New study finds construction equipment workers mired in economic depression

While recession abates for some sectors of the American economy, the construction equipment industry remains stalled in a deep depression caused in part by a scarcity of new federal investment in needed transportation improvements. In fact, 8 percent of all jobs lost during the recession – or 2 out of every 25 – can be traced to this ailing industry, according to a new study.

The research – conducted by IHS Global Insight, an economic and financial analysis firm – came one day prior to the expiration of federal transportation funding. Congress has yet to pass a new multi-year reauthorization bill, and many experts consider that legislation to be the best opportunity for lawmakers to help stimulate the slumping construction sector this year and improve traffic.

Study Charts

To highlight the report’s findings and rally support for swift government action, construction equipment workers and business leaders have launched the Start Us Up USA! campaign. Led by the Associated Equipment Distributors (AED) and the Association of Equipment Manufacturers (AEM), Start Us Up USA! aims to secure passage of adequately funded transportation legislation before the spring construction season begins in early 2010.

“The current recession has placed a severe drag on the construction equipment industry, which is consequently holding back the broader economy from recovery,” said Scott Hazelton, director of construction services for IHS Global Insight and principal author of the study. Other key findings include:

•The construction equipment industry – which includes manufacturing, distribution and equipment service facilities – has shed 37 percent of its workforce. By comparison, auto manufacturing and dealership jobs are down by 16 percent, while job losses in the finance and insurance industry amount to 6 percent of their workforce.

•Spending on construction equipment has fallen by more than 50 percent compared to its peak in 2006.

•The economic output of this industry has contracted by nearly 40 percent and resulted in the loss of approximately 550,000 jobs. That’s eight percent of all jobs lost since the start of the recession.

•In 2008, the construction equipment industry contributed $243.3 billion in United States economic output and supported nearly 1.25 million jobs. The jobs supported by this industry were roughly equal to the number of men and women employed in manufacturing computer and electronic equipment.

IHS Global Insight also analyzed the impact of the construction equipment depression on individual states. From “peak-to-trough” – roughly 2006 to 2009 – the states suffering the greatest losses are California, North Dakota, Texas and Wyoming.