Economic stimulus and recovery update

And it's on to the Senate. According to NSSGA, which is monitoring the situation closely, Senate appropriators released figures contained in the Senate version of the economic stimulus and recovery bill just passed by the house. While limited details are available about the bill, it is known that it contains just over $43 billion in transportation spending. This total figure is similar to that allocated in the House version. However, unlike the $30 billion in the House bill for highway spending, the Senate's is $3 billion less at $27 billion.

The Senate's Appropriations committee and Finance committee both held mark-up hearings for the economic stimulus bill. Both committees passed the bill as written out of committee. It now goes to the full Senate for consideration. During the mark-up, no amendments were added at the request of the respective committee chairman. Senators will have the opportunity to offer amendments to the bill when it is debated on the Senate floor.

Senate Environment and Public Works committee Chairman Barbara Boxer (D-Calif.); Ranking Member Sen. James Inhofe (R-Okla.), Sen. Max Baucus (D-Mont.) and Sen. George Voinovich (R-Ohio), prior to mark-ups, wrote to Appropriations committee Chairman Daniel K. Inouye (D-Hawaii) expressing concerns about what they consider the inadequate funding level for highways. Citing the large number of "ready-to-go" transportation projects around the country and the economic benefits of highway investment, they stated their belief that the level of highway investment should be at least 10 percent of the total stimulus package. Your comment?

Engineers say the train is off-track

The American Society of Civil Engineers issued its anxiously awaited infrastructure report card and gave U.S. roads, bridges and waterways a bleak cumulative ranking of D. The ranking is the same as the the last time such a report was issued, in 2005. In 2001, the grade was D+, slightly better but still poor.

* Roads got a D-, with Americans spending more than 4.2 billion hours a year stuck in traffic. "Poor conditions cost motorists $67 billion a year in repairs and operating costs. One-third of America's major roads are in poor or mediocre condition and 45 percent of major urban highways are congested," the engineers' report said.

* Drinking water, D-. "America's drinking water systems face an annual shortfall of at least $11 billion to replace aging facilities," the report said. "Leaking pipes lose an estimated seven billion gallons of clean drinking water a day."

* Inland waterways, D-. "The average age of all federally owned or operated locks is nearly 60 years, well past their planned design life of 50 years. The cost to replace the present system of locks is estimated at more than $125 billion."

* Wastewater systems, D-. "Aging systems discharge billions of gallons of untreated wastewater into U.S. surface waters each year."

* Levees, D-. Many levees are locally owned and maintained, but they are aging and their "reliability" is not known. "With an increase in development behind these levees, the risk to public health and safety from failure has increased."

* Solid waste got the highest grade at C+ because of success in recycling. "More than a third was recycled or recovered, presenting a 7 percent increase since 2000."

* Bridges get a C. One in four of the country's bridges "are either structurally deficient or functionally obsolete." The report cites progress in reducing such structures in rural areas but the problem is increasing in urban areas.

* Rail gets a C-, with the report noting that a "freight train is three times as fuel efficient as a truck, and traveling by passenger rail uses 20 percent less energy per mile than traveling by car."

* A C-minus was also given to public parks and recreation, with parks, beaches and other facilities generating jobs, income, and cleaner air and water.

* The national power grid received a D+. "Progress has been made in grid reinforcement since 2005 and substantial investment in generation, transmission and distribution is expected over the next two decades."

The other categories -- aviation, dams, hazardous waste, schools and transit -- each received a D.

Source: CNN. Your comment?

Cat bleeds bright yellow

Caterpillar has spoken, rather decisively about the current economy. The company said it will cut 20,000 jobs in an attempt to "deal with a very challenging global business environment." The manufacturer will cut roughly 4,000 production employees and around 7,500 management and support staff. About 8,000 of the job cuts will come from contractors not directly employed by the company. The 12,000 direct cuts equal about 11 percent of the company's total workforce. Caterpillar currently employs about 113,000 workers.

"These are very uncertain times, and it's imperative that we focus Team Caterpillar on dramatically reducing production schedules and costs in light of poor economic conditions throughout the world," Caterpillar CEO Jim Owens said in a statement. "While it's painful for our employees and suppliers, it's absolutely necessary given economic circumstances."

Caterpillar's announcement came on the same day it reported record sales and revenue of $51.3 billion for 2008. Fourth-quarter earnings, however, fell 32 percent on a sharp decrease in demand for construction services in the past three months.

Read the rest of the article here. Your comment?

Forecast is for weak activity, with bright spots

U.S. residential and non-residential construction activity is expected to remain weak through most of the coming year, according to the 2009 Wells Fargo Construction Industry Forecast. Survey respondents were slightly less pessimistic about non-residential construction activity.

