From Spike To Splat?

June 8, 2010

Recovery and reinvestment appears to be headed toward a cease and desist. The Associated General Contractors of America (AGC) decided to gauge the construction industry during a teleconference in May, and although the news was positive in regards to current day, thanks in part to the American Recovery and Reinvestment Act (ARRA), future prospects were looking frighteningly dim.

Recovery and reinvestment appears to be headed toward a cease and desist. The Associated General Contractors of America (AGC) decided to gauge the construction industry during a teleconference in May, and although the news was positive in regards to current day, thanks in part to the American Recovery and Reinvestment Act (ARRA), future prospects were looking frighteningly dim.

According to Ken Simonson, chief economist for AGC, nonresidential construction, which includes road and bridge work, added 24,000 jobs in April and 36,500 jobs in March, which are the first two gains since 2008. Heavy and civil engineering construction did one better. The sector picked up 9,000 new jobs in April, marking the fourth gain in the past six months.

“The impacts of the stimulus legislation are now being felt across a much broader section of the construction industry,” said Simonson during the teleconference. “The good news is the stimulus has stemmed the losses in construction unemployment.”

The Great Recession, however, has dropped the construction industry into an extremely deep well. Spending has declined by over $360 billion, or 30%, since March 2007, and 2.1 million construction workers lost their jobs between August 2006 and February 2010. The April unemployment rate of 21.8% is the highest reading for that month since the Bureau of Labor Statistics began its series in 1976.

ARRA did temporarily plug the drain, but all of the contractors on the AGC teleconference called for more funding at the state and federal level.

“State and local construction spending is unlikely to grow until at least 2012,” warned Simonson. “At the federal level it looks increasingly likely that the sequel to the stimulus will be the kind of deferred investments that were all too common over the last year.

“The highway bill is stuck in gridlock, the aviation bill is grounded and prospects for water infrastructure funds are drying up. Without long-term federal investment programs like these in place, construction employment is likely to suffer significant new declines once the stimulus runs its course.”

Ted Aadland is president and CEO of Aadland Evans Constructors, Portland, Ore., which specializes in highway and bridge work. Aadland believes the stimulus money, coupled with Oregon’s six-year bonded program for the replacement of about 365 bridges, has helped significantly.

However, job prospects, which are experiencing three times as many bidders as in years past, are starting to tail off.

“We have a six-month and one-year look ahead that the DOT publishes, and work is definitely starting to dwindle,” he said. “We believe the competition is going to get worse and we are going to see more contractors actually shutting their doors.”

The state of Oregon has attempted to throw out a lifeline for road and bridge contractors, passing a transportation plan in 2009 that raises that gas tax 6 cents and should provide $300 million in funds annually.

Aadland thinks the legislation will help when it comes to smaller projects, but it certainly will not fill the void of a new six-year highway bill.

“Although the state is trying to do what it can to generate some additional funds for highway work, without a fully funded highway program you just can’t get into the larger projects and the longer-term projects.

“It is really a drop in the bucket for what is needed.”

The forecast is not any brighter in Kansas, where David Howard is president and CEO of Koss Construction, a highway and airfield paving contractor operating out of Topeka. Koss handles work in Kansas, Oklahoma and Missouri, and all three are having their troubles.

“From where we are sitting now, one of the striking things in our market is that while the stimulus funding provided an influx of revenue, at the same time the states have been making budget cuts,” said Howard.

“What we are seeing now are very, very short lists of projects that are being put out to bid by the states.”

Choctaw Transportation Co., Dyersburg, Tenn., is a fourth-generation operation that booked 15 stimulus jobs in the road and bridge industry and picked up an additional 95 workers.

“It would have been very difficult to keep the doors open had it not been for the stimulus funding,” Jamey Sanders, vice president at Choctaw, said during the teleconference.

“We are struggling. The stimulus money is short-term funding,” he added. “Unless we get a multiyear system of funding, we have a very bleak outlook.”

When times were high, Choctaw averaged seven to 10 bridge crews and as many as five paving crews, operating six asphalt plants, at one time. Today four of those plants remain closed and only two paving crews are seeing work four days a week.

“We only have enough work for them to work probably for the next four to five months,” said Sanders

ITF reports record low in road deaths

The number of people killed in road accidents has fallen below 150,000, according to data released by the International Transport Forum (ITF). The data includes all 52 member countries except for India. The data also showed that road fatalities recorded the biggest decrease since 1990 with a drop of 8.9% in 2008 compared with 2007. Preliminary data for 2009 shows a continuing significant reduction in the number of road deaths for most ITF member countries, recording a drop of almost 10%.

“The moderating effects of the economic crisis on road traffic appear to be one reason for this favorable trend,” said Jack Short, secretary general of the ITF. “But many governments can also take credit for road safety policies that are now starting to produce results.”

