Construction Industry Continues Rebound: More Competition Means Greater Need for Surety Bonds

In the construction business, many saw the 2008 economic collapse happening before it reached the awareness of the media and the general public. Long before the terrifying headlines in September of 2008, they knew that work was slowing down, the real estate market was fading, and that the end of a long and productive period was coming to a close. Not coincidentally, construction and development firms felt the effects of the recession more than other groups, and the time period was marked with shuddered projects and abandoned developments, growing weeds instead of families.

Now, finally, we can say that period is in the past. For the last few years, the construction industry has been in a period of recovery that is expected to continue for the foreseeable future. Indeed, one could argue that we are no longer “recovering”- we are recovered. That is great news, of course, but it also brings with it some challenges – more work means more firms either starting or resurrecting, increasing the competition. In order to get work, particularly government bids, you have to stand out. Having a rock-solid surety bond from a reliable company is one of the best ways to do that.

After the gold rush

It is really hard to exaggerate how bad things were in 2009 and 2010. Serious thinkers were even asking if construction workers could survive the calamity. Well, they did survive and are now thriving. Just as construction bore the brunt of the recession, the industry is benefiting from the general economic improvement, adding 48,000 new jobs in December 2014 alone. In fact, the industry added almost 300,000 new jobs in 2014, its best growth rate since 2005.

There are a number of factors regarding this that are important when considering where to take your business. During the recession, when no one was buying houses, multi-family dwelling units picked up. That market has still been going strong, but has begun to slow down a little bit as the home market has picked back up. These have been at the forefront of the resurgence, and even though December was slow, that was only compared to extremely positive highs in August. Homebuilder confidence, not coincidentally, is the highest it has been since 2005.

More jobs means more competition

The thing with a recovery is that it allows for firms that had slowed down to regain ground, because there is now more work. More work seems like it means more opportunity, and it does, but it also breeds more competition. Those who closed firms in 2009 are opening up once again, and people who have the skills but didn’t want to enter a depressed market are chasing their dreams now that jobs are more readily available. You can fall into any of these categories, but there is one thing everyone has in common: the desire to obtain great jobs and do great work.

More and more, this work is non-residential. Residential led the recovery, but now other sectors are picking up, including industrial, retail, office, and government work. All of these, especially the latter, are going to be looking for companies that don’t seem like a risk. They’re going to be looking for bonded companies.

More competition illustrates the need for surety bonds

Once the money starts flowing, it is easy to imagine that it is going to be the Wild West out there, but nothing could be further from the truth. Principals might be building, but they are not going to take a chance on a contractor or developer who isn’t fully bonded, and whose subcontractors also aren’t bonded. It just won’t happen.

They also aren’t going to want to do business with a firm backed by an unreliable bonding company. You might have the paperwork, but if you are bonded by a firm with a bad reputation or no reputation at all, you are far less likely to get the gig. You could be the best in the world at what you do, but it won’t matter.

So this recovery has shown great promise, and it is once again a good time to be in this industry. Those who survived should be proud, and those who are getting back in should be excited. But these times come with their own challenges. Making sure that you are bonded by a reliable surety bond company is one of the best ways to rise above the competition.

Find the surety that you need to get the jobs you deserve. Contact Surety1 today for more information on getting the payment and performance bonds that will help your business thrive.