to eight week recovery time to meet with County employees and study County government issues. I would have thought he would have already done that prior to filing to run for the office, but that’s just me. Anyway, let’s all wish him a speedy recovery, a long and happy life and a quick and decisive defeat at the polls come November. By the way HCA has endorsed Judge Emmett for re-election to the position. Go Judge Emmett!
