P&Q Editors Blog

WE'VE MOVED

2009-04-29T11:42:00.000-07:00

The new home of the Pit & Quarry Editors Blog is at:
www.pqeditors.blogspot.com

Already five aggregate-industry deaths in 2009

2009-04-29T08:34:00.000-07:00

With not even a third of the year behind us, the Mine Safety & Health Administration (MSHA) is reporting that five fatalities have occurred in the nonmetal mining sector -- a pace that would double the total industry deaths of 2008. Three of the five fatalities involved “falling/sliding” material.
The National Stone, Sand & Gravel Association (NSSGA), in its latest e-newsletter, noted that one of the recent fatalities occurred when electrical work was being done. NSSGA also provided some MSHA advice regarding electrical work, and it’s worth repeating here:
• Be trained and knowledgeable in the task.
• Be trained on all electrical test and safety equipment necessary to test and ground the circuit being worked on.
• Use properly rated personal-protection equipment, including arc flash protection such as a proper hood, gloves, shirt and pants.
• Positively identify the circuit on which work is to be conducted.
• De-energize power and ensure the circuit is visible.
• Place your lock and tag on the disconnecting device.
• Verify that the circuit is de-energized by testing for voltage using properly rated test equipment.
• Ensure all electrical components in the cabinet are de-energized.
• Ground all phase conductors to the equipment grounding medium with equipment that is properly rated. -- Darren Constantino

Quarry marks Earth Day

2009-04-27T04:06:00.000-07:00

Eight middle school-aged students from Grace Academy, a private school in Georgetown, Texas, plunged their hands and their shovels into mounds of dirt to commemorate Earth Day by planting trees and wildflower seeds at KBDJ, a limestone quarry in Hays County. “What better way to celebrate Earth Day than by getting a little dirty?” said KBDJ President Jill Shackelford. “KBDJ is thrilled that Grace Academy traveled to the quarry to learn more about the local environment and take an active role in improving it.”

During the field trip, the students also got an up-close look at a working rock quarry and saw the steps KBDJ has taken to protect the environment and wildlife on the quarry site. “I thought it was just going to be a rock quarry,” said eighth grader Kristen Klein. “It’s much more than that.” Added Ashton Murphy, who is in ninth grade, “We’re currently studying the age of the Earth in school, so the quarry pit allowed us to see the different layers and colors of the Edwards limestone formations.”

Hays County Commissioner Karen Ford, also a member of the Clean Air Force of Central Texas, visited the event to encourage the students and to give them information on regional efforts to ensure Central Texans breathe clean air. “We’re working very hard to get the word out about what people can do to keep the air clean,” Ford told the students. “Trees help clean the air, so thank you for being here.”

With help from quarry staff and a backhoe donated by Texana Machinery, the students planted three live oak trees, which they named “Grace,” “Faith” and “Love,” at the quarry entrance along FM 967. The trees came from the tree farm at Texas Disposal Systems, and KBDJ worked with the Hill Country Conservancy to pick the appropriate type of tree to plant. Students also planted a mix of wildflowers at the quarry site, which included Black-eyed Susan, Mexican Hat, Prairie Coneflower, Indian Blanket, Lemon Mint, Bluebonnet, Plains Coreopsis and Clasping Coneflower. -- Mark S. Kuhar

Fatality #4

2009-04-24T03:34:00.000-07:00

On April 7, a 36-year-old supervisor with 15 years of experience was fatally injured at a sand and gravel dredging operation. It was the fourth metal/nonmetal fatality of the year. The victim was attempting to connect the 4160 volt cable for the dredge to load side terminals in the electrical panel when he came into contact with energized 4160 volt line side terminals. This is the fourth fatality reported in calendar year 2009 in the metal and nonmetal mining industries. As of this date in 2008, there were five fatalities reported in these industries. This is the first electrical fatality in 2009. There were no electrical fatalities for the same period in 2008. -- Mark S. Kuhar

