Contractors Pessimistic on 2010 Prospects Unless Long-Term Bill Enacted (AASHTO Journal)
A report issued late last week emphasized that many transportation contractors have laid off employees this year and a lot more job cuts are likely to take place in 2010 unless Congress enacts a robust authorization bill for highways, bridges, transit, and safety projects.
The report, which was issued by the Transportation Construction Coalition, states the $27 billion for highway and bridge infrastructure projects in this year’s economic recovery act provided some momentum for the industry. About 70 percent of the 527 firms that responded to the coalition’s survey said they received recovery work. The survey results confirm, however, that funding has not been enough to prevent widespread workforce reductions in this tough economic climate.
“It is impossible to overstate just how difficult current conditions are or how dire the outlook for next year is,” said Ken Simonson, chief economist for the Associated General Contractors for America. “One-time investments in transportation infrastructure like the
The survey found only 17 percent of contractors will enter next year with a work volume backlog at least as large, by value, as they had going into 2009. Contractors depend on maintaining a sufficient backlog of future work contracts to ensure the cashflow necessary to keep and perhaps even add to their permanent workforce.
The report is a part of the coalition’s efforts to press Congress to enact a robust six-year, $500 billion authorization bill that is pending in the House of Representatives. The coalition, which includes road builders and general contractors, insists that continual delays in steady funding would harm the transportation construction industry.
The previous transportation law known as “SAFETEA-LU” expired Sept. 30 and has been extended twice by Congress on a short-term basis. The current extension lapses Dec. 18. Key senators are now pushing for approval of a six-month temporary extension of transportation authorization with the goal of passing a longer-term measure next year. (see related story)
According to the coalition’s report, 63 percent of those firms surveyed have laid off employees this year. Nearly half of the respondents expect to lay off permanent employees next year, while only 5 percent anticipate hiring new nonseasonal personnel. Less than 20 percent of the contractors said they plan to purchase new construction equipment or trucks next year.
More than three-fourths of those answering the survey said they expect state departments of transportation to put out fewer projects to bid in 2010 than they have this year. About one-third of the contractors anticipate a severe decline in their state markets next year; an additional 46 percent expect a slight drop.
“Our members have capacity; they’re ready to meet the nation’s needs, but the state DOTs can’t offer projects for which there is no stable source or commitment of funding by the federal government,” said Joy Wilson, president and CEO of the National Stone, Sand, and Gravel Association.
Ron DeFeo, chairman and CEO of equipment manufacturer Terex Corp., said during a teleconference that the $500 billion spending level being considered by the House Transportation and Infrastructure Committee would be a much-needed boost for the industry.
“The alternative is continued spending at levels that are half that size,” DeFeo said.
More information is available at tinyurl.com/TCC-Survey.
Suppliers Also Push for Enaction of Long-Term Authorization
A consortium of asphalt and concrete industry groups are urging Congress to pass a new transportation measure soon because states won’t commit to major highway construction projects without a long-range federal spending plan.
In a letter sent to Capitol Hill on Wednesday, the consortium asked lawmakers to enact a six-year bill instead of continuing to pass short-term extensions.
“The current lack of funding certainty in the federal highway market is having a devastating effect on the transportation construction industry,” wrote the consortium, which includes the National Asphalt Pavement Association, the American Concrete Pavement Association, the National Ready Mixed Concrete Association, and the Portland Cement Association. “While the American Recovery and Reinvestment Act staved off a catastrophic decline in highway construction, uncertainty about long-term federal investment in state and local highway programs, combined with a lingering recession and associated state budget problems, poses a significant threat to the future of transportation builders and suppliers.”
The group notes that asphalt production is forecast to be down 15 percent this year. Road construction accounts for 85 percent of asphalt demand in America.
