Aggregates production down in Q2

According to the U.S. Geological Survey, an estimated 662 Mt of total aggregates was produced and shipped for consumption in the United States in the second quarter of 2008, a decrease of 15 percent compared with that of the same period of 2007. The estimated production for consumption in the first 6 months of 2008 was 1.09 billion metric tons (Gt), a 16 percent decrease compared with the same period of 2007.

An estimated 383 million metric tons (Mt) of crushed stone was produced and shipped for consumption in the United States in the second quarter of 2008, a decrease of 14 percent compared with that of the same period of 2007. The estimated production for consumption in the first 6 months of 2008 was 635 Mt, a 15 percent decrease compared with the same period of 2007.

The estimated U.S. output of construction sand and gravel produced and shipped for consumption in the second quarter of 2008 was 275 Mt, a decrease of 18 percent compared with that of the same period of 2007. The estimated production for consumption in the first 6 months of 2008 was 442 Mt, a 19 percent decrease compared with the same period of 2007. Your comment?

Murray comments on financial markets

According to Robert Murray, McGraw-Hill Construction economist, the upheaval in the financial markets during September has altered the financial landscape, which will affect funding for construction projects and in turn construction activity.

"The situation with the financial markets continues to be fluid, particularly regarding the shape of the $700 billion mortgage buyout proposal," Murray said. "Given the sense of urgency coming from Treasury Secretary Paulson and Fed Chairman Bernanke, Congress is anticipated to pass some measure with revisions to the Treasury proposal, including oversight of the process by which the distressed mortgage securities are purchased. The expectation is that the purchased securities will increase in value as the housing market begins to improve in 2009 and beyond, which would allow them to be resold and decrease the potential cost of the bailout from $700 billion to something less. The key, of course, is that the decline in home prices comes to an end, and we don’t expect to see that until 2009 at the earliest.

"The steps taken to provide stability to the financial markets will require time. The lending environment for commercial projects will probably grow even more difficult in the near term, before some credit easing begins to take hold, perhaps in the latter half of 2009. This means that the downturn in construction starts shown by commercial building in 2008, particularly for stores and warehouses, will grow more widespread in 2009, dampening offices and hotels as well. This had been our expectation prior to this September’s events; if these steps are successful, a rebound in commercial construction could occur earlier than expected, perhaps as soon as 2010 or 2011.

"The institutional structure types, such as schools and hospitals, respond in a lagged manner to shifts in the economy and lending conditions. We expect to see a loss of momentum for 2009, given the deterioration in state and local fiscal health, although funding already raised through the bond market should help the initial stage of a construction slowdown remain gradual. In other words, the response to September’s financial turmoil is expected to be delayed and diffused. The same applies for public works, and a near-term plus for that sector is that Congress recently transferred $8 billion from the general fund to shore up the Highway Trust Fund. As for single-family housing, the steps to stabilize the financial markets, if successful, should help to stabilize homebuilding in 2009, although at a very, very low level." Your comment?

Infrastructure and jobs

According to Chief Economist Jack Wells at the U.S. Department of Transportation, whenever the economy hits a rough spot, politicians often say that we need to spend more on transportation infrastructure to create jobs. They often cite numbers like “47,500 jobs are created for every billion dollars spent on infrastructure.” The Federal Highway Administration has indeed done estimates of the number of jobs that are supported by spending on highway infrastructure, and the “47,500 jobs” number comes from one such study done in 1997. But a billion dollars doesn’t buy as much as it used to, in highways as in most things, and, because that billion dollars buys less steel, concrete, and employment-hours, recent updates of those studies have cut the number of jobs supported by a billion dollars in federal highway spending to about 34,800 jobs. Read more here. Mr. Wells' post has more than few critics. Check out this response from the Energy Collective. Your comment?

Hot merger rumor!

A major industry financial transaction may be brewing, according to sources. Construction materials giant Holcim has declined to comment on rumors that it plans to launch a hostile takeover of Lafarge SA, with backing from a large financier, possibly from Venezuela or Russia. Lafarge has also refused to comment. Its balance sheet has been significantly improved through its Excellence 2008 initiative, even though company revenues have dropped through the reduction of construction globally. Holcim sees the significant cost reductions that are possible through a merger of the two companies. Original article here. Your comment?

