Georgia continued to shed construction jobs in October, according new analysis by the Associated General Contractors of America of government employment figures.
The Peach State had 161,800 construction jobs in October, compared with $197,300 in October 2008 and 161,400 in September 2009. Georgia ranked 43rd among the states for the 18 percent year-over-year loss.
Every state but one, North Dakota, lost construction jobs in October.
“A shockingly large portion of the construction industry’s workforce has simply evaporated,” said Ken Simonson, chief economist for the association.
He added that the national construction unemployment rate of 18.7 percent was the highest of any sector in October and the industry accounted for one-fifth of all job losses in the past year, even though construction only employs one out of 20 workers.
The five biggest percentage losses in construction employment over the year occurred in Nevada (26.9 percent, or 30,200 jobs), Arizona (24.2 percent, or 42,600 jobs), Tennessee (22.3 percent, or 29,300 jobs), Kentucky (20.8 percent, or 17,600 jobs) and Connecticut (19.3 percent or 12,500 jobs).
The largest monthly gains were a 4.6 percent rise in Michigan (5,400 jobs); 3.4 percent in Wisconsin (3,500 jobs), 3.3 percent in Indiana (4,000 jobs), 2.6 percent in West Virginia (900 jobs) and 2.3 percent in Rhode Island (400 jobs). The largest percentage losses for the month were a 3.7 percent decline in Mississippi (2,000 jobs), a 3.4 percent decline in North Carolina (6,600 jobs), a 2.9 percent decline in Idaho (1,100 jobs), a 2.8 percent decline in Colorado (3,700 jobs), and a 2.4 percent decline in Oregon (1,900 jobs).
“Because construction workers have carried the burden of the downturn’s job losses, the easiest way to cut unemployment and boost the economy is to get America building again,” said Stephen E. Sandherr, the association’s CEO, in a statement. “Increasing investments in highway, transit and infrastructure construction must be the core component to the ‘jobs’ bill that Washington officials are committing to pass soon.”
Nov 20, 2009 - The Atlanta Business Chronicle
The CEO of Wells Fargo & Co. sees hope, and a little pain, in the Atlanta market as early signs point toward a long and slow economic recovery.
In a wide-ranging interview with Atlanta Business Chronicle, John Stumpf, the head boss of Wells Fargo (NYSE: WFC), and its merger partner, Wachovia Bank, talked about the state of commercial real estate, the bank’s plan for the Big Peach, when its Wachovia branches will switch from blue and green waves to Wells Fargo’s red and gold, and future bank regulation.
When Wells Fargo (NYSE: WFC) acquired Wachovia, Atlanta became a Top Three market for the San Francisco-based financial services and banking conglomerate. Stumpf, here for meetings with key corporate clients and top regional management, said the company is seeing some positives signs in the local economy.
A looming danger for Atlanta and much of the nation, is the bursting of the commercial real estate bubble. Signs of the fallout have begun, as office towers and retail centers have fallen into default and foreclosure
Atlanta’s Buckhead submarket has the highest office vacancy rate in the nation, and vacancies in Midtown and Buckhead are climbing to historic highs.
Stumpf said it is not yet clear how much pain the industry will suffer in commercial real estate.
Nearly 9 percent of commercial real estate loans held by banks nationwide were in delinquency during the second quarter, according to the Federal Reserve, double the same quarter last year. More than 16 percent of construction and development loans were delinquent.
Nearly $500 billion in commercial real estate loans will mature in each of the next few years.
“One reason you’re seeing less pain is because interest rates are so low,” Stumpf said. “The carrying costs of these properties are at record low levels. That being said, you can’t carry it forever if there’s no cash flow on these properties.”
Atlanta, Stumpf said, is not as challenged as Florida, particularly in things such as condo lending.
Wachovia appears to be picking up steam in its foreclosures of commercial properties, industry insiders say. Stumpf said he could not comment specifically about troubled projects in Atlanta, but he did admit that in general the Wachovia portfolio has steeper challenges than legacy Wells Fargo.
“On the Wells side, while like other banks, ours has taken bumps, but I think it’s the finest underwritten commercial loan portfolio in the country,” he said. “On the Wachovia side there was more risk in the portfolio, but at the time of the merger we wrote that down we took big substantial hits on that portfolio. So in many cases our losses are already behind us.”
