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For construction spending to increase, businesses need economic certainty

We all know that the construction industry has lost jobs – a lot of jobs. We all know that nonresidential construction spending is a fraction of what it was in 2008 and that residential has shown only the slightest indication of an uptick.

Yet each month we look for any sign that says things are better. After we find a piece of encouraging news, we wait anxiously for back-to-back months of good news.

The problem is that few statistics suggest that the situation is getting much better. At best, we are looking at a grand total of 1 percent to 2 percent improvement over construction spending in 2010.

I have stopped asking people how business is going, but as the eternal optimist I continue to search for the positives in their answers. Lately, in fact, along with looking for a statistical silver lining in the big rain clouds every month, I’ve begun asking people why they think things are not getting better.

Many of the answers are logical: federal stimulus spending is tapering off, consumer confidence is low, access to capital is limited and regulatory restraints are greater. We have all heard these same thoughts from clients, co-workers, friends, neighbors and even “the experts.” They are all logical. They all make sense. And there is not much to disagree with.

The other ongoing theme is that things are uncertain because the only thing certain today is uncertainty.

Business owners point to the mess on our hands in Washington, D.C. “Are taxes going up again?” we asked. Are there going to be more anti-business regulations or are they finally done piling on? Nobody knows, and so for the last couple years many owners have simply chosen to sit on their hands and wait until the politicians (and some of my best friends are political types) figure out how much worse they are going to make the situation.

While some people might call this theme of comments cynical, there is a lot of truth within them. How can businesses plan when they don’t know what they are planning for? Who is going to buy land and build a new warehouse if they don’t know how much they are going to owe in taxes?

And what incentive is there to increase production in your factory and add more workers when you don’t know what kind of new restrictions to expect from the Environmental Protection Agency or the National Labor Relations Board?

Business owners need certainty to grow. And growth is what fuels the commercial construction industry. If our economy is not growing and people aren’t producing, then there is no need for construction.

What is the solution? What can you do? Well, it is time to dig in and work on the big issues.

Tell your local political leader or favorite business association what you think is blocking growth. Is it land use? Is it lending? Is it regulation by a dozen different government agencies for just one project? Regardless of what is in the way, we as an industry need to work together to move it.

John Killin is president of the Associated Builders and Contractors’ Pacific Northwest chapter and executive director of the Independent Electrical Contractors of Oregon.

About John Killin