Threat to U.S. Banking System May Paralyze Construction Market

As reported by Engineering News-Record on September 24 (Gasping Bank System Puts Credit in Doubt), all phases of the construction industry are feeling the pinch from current financial woes that have restricted the flow of credit through the U.S. banking system. Obviously, this is an issue that affects readers of Just Venting with their professional involvement in HVACR and other aspects of the construction and building industries.

In the words of the ENR article, “The swift deterioration of the U.S. banking system is threatening to restrict funds needed at every step of the construction industry’s life cycle, with participants putting the brakes on everything from casino jobs and privatized bridge-repair projects to company buyouts and executive retirements.”

Citing the recent epic government bailout of insurance industry giant AIG and referring to the Bush administration’s efforts in late September to secure congressional approval for a historic bailout of the entire financial system, the article warns, “For an industry accustomed to risks and dangers, few in construction had seen anything so ominous. The real trouble won’t show up until late next year, sources say. The initial blow to commercial construction may be the heaviest, but other projects will suffer because most construction loans are made by state and regional banks” (emphasis added).

Readers are advised to consider this information a serious “heads up,” since a paralyzed construction market will obviously have a direct impact on HVAC installation and other aspects of the HVAC market. On the other hand, there’s reason to believe that the HVAC employment market will be greatly strengthened by the ongoing explosion in “green” jobs. And in any event, the future shape of the industry is going to be dramatically changed by everything that’s going on, resulting in new opportunities. So even though the signals are mixed, this cloud definitely seems to have a silver lining.

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