Nearly 58 percent of firms said they expect their revenue to increase either significantly (10.1 percent), moderately (25.7 percent) or slightly (22 percent) in 2023.
(Caltrans photo)
A recent survey of its members by the Associated General Contractors of California (AGC of California) found that contractors are generally feeling optimistic about the construction industry's outlook and their companies' financial and hiring prospects in 2023.
"Our members' feelings of optimism for their business run in tandem with an equally strong urge to grow the construction industry and hire more talent to join the industry," said Peter Tateishi, chief executive officer, AGC of California. "As AGC of California continues to focus on delivering value for our members and the industry through our advocacy efforts, we also heavily invest in building a future workforce to meet the needs of the California construction industry that is both innovative and inclusive."
Some key statistics from the third annual AGC of California 2023 Optimism Survey include:
- More than 58 percent of respondents said they expect business activity in California to be strong or moderate in 2023;
- More than 65 percent of respondents expect the construction industry in California to stay the same or grow in terms of expansion;
- Approximately 49 percent of respondents felt optimistic about California's construction industry overall, outnumbering those respondents with a more pessimistic outlook (25.5 percent) by nearly two to one. One-quarter of respondents were "neutral" (neither optimistic nor pessimistic) in their outlook; and
- A strong 70.4 percent of respondents said they were optimistic about their own companies' prospects and success in 2023.
To capitalize on the market opportunities ahead, many firms plan to continue to grow their workforce and increase their talent pool. In fact, nearly 56 percent of survey respondents expect to increase their hiring in 2023 over 2022 levels either slightly (33 percent), moderately (15.1 percent) or significantly (4.7 percent).
On the revenue front, nearly 58 percent of firms said they expect their revenue to increase either significantly (10.1 percent), moderately (25.7 percent) or slightly (22 percent) in 2023, while 22.9 percent expect it to remain the same and 19.3 percent expect 2023 revenue to decrease. Asked about net profit, some 54.1 percent of respondents anticipate it will increase over 2022, while 22.9 percent expect it to remain the same and 15.6 percent expect it to decrease slightly.
"AGC of California members acknowledge apprehension of a potential recession, but interestingly, the majority of respondents expect their companies to continue to grow net profit and revenue in the coming year," said Tateishi. "Respondents also expect to increase hiring in 2023 and AGC of California is continuing to capitalize and expand on our many workforce development programs that prepare future workers for jobs in our vital industry."
Respondents' concerns for the construction industry in 2023 in California include the threat of a potential recession (70.4 percent), workforce shortages (68.4 percent), regulatory requirements (62.2 percent) and increased pay and benefits (52 percent), to name a few. Asked to choose the single issue they are most concerned about, 21.4 percent of respondents cited the threat of a potential recession, followed by workforce shortages (20.4 percent), regulatory requirements (17.4 percent), increased pay and benefits (11.2 percent) and unreliable infrastructure investment (8.2 percent), among others.
The 2023 Optimism Survey is an annual questionnaire AGC of California issues to evaluate association members' and the construction industry's optimism regarding their business outlook in the coming year. The survey, sent via email, newsletters and posted on social media, garnered 109 responses, 93.6 percent of whom are members. Survey participants were 56 percent contractor members, 20.2 percent associate members, 16.5 percent specialty contractor members, with 7.3 percent unsure and they represented the vertical construction building division (56 percent), highway and transportation division (47.7 percent) and the utility and infrastructure division (31.2 percent) of AGC of California. By total dollar amount of work in 2022, 20.2 percent performed $500 million and above, 22 percent performed $100 million to $500 million, 11.9 percent performed $25 million to $50 million and more than 28 percent performed $25 million or less.
About Associated General Contractors of California
Since 1920, the Associated General Contractors of California (AGC of California) has worked alongside members to provide advocacy, education, career development, and networking opportunities to experienced and next generation construction and contracting professionals. AGC of California advocates for contractors with state and local governments, while helping members connect with industry leaders through services, innovative programs, and events.
For more information, visit www.agc-ca.org.
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