AGC evaluates economic impact of terrorism on construction

While the attacks on the World Trade Center and the Pentagon have had an unprecedented impact on the U.S. economy, the implications for the construction industry could be just as dramatic, according to a news release from the Associated General Contractors of America.

"Overall, construction is likely to decline from its recent peaks as the economy absorbs the shock from these attacks," said AGC Chief Economist Ken Simonson.

"But the industry will lead the recovery in the hardest-hit regions by providing the recovery and rebuilding that is needed. In addition, high-paying construction jobs will pump money into local economies wherever government and private employers invest in making facilities more secure or in building backup capacity for critical functions."

In general, the release continued, the construction industry will be affected by the current slowdown in the economy, although a drop in interest rates could spur some additional construction spending in the near future.

Simonson noted that there is also an immediate need to provide office space for workers displaced from lower Manhattan and the Pentagon, which will provide a small lift for regional markets in addition to the demolition and reconstruction work at the sites themselves.

AGC expects there will be additional construction spending to strengthen security at governmental and some private facilities, while the Defense Depart-ment is likely to spend more on construction of all types.

Airport construction is likely to decline, in Simonson's view, except for security-related activity. He predicts that airlines will reduce their operations, cutting the demand for gates and other passenger facilities, and hotel and other travel-related sectors will suffer sharply at first and may be reallocated geographically (e.g., away from Hawaii and western mainland resorts that are reached mainly by air).

The Associated General Contractors of America was founded in 1918 and represents more than 35,000 firms, including 3,500 leading general contractors and more than 12,000 specialty contracting firms.

More than 14,000 service providers and suppliers are associated with AGC through a nationwide network of chapters.

The AGC Web site is located at www.agc.org.