Post-storm construction hiring may aid US economy

Hiring in the long-depressed U.S. construction industry will get a boost from the rebuilding that will follow Superstorm Sandy. Those jobs, in turn, could raise economic growth, analysts say.

The modest lift to the economy is expected to come in the first months of 2013. Construction firms, contractors and local governments will hire to rebuild or renovate homes, buildings, roads and bridges that were damaged or destroyed.

"This is going to be a net positive, particularly in the mid-Atlantic," said Sophia Koropeckyj, managing director Moody's Economy.com.

Sandy inflicted up to $50 billion in estimated losses from property damage, lost business and additional living costs. The damage was concentrated near the coastlines of New Jersey and New York City.

If your company had no accountants, how would it know whether the processes it was using made it cheaper, or more expensive to produce the products? Would you have engineers spend part of their time tallying up things? If so, what would they call that task “accounting”? Would that have been the best use of engineers’ time? Would you trust creative engineers to with the detailed work of accounting? Is everyone capable of doing engineering work? If someone can’t do engineering, but could do the counting — wouldn’t it make sense to have some specialization of tasks?

(I’ve already said enough about dead-weight costs owing to government regulation. I don’t disagree with you there.)

Your questions are very valid. This outfit dealt only with custom designed complex machinery. Each machine was built with different set of parts. In such situations it is very difficult to pin point what a new order for a machine should be sold for. Each machine had between 2000 & 3000 parts. Some parts were bought ready to assemble, others manufactured in house.

It is a waste of time in such situations trying to pin point exact cost of making one particular machine since exact duplicate machine would not be made again. However the sales department must know what to sell the machine for. Accounting department was no help since they had no clue what the new machine needed. So, the job fell to engineering department to prepare a preliminary design of major components needed. The most important parameter was total weight which typically between 200,00 to 1,000,000 pounds, mostly steel. Then adding other components such as motors, gears, bearings, electricals, etc. we could compute material cost. Engineering and manufacturing labor was determined based on complexity of the machine.

Note that accountants had no clue what the machine should be sold for. Their job was primarily figuring profits during the fiscal year, using actual dollars spent and received during the period, and prepare taxes to be paid taking into account depreciation of machinery and building etc. If there were no tax laws on profits, we could eliminate the entire accounting department and not lose anything.

For the bottom line for each machine to be profitable, it totally depends on how well it was designed to facilitate manufacturing, and how efficiently it was manufactured. That is what makes a difference between good profit, mediocre profit or loss on any particular machine.

I was working at a fairly new high-rise that was getting torn down this summer due to some construction worker’s mistake. The cut ends of wire cables in the concrete were to be dabbed with epoxy - but weren’t, and the cables started rusting.

Building was built six years ago - 15 stories. Was the Construction Union Building that was built as an investment for the union’s pensions. (No joke!) While monitoring the destruction of the building I mentioned to one of the construction guys (union) there about it being such a waste.

“Huh? This project is a year for tearing it down - and then it will be rebuilt again. It’s keeping a bunch of us employed. What are you talking about?!”

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