Stimulus praise

2009-04-23T05:59:00.000-07:00

In a statement released by the Associated General Contractors of America, CEO Stephen E. Sandherr praised the stimulus package and its effect on funding projects and putting people back to work. "Our member companies involved in highway and transit construction have been pleased with the speed with which the federal government and its state partners have been able to move in identifying and awarding stimulus-funded projects," Sandherr said. "Indeed, our member companies have consistently cited the transportation program as a model for being able to quickly and effectively fund projects in a way that puts construction workers back to work promptly while restoring America's aging infrastructure. Given the extremely challenging economic environment our contractors are operating in, with significant declines in private-sector construction activity, it is hard to imagine how much worse conditions would be if not for the stimulus. The bottom line is our members are eager and anxious to get to work rebuilding America's economy, and the stimulus is helping them do just that." -- Brian Richesson

World construction demand sinks

2009-04-21T05:24:00.000-07:00

Construction activity is now falling quickly around the world, increasing the downward pressure on construction costs, according to Reed Construction Data. The construction decline is much deeper in many developing countries where investment, which includes construction, is a much larger share of the economy than it is in the U.S. Through March, U.S. GDP has dropped about 4 percent while investment spending has fallen 12 percent. Investment spending has already plunged more than 20 percent in several Asian and Middle East markets, which have experienced more frequent shutdowns of construction projects already underway than have occurred in the U,S.

World GDP fell at a 5 percent annual pace in the 4th quarter of last year and continued to decline at about the same pace through the winter. The International Monetary Fund (IMF) projects world GDP will fall as much as 1 percent this year, the first worldwide decline in 60 years. The IMF outlook foresees stable or slightly rising economic growth by the end of the year but a relatively sluggish recover in 2010. World construction activity is unlikely to return to the peak 2008 level until 2011 at the earliest.

The consequence is weak pricing for the resources used in construction. This occurred first in materials. The materials price surge that occurred in mid-2008 has now been fully reversed. Materials price indexes are likely to slip slightly lower later this year before rising modestly next year. Price declines for other project resources are harder to measure but have now begun. This includes design and contractor bidding where more competition has forced discounting. Prices for new construction equipment appears to have had little impact so far but used equipment prices are falling at a double-digit pace.

It also includes labor. Construction hourly wage gains abruptly slowed from more than 4 percent (annual rate) to below 2 percent in the last three months even though few union contracts have yet been re-negotiated in this weaker construction economic environment. Expect the pullbacks in professional fees, contractor margins and skilled labor rates to persist will into next year long after materials prices have begun to recover. Many union locals will have to anguish over contractor demands for wage concessions before the contract expires. -- Mark S. Kuhar

AEM head pens op-ed piece

2009-04-15T06:35:00.000-07:00

Association of Equipment Manufacturers President Dennis Slater wrote an interesting article last month in the Argus Leader newspaper of Sioux Falls, S.D. It's worth checking out and even passing along to others. Slater does a good job of putting infrastructure spending, specifically for roads and bridges in South Dakota, into perspective. He points out that South Dakota's roads and bridges are deficient – as TRIP, a national transportation research group, reported – and must be improved to enhance the economic health and quality of life in the state. (There is a similar TRIP report about Idaho's roads, highways and bridges.) The federal stimulus package will provide a boost to improving roads and bridges in South Dakota, Slater writes, but it's not the end-all solution. Therefore, every funding option must be considered, and South Dakotans should recognize the benefits of paying for these projects. "You get what you pay for," Slater writes. -- Brian Richesson

From dust to dust

2009-04-13T04:03:00.000-07:00

The dust is about to hit the fan. According to NSSGA, the U.S. Environmental Protection Agency is under court order to issue a revised opacity rule by April 16. The New Source Performance Standards (NSPS) Subpart OOO is the visible emission, or opacity, standard for non-metallic mineral processing plants, which includes aggregates.

The rule limits how much visible dust is allowed to be emitted to the air from crushers, screens and conveyor transfer points. In response to a lawsuit filed last year by the Sierra Club against EPA, NSSGA has negotiated a final rule that would lessen the administrative burden on the aggregates industry.

While the Sierra Club suit claimed that the existing opacity standards are too easily achievable by industry, NSSGA's NSPS task force, