Wells Fargo Survey: Construction Industry Executives Expect Increased Activity in 2017

Forecast reveals third highest optimism rating in 20 years; two-year optimism up from 2016.

REUTERS

(Wells Fargo is No. 12 on the DiversityInc Top 50 Companies list)


Construction industry executives have entered 2017 with increased optimism for nonresidential construction activity, according to a recent survey of industry contractors and equipment distributors released from Wells Fargo Equipment Finance, a subsidiary of Wells Fargo & Company. The 2017 Construction Industry Forecast revealed increased optimism driven by expectations of industry expansion through higher infrastructure spending and increased company profits.

The survey's primary benchmark for measuring construction industry contractor and equipment distributor sentiment is the Optimism Quotient (OQ). The OQ reached its third highest reading in 20 years with a very positive 123 for 2017, a marked increase over the 2016 reading of 108. An OQ score greater than 100 suggests strong optimism for increased local construction activity versus the prior calendar year.

"An OQ reading at this level leads us to believe that the industry will continue to build on the momentum generated over the last few years," said John Crum, senior vice president and national sales manager of the Construction Group at Wells Fargo Equipment Finance. "Contractors have increasingly improved their businesses and this year looks to provide more opportunities to do that again."

A growing number of executives believe the industry will expand in the next two years, with 84 percent of executives expecting moderate to significant expansion in this timeframe versus the results in last year's survey that indicated only 62 percent expected expansion.

Equipment sales and purchases

Regarding equipment sales, distributors are expecting to move more new and used equipment this year with 65 percent expecting an increase in new and 66 percent expecting an increase in used sales, compared to contractors who plan to increase new and used equipment purchases by 39 and 25 percent, respectively.

A significant result of the survey showed that only 13 percent and 11 percent of contractors expect to decrease new and used purchases this year, respectively. In 2013, these figures were 30 percent and 20 percent. This reading shows the strong confidence that equipment end users have in their businesses.

Cost concerns

Contractors and distributors report similar cost concerns in 2017. The top concern among contractors continues to be employee wages and other benefits (24 percent), followed by taxes (21 percent) and healthcare costs (19 percent). Contractors are also more concerned about equipment purchase costs in 2017 than in years past with 18 percent selecting this as their top concern, compared with just 10 percent in 2016. Top concerns for distributors include increasing concerns over equipment costs (31 percent) and continued concern over healthcare costs (22 percent).

Rental market remains strong

With increasing concerns about equipment acquisition costs, contractors generally expect to support construction expansion by renting equipment in 2017. Although most (49 percent) continue to believe rentals will remain flat, a growing number of contractors (38 percent, up from 27 percent in 2016) believe it will increase. The largest percentage of contractor respondents (49 percent) cited the need for flexibility as the most important factor in renting equipment instead of buying, while 29 percent said rental equipment being readily available is also very important.

"Rental companies, distributors, and manufacturers might notice that their customers indicated increased rental costs as a driver of more purchasing behavior. Even a small increase in rental rates of less than 5% could cause almost one in five contractors to consider purchasing over renting equipment," said Crum.

To learn more, including key opportunities for the industry, download the complete report.

The 2017 Construction Industry Forecast presents the results of Wells Fargo Equipment Finance's 41st year surveying construction industry executives. This year's survey was conducted November 10 – December 2, 2016. Drawing on the responses of construction contractors and equipment distributors from across the U.S., the Forecast reveals trends in the industry and gauges the sentiment of industry leaders on a variety of business topics.

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13 Organizations Awarded $12.1 Million From Wells Fargo to Support Diverse Small Businesses

Funding awarded to local Community Development Financial Institutions.

REUTERS

Originally Published by Wells Fargo.

Wells Fargo & Company announced that 13 Community Development Financial Institutions (CDFIs) around the U.S. have been selected to receive $12.1 million in lending capital and grants under the Wells Fargo Works for Small Business: Diverse Community Capital (DCC) program. The recipients are private, nonprofit financial institutions that are dedicated to delivering responsible, affordable financial products to underserved populations and communities. Many of the small and micro businesses CDFIs serve may not be ready to access capital through conventional financing methods.

The Diverse Community Capital recipients are:

  • BOC Capital Corp. - Brooklyn, N.Y.
  • California Capital Financial Development Corporation – Sacramento, Calif.
  • Cooperative Development Fund of CDS for Shared Capital Cooperative - St. Paul, Minn.
  • Cooperative Fund of New England – serving New England
  • Entrepreneur Fund – Duluth, Minn.
  • First American Capital Corporation – West Allis, Wis.
  • Hartford Community Loan Fund – Hartford, Conn.
  • Local Initiatives Support Corporation – serving Los Angeles
  • Mission Economic Development Agency (MEDA) – San Francisco
  • Mountain BizWorks – Asheville, N.C.
  • New Jersey Community Capital – New Brunswick, N.J.
  • PeopleFund – Austin, Texas
  • Rainier Valley Community Development Fund – Seattle, Wash.

Diverse Community Capital funds will be used by the awardees to increase lending to diverse small business owners; help more diverse small business owners get the coaching and education resources they may need to grow their business; and improve, create or add resources, materials, products, or programs to better serve their target market.

Under the program, awardees also have the opportunity to participate in a social capital component, delivered by Opportunity Finance Network, a national network of CDFIs. Social capital opportunities include an online learning community, working groups on specific topics, consulting, peer learning and mentoring.

"Now in its third year, the DCC program's impact on communities has been compelling," said Connie Smith, Wells Fargo's Diverse Community Capital program manager. "DCC awardees are increasing access to capital and development services for diverse small businesses in their local communities. These awards are inspiring collaboration and innovation in the CDFI industry every day."

In fiscal year 2017, Diverse Community Capital awardees closed more than $284 million in loans to diverse small business clients. That represents a year-over-year increase of 23 percent for the first 18 awardees and a 63 percent increase for the next 26 awardees. Awardees closed nearly $103 million to black or African American entrepreneurs and more than $75 million to Hispanic or Latino entrepreneurs. In addition, 76 of all development services offered by DCC awardees were delivered to diverse small businesses. Most awardees reported at least one new or changed program or product designed to increase capital deployment to their clients.

"When local businesses succeed, so do the communities where we live and work," said Mike Rizer, director of Community Relations at Wells Fargo. "By financing community businesses — including small businesses, microenterprises, and nonprofit organizations — CDFIs spark job growth and retention in communities across the U.S."

Today's announcement marks Diverse Community Capital's fifth installment, or round, of awardees since 2015. Wells Fargo has committed an additional $100 million over the next three years to CDFIs serving diverse small businesses.

To earn back your trust, Wells Fargo has renewed its commitment to you. See our re-established goals at http://www.wellsfargo.com/renew.
We are re-committing to you and re-inventing how we serve you, delivering banking features like Card-Free ATM Access, and Debit Card On or Off for when you misplace your debit card. We have changed our sales policies and culture to fix what went wrong and make things right, knowing an apology is just the beginning.

6 Tips for Inclusive Leadership

"We need to hold up a mirror to ourselves and ensure that we are leading inclusively," says Bryan Gingrich, Ph.D., SVP and Enterprise Diversity and Inclusion Leader at Wells Fargo.

By Alana Winns and Christian Carew

Bryan Gingrich, Ph.D., is Senior Vice President and Enterprise Diversity and Inclusion Leader at Wells Fargo. He designs and implements diversity and inclusion strategies.

Gingrich holds a doctoral degree in social cognitive psychology with specialty in stereotyping and prejudice.