Highway Trust Fund fix

According to ARTBA, following months of having legislation to prevent a Highway Trust Fund (HTF) revenue shortfall blocked by a handful of senators, the U.S. Senate has approved the House-passed trust fund fix, H.R. 6532, by voice vote. The action follows reports from the U.S. Department of Transportation last week that the trust fund’s revenue situation had worsened significantly over the last two months and that the department is about to begin providing states only partial reimbursements for federal-aid highway projects.

While Senators Judd Gregg (R-N.H.), Jim DeMint (R-S.C.), and Tom Coburn (R-Okla.) had previously said they wanted to offer amendments to the bill, they agreed to allow the measure to move forward after Senate leaders committed to 90 minutes of floor debate. The three senators criticized the bill, crediting the HTF for $8 billion in highway user fee revenue transferred to the general fund in 1998, as deficit spending.

The Senate included a technical modification to the House bill that would allow funds to be spent in the remaining weeks of FY 2008 to prevent the looming shortfall. As such, the revised H.R. 6532 must now go back to the House of Representatives for action before it can be sent to President Bush for his expected signature.

Senate Finance Committee Chairman Max Baucus (D-Mont.), Senate Environment & Public Works (EPW) Committee Chairman Barbara Boxer (D-Calif.), EPW Committee Ranking Republican James Inhofe (R-Okla.), Senate Transportation Appropriations Subcommittee Chairman Patty Murray (D-Wash.), and Senator Amy Klobuchar (D-Minn.) spoke in favor of the HTF fix. ARTBA joined 22 other national organizations and labor unions (including the U.S. Chamber of Commerce, National Association of Manufacturers, and American Trucking Associations) in a letter today urging all senators to support H.R. 6532.

While there are still several steps that must be taken before this crisis is ultimately averted, the action in the Senate overcomes a major hurdle . Your comment?

GOP divided over transportation issues

According to a report on Bloomberg.com, the site of one of the worst bridge disasters in U.S. history (in photo at left) served as a backdrop for House Republicans seeking more money for highways and infrastructure, a position that runs contrary to that of President Bush and presidential nominee John McCain. The lawmakers, detouring from their national convention in St. Paul, Minn., stood on the newly constructed Interstate 35W bridge across the Mississippi River in Minneapolis and talked about the need to maintain roads and bridges. "There are some things the government has to do," said Representative John Mica of Florida, the top Republican on the House Transportation Committee. That view isn't shared by the party's leaders. Bush has threatened to veto legislation that would use general tax revenue for highways, saying it would increase the deficit. McCain proposed a temporary elimination of the fuel tax, which would cause an even bigger shortfall in money for highways. McCain's challenge is how to continue his opposition to the federal funding of local projects known as earmarks while still trying to make a case that he supports road and bridge construction. According to NSSGA, which tracks the voting records of elected officials on transportation issues, McCain has voted to support such issues just 25.7 percent of the time. Barack Obama, by contrast, has voted to support transportation issues 65 percent of the time. Your comment?

Construction spending hits 7-year low

Construction spending just hit a 7-year low. The U.S. Census Bureau of the Department of Commerce announced that construction spending during July 2008 was estimated at a seasonally adjusted annual rate of $1,084.4 billion, 0.6 percent (±1.4 percent) below the revised June estimate of $1,091.3 billion. The July figure is 4.8 percent (±2.1 percent) below the July 2007 estimate of $1,139.4 billion. During the first 7 months of this year, construction spending amounted to $614.2 billion, 5.4 percent (±1.6 percent) below the $649.5 billion for the same period in 2007.

Spending on private construction was at a seasonally adjusted annual rate of $774.6 billion, 1.4 percent (±1.1 percent) below the revised June estimate of $785.9 billion. Residential construction was at a seasonally adjusted annual rate of $357.8 billion in July, 2.3 percent (±1.3 percent) below the revised June estimate of $366.1 billion. Nonresidential construction was at a seasonally adjusted annual rate of $416.8 billion in July, 0.7 percent (±1.1 percent below the revised June estimate of $419.8 billion.

In July, the estimated seasonally adjusted annual rate of public construction spending was $309.7 billion, 1.4 percent (±2.2 percent) above the revised June estimate of $305.4 billion. Educational construction was at a seasonally adjusted annual rate of $87.4 billion, 2.5 percent (±4.3 percent) above the revised June estimate of $85.3 billion. Highway construction was at a seasonally adjusted annual rate of $76.0 billion, nearly the same as (±5.6 percent) the revised June estimate of $76.0 billion. Your comment?