Many survey respondents expect comparable levels of construction activity in the non-residential and residential sectors. However, 43 percent of contractors and 39 percent of construction equipment distributors foresee less non-residential activity, while 55 percent and 48 percent, respectively, expect residential work to decrease. Eleven percent of both contractors and distributors believe residential construction activity will increase. Non-residential construction appears to be in slightly better shape given that 15 percent of contractors and 17 percent of distributors forecast an increase in that type of work.

While 2009 is shaping up to be a challenging year, most contractors (73 percent) and equipment distributors (63 percent) who foresee a decrease in construction activity see a turnaround coming 12, 18 or 24 months from the time of survey in October 2008. The largest share of these distributors (28 percent) and contractors (22 percent) predict that improvement will come 12 months from the time of survey.
Your comment?

The incredible Vulcan

If you believe the assessment of David Peltier, a research associate for TheStreet.com, heavy debt makes Vulcan Materials an unlikely takeover target. "Vulcan has had a rough start to 2009, with the shares down nearly 8 percent year-to-date, trading last week around $64," writes Peltier. "Prior to that, the stock had gained nearly 72 percent between Nov. 21 lows and the end of 2008 because of some short-covering and the snapback in infrastructure from the stimulus plan proposed by the next president. "Vulcan would definitely benefit from increased building activity, especially if it means new highways and bridges," Peltier said. "The company is the largest producer of construction materials like crushed stone, gravel and sand in the world, and also sells asphalt and concrete. In November 2007, Vulcan increased its scale with the $4.5 billion purchase of competitor Florida Rock Industries."

Read the rest of the article here.

This may "interest" you

Here's something that may "interest" you. According to NSSGA, Rep. Rob Wittman (R-Va.) this week reintroduced The Responsible Highway Investment Act (H.R. 457). This legislation would reinstate the requirement that any Highway Trust Fund balances be placed in interest bearing accounts, the method used by the government to manage the HTF up until a decade ago.

"In light of recent government-sponsored bailouts and a record federal deficit, this legislation would immediately generate desperately needed money for our bridges and roads," said Wittman.

The HTF accounts for nearly half of the transportation infrastructure funding throughout the country. Since the introduction of this legislation in the 110th Congress, the House of Representatives has already had to make an emergency injection of $8 billion into the fund to stave off insolvency. Despite this, the Congressional Budget Office predicts the fund will run a deficit of $1.7 billion at the end of 2009 and $8.1 billion by the end of 2010.

"By not placing balances in interest bearing accounts, we've lost billions of dollars over the past decade. In times like these when critical transportation projects are being cut...... we cannot afford to continue leaving that kind of money on the table," said Wittman. Your comment?

Lafarge mulling options?

According to a report from the Aggregates Research Industries web site, Lafarge North America Inc. is actively seeking buyers for some sectors of its business operations in North America. Speaking on condition of anonymity, a company representative has indicated that large slices of their operating sites may be put up for sale. The recent downturn in the economy has made business conditions difficult, with cement sales down more than 20 percent in the United States in 2008.

The businesses rumored to be for sale are: The company's asphalt and paving business in the U.S. and Canada, including the Contracting Division; and The company's aggregates and concrete business in Colorado and New Mexico. Other options that are being studied according to the source are the mothballing of the company's southeast concrete operations, which is reportedly down by more than a third in this region. Your comment?

P&Q Index Rises

The Pit & Quarry Index number, which will be released in the February issue, has risen to 225. This is very good news. The decline seen in January may have been a bottoming out. The number had plummeted from a 2008 high of about 250 in October down to 187 in January. This time, 8 of the 9 statistics used to calculate the figure have risen. That's very rare, and a pretty good sign that we might be turning the corner. Your comment?

Construction spending a bright spot

Construction activity is a major key to economic growth even without a national stimulus plan in place. According to the U.S. Commerce Department, federal building was up 6 percent in November, and state and local building gained 1 percent. Public spending increased 1.4 percent. Total public spending reached a record high rate in November of $322 billion. The Commerce Department said educational construction rose 1.3 percent in November, as did highway work. Public construction was up 7.9 percent year-over-year. Total U.S. construction spending fell only 0.6 percent in November, an indication that building at the end of 2008 was stronger than Wall Street had expected. Analysts polled by Reuters had anticipated the drop to be a much steeper 1.3 percent. October's change was also revised to down 0.4 percent from the originally reported drop of 1.2 percent. Still, private homebuilding, which makes up roughly a third of total spending, fell 4.2 percent to an annual rate of $328 billion, the lowest since August 1999. Your comment?