Highway repair
Officials break ground on Newark Toll Plaza Improvement Project

Work on Delaware’s largest American Recovery and Reinvestment Act (ARRA) project has officially begun. Deputy Federal Highway Administrator (FHWA) Greg Nadeau joined Gov. Jack Markell, federal and state officials in breaking ground on the $45 million Newark Toll Plaza Improvement Project on I-95.

The job will reconfigure the toll plaza on I-95 to accommodate new northbound and southbound highway-speed E-ZPass lanes. The state will install pavement markings and updated highway lighting in addition to full-width right and left shoulders for both directions.

“The age of waiting in line at this toll plaza is nearly over,” Nadeau said. “When it is finished next year, this new plaza will improve safety for drivers, help the region’s economy and preserve one of the nation’s most historic highways.”

Of the $26.6 billion in FHWA ARRA funds available nationwide, Delaware’s share is more than $122 million. To date, the state has obligated $115 million toward 33 road and bridge projects, with 30 under way.

Highway Repair
Preservationists attempt to halt work on West’s oldest freeway

It has been 70 years since the Pasadena Freeway (a.k.a. Arroyo Seco Parkway or “the 110”) opened and just as many since it has seen any major changes. But those in favor of savoring its history are expressing major objections to a $17 million project aiming to build new concrete barriers and lighting on the route’s original 6 miles, according to the Associated Press.

They believe the work would strip the 8.2-mile freeway, which runs between downtown Los Angeles and suburban Pasadena, of its authenticity and character.

“This is where we come from. This is where our freeways evolved from,” community activist Nicole Possert told the Associated Press. “This was a testing ground for what was to become the California freeway system.”

But the California Department of Transportation began work in late 2009 on replacing metal-beam guardrails with concrete barriers to both increase safety and decrease maintenance costs. This situation illustrates the department’s struggle between preserving historic features and achieving modern standards.

Bridge Replacement
Federal highway administrator breaks ground on new I-695 bridge

Federal Highway Administrator Victor Mendez joined Gov. Martin O’Malley in Baltimore to break ground on the $22 million replacement of the I-695 bridge over Liberty Road. The new bridge will aim to make travel safer and less congested. It is almost entirely funded with ARRA funds.

The I-695 bridge is one of Maryland’s top bridge replacement priorities, according to the department of transportation. Built in 1961 and widened twice since then, the eight-lane bridge sees about 210,600 vehicles daily. The new bridge, scheduled for completion in 2010, will carry the 282,300 drivers estimated to use the route by 2030.

Next summer, part of the project will require reducing the route’s eight lanes to six, three in each direction. The contractor will be rewarded with up to $450,000 if this part of the project is complete in under 120 days.

Industry: Kerry-Lieberman bill inadequate

Key figures in the transportation industry are protesting the energy and climate legislation released by Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.). According to DC Streetsblog, the industry’s D.C. lobbying outlet joined the umbrella group for state DOTs and two major construction groups to blast the bill’s failure to use all of the revenue from its proposed new fuel fees for infrastructure projects.

But a spokesman for Kerry insisted that the qualms are misguided, noting that the bill invests more in transportation infrastructure (more than $6 billion, the spokesman told DC Streetsblog) than any other comprehensive energy and climate bill.

The legislation would require oil refiners to purchase carbon emissions allowances at prices that would increase with time in an effort to drive down oil consumption and promote the use of cleaner energy.

Transportation groups estimate that in 2013, the first official year of the climate bill, $19.5 billion in fees from fuel consumption will be generated.

“Instead of returning revenue from these fees to improving the transportation system, the bill diverts at least 77% of the funds away from transportation infrastructure investment,” a group of 28 representing the transportation industry said in a statement.

The Portland Cement Association (PCA) believes the new bill does not go far enough to balance protecting the environment with maintaining American jobs.

“We appreciate the senators’ efforts to work with industry throughout the drafting of the bill,” said John Shaw, PCA’s senior vice president of government affairs. “However, more needs to be done in key areas to maintain robust domestic cement production.”

Furthermore, the transportation industry fears that emphasis on the climate bill will take the focus away from passing a new six-year transportation bill. A new commitment to highway funding could help reduce greenhouse-gas emissions. Stephen Sandherr, CEO of the AGC, cited a study that concluded that easing congestion could cut carbon emissions from transportation by 30%.

Cost, competition continue to rise

The producer price index (PPI) for finished goods in April rose 0.2% and 5.5% over the last 12 months, the Bureau of Labor Statistics announced on May 18. Contractors, however, continued to battle heavy competition and rising input costs. The PPI for inputs to construction industries, a weighted average of the cost of materials used in every type of construction plus items consumed by contractors, like diesel fuel, jumped 1.1% for the month and 5.7% over 12 months. Highway and street construction experienced increases of 1.1% for April and 8.3% over 12 months.

Pavement marking materials continue to be in tight supply following plant breakdowns at Dow. The shortage also has caused prices to skyrocket.

—edited by Elizabeth Lisican

About The Author: Bill Wilson is Editorial Director of Roads and Bridges. He can be reached at [email protected] or 847/391-1029

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