Appropriations

Congressional republicans are leaving work on the table. The outgoing Republican majority appears to have decided to forego dealing with nine FY '07 appropriations measures including the Transportation Appropriations bill and instead pass a continuing resolution (CR) to keep the government operating until the Democrats take over in January, according to NSSGA. Only two appropriations bills (Defense and Homeland Security) out of 11 have been enacted into law. This negatively impacts the highway program, which under a CR would be funded at the FY '06 $36 billion level for the length of time the CR is in effect as opposed to the authorized amount of $39.1 billion for FY '07, contained in both the House and Senate versions of the FY '07 Transportation Appropriations bill. NSSGA is working with its coalition partners to gain an exception so that the higher amount could be appropriated for the highway program even under a CR. Your comment?

Working with the community

Producer-community groups working together can be a benefit to both the propducer and the community. A new citizens advisory group in Manteno, Ill., for instance, has joined forces with Vulcan Materials in a partnership which has already paid some dividends for the community, according to an article in the Daily Journal. "Our goal is to help improve communications and serve as a forum between the quarry, its immediate neighbors and the Manteno community," says Todd Creek, owner of Dura-Tech Enterprises who chairs the advisory panel. "No employer is perfect; we all know that. But Vulcan has promised to work closely with the neighbors, and the formal creation of a permanent advisory group is a critical step in making that happen," he said. Your comment?

Fatality #24

According to the latest Fatalgram from MSHA, on November 10, 2006, a 41 year-old equipment operator, with 4 years mining experience was fatally injured at a sand and gravel operation. The victim and a co-worker were standing underneath the head pulley section of a conveyor preparing to attach a chain that was to be used to move the conveyor. The bolts connecting the conveyor truss sections in the conveyor's frame failed, causing the head pulley section to fall and strike the victim. Your comment?

NSSGA on the election

NSSGA, commenting on the Mid_term elections, noted, "When the numbers are analyzed, it is clear that the vote on Tuesday showed frustration with the President, his policies on Iraq, and a Republican Congressional majority that was perceived as arrogant, fiscally irresponsible and scandal ridden. It is also evident that it was not enough for the Republicans to appeal to their base, they needed to attract Independents. Of the 26 percent of the electorate that identifies themselves as Independents, 57 percent voted for Democrats and 39 percent voted for Republicans. One pundit commented that in 1994 the Independents turned out and fired the Democrats. In 2006, the Independents turned out and fired the Republicans."

NSSGA says 87 percent of NSSGA's ROCKPAC-endorsed candidates won on Nov. 7, and that a freshman House class of 55 or more new members and a Senate freshman class of nine present a challenge.

"We must educate new members on the aggregates industry and its role in the quality of life Americans enjoy. NSSGA welcomes the challenge and has begun the process of building relationships with new members of Congress. If you know any of the newly-elected members, please let the Government Affairs Division know. This will give us a jump start on educating the newly-elected about the contributions the aggregate industry makes to our quality of life.," the association said in a statement. Your comment?

Cement consumption to level off?

According to the most recent forecast from the Economic Research department at Portland Cement Association (PCA, although cement consumption is not projected to decline, only marginal gains are expected.

The fall forecast, presented last week at the PCA Board of Directors Meeting in Sea Island, Ga., by chief economist Ed Sullivan, revises cement consumption growth for 2006 to an increase of .6%. An even more modest growth rate of .3% is expected in 2007 with more robust trends returning in 2008 when cement consumption is projected to increase by 2.7%.

The flattening of the market, according to Sullivan, is the combined result of the decline in the housing industry and softer overall economic conditions. "In recent years the U.S. and the cement industry have experienced unprecedented growth. However, construction activity is starting to soften and this will create an adverse impact on cement consumption."

Sullivan sees cement intensity growth as key to market growth during the next couple of years. Cement intensities refers to the tons of cement per dollar of construction activity.

"Our forecast projects that cement intensities will increase by 2% in 2007, fueled by a favorable relative price position versus asphalt and steel, as well as a shift towards higher cement usage construction projects," Sullivan said. "Code changes in hurricane-prone regions, improved concrete products, and concretes growth as a 'green' building material will all contribute to this despite a decrease in construction activity."

Additionally, the PCA fall forecast does not expect the sharp decline in housing to continue at the current rate. Sullivan says the recent downward change in the housing market was driven by the departure of speculators from the market. Their exit will actually help introduce a correction to housing prices and improve affordability for the average homebuyer. Your comment?

VOTE!

It's election day, don't forget to vote!

Nonresidential rise

Nonresidential is still going up. "Nonresidential construction spending climbed to its 13th consecutive record in September, showing that the homebuilding slide hasn't carried other segments downhill with it," says Ken Simonson, Chief Economist for The Associated General Contractors of America (AGC). Simonson was commenting on the November 1 construction spending report from the Census Bureau..

"Census said that seasonally adjusted construction spending slipped 0.3 percent in September, the third straight monthly drop," Simonson observed. "But nonresidential construction rose 1.1 percent, the 15th monthly rise in a row and the 13th record. Unfortunately, that wasn't enough to offset a 1.1 percent monthly drop in residential construction, which has now fallen 8.2 percent since peaking last March.

"In the first nine months of 2006 combined, overall construction spending was up 6.6 percent from the same period of 2005," Simonson stated. "Private nonresidential construction spurted ahead 17 percent, public construction rose 10 percent, and even residential eked out a 1 percent gain.

"Major private-sector growth categories on a year-to-date basis included lodging (hotels and resorts), up 48 percent compared to January-September 2005; multi-retail (general merchandise stores, shopping centers and malls), up 37 percent; hospitals, up 25 percent; and manufacturing, up 23 percent," Simonson added. "Multi-family construction was up 18 percent year-to-date, as an upsurge in rental construction has helped offset a recent decline in condo-building.

"Of the two big public construction categories, highway and street construction was up 16 percent year-to-date and educational had 7 percent pickup," Simonson pointed out. "Other large components with gains included sewage and waste disposal, up 20 percent, and transportation facilities, up 7.5 percent.

"Nearly all of these categories should continue growing over the next year," Simonson concluded. "I believe the economy is still fundamentally strong, and the housing slide will have limited impacts on other segments. A bigger concern is that fast-rising materials costs have forced cancellation or delay in many projects. Cost increases should moderate in the next few months, but materials costs will still outrun overall inflation." NAME

Vulcan a takeover target?

Vulcan Materials Co. might wind up joining forces with the Australia-based Rinker Group, if you believe Goldman Sachs JBWere analyst Matthew McNee. He believes that the Australian company, the biggest construction materials supplier in its country, will be seeking a strong strategic partner now that the it rejected a hostile offer from Mexico's Cemex SA. Florida Rock Industries Inc. may also be ripe for a marriage with Rinker, says McNee. Vulcan, which just reported record third-quarter results, had no comment on the merger rumors. And I'll believe it when I see it. Your comment?