6TH DEL MONTE CONFERENCE April 1-3, 1955 April 1, 1955 Gentlemen: The construction business has been much in the news for the past year. It is well known to all of you that 1954 saw the greatest volume of construction in history and the forecast for 1955 is for a further increase. Construction has been hailed as one of the major factors contributing to the upturn in business over the past year. Outwardly one would assume that the unprecedented volume had been accompanied by a commensurate increase in profits for the construction industry. Unfortunately for those of us in the business, such was not generally the case. Paradoxically in the year of its highest volume the construction industry made less money in 1954 than it did in 1953 and the number of business failures in 1954 set an all time record both in number of failures and the total liabilities involved. Because the construction industry is characterized by many small firms, most of which are privately owned or closely held, it is difficult to obtain up-to-date profit information. In an effort to get a good current sample I have checked with large banks located in New York, Chicago, and San Francisco and a large surety company. Each of them reports very much the same story which can be summarized as follows: First, contractors as a class tended to do more business but make less money than they did in the preceding year. Generally speaking the home builders fared better than the rest of the industry and the larger more experienced contractors fared better than the newer and smaller contractors. Secondly, the larger more experienced general contractors made good money, even though their profits were off about 15% on the average from the preceding year. The 1954 profits were improved because of the results obtained on work requiring several years to complete and obtained when competition was less stringent.