Much of the pain to be felt will hinge of the recovery of the consumer, Stumpf said.
“At the end of the day, all commercial real estate has a consumer component to it. It serves the consumer one way or another, most businesses do,” he said.
Wachovia is the second largest bank in metro Atlanta and the state in terms of deposits behind rival SunTrust Banks Inc. (NYSE: STI).
“This is a big part of our company, we have some of our best leaders here, we have a big market share here,” Stumpf said. The company is in the process of hiring 200 bankers in the metro area.
Despite an overall decline of $1 billion in deposits in the metro area, the CEO said most were high-priced CDs that were allowed to expire.
“When you look at the transaction accounts, not hot money, we’re growing share here,” he said. “And that’s happening across the company.”
Wachovia has more than 280 branches in Georgia, and more than 500 ATMs that ultimately will be rebranded Wells Fargo. The bank isn’t in any hurry, and is focusing its rebranding on markets like California, Nevada and Texas where the banks competed head-to-head. Colorado has already seen its Wachovia branches converted to Wells Fargo.
“We can say this definitively, the name will change, it will be Wells Fargo, it will most likely happen in the next two years,” he said. “…I don’t know that we even know when Atlanta and greater Georgia will fit into all that.”
Stumpf, who became familiar with and “fell in love with” Atlanta during his time financing Spaghetti Junction, said he was impressed with the region’s resiliency.
“What’s impressed me about Atlanta, even though unemployment is higher than the national average and home prices have gone down more than the national average,” he said, “I wouldn’t bet against Atlanta. I’d bet with Atlanta all day long.”
Atlanta’s place as a logistics hub and its affordable real estate—made more affordable by the fallout of the real estate market—should continue to make it an attractive place to do business.
Stumpf cited First Data and Sony Ericsson’s respective recent decisions to relocate headquarters to the metro Atlanta as proof.
There are other signs of hope. Loan volume for October and November among mid-sized companies ($2 million to $25 million in revenues) was more than $50 million, more than the previous nine months combined.
“We’ve got our team marching double time looking for loans,” Stumpf said. “You hear from time to time that banks aren’t lending money, we’re lending all the money we can.”
Industry wide, loan demand is down as businesses retrench. Since the start of the credit crunch, some in business and in government have complained about the lack of bank liquidity, but bankers have generally been quick to counter that they are making loans to creditworthy borrowers, though standards have tightened.
“As an industry I think one of the biggest challenges will be not enough earning assets, not enough loans.”
Stumpf said the banks are one-third of the way into their three-year integration process. Wells Fargo expected $60 billion in losses over those three years as it came to grips with soured loans within the combined Wells Fargo-Wachovia portfolio. Much of that, about $41 billion, was realized in the first year, as planned.
“We’re still in same zip code with those numbers,” he said, adding that synergies from merged operations are being realized a faster clip than originally planned, and losses from legacy Wachovia’s risky option-arm Pick & Pay mortgage portfolio are actually not as steep as originally feared, despite deepening financial gloom.
“We’re on track, we’re on schedule and we’re under budget,” Stumpf said. I couldn’t be happier, I couldn’t be more excited.”
The bank’s mortgage origination business, he said, “is booming.” The company originates about one in four U.S. mortgages and services one in six.
Georgia is one of the nation’s leading centers of the foreclosure crisis, but Stumpf said the state has fared better than many areas, including Florida.
“On residential side, seeing signs, especially on the lower end, we’ve reached the bottom,” he said.
The bank has seen home prices rebound from the bottom in California, but losses are continuing in regions like the Sunshine State.
Wachovia and Wells Fargo have modified 400,000 home loans and refinanced 1.1 million loans Stumpf said. Overall, the mortgages on its balance sheet, he said, “have held up exceedingly well.”
In October, Wachovia played host to a mortgage modification event at the Georgia World Congress Center, and met with 2,600 borrowers in distress.
“What most people miss on real estate is people want to repay their bills,” he said. “Most people love their homes, they want to stay there but losses are higher today because of the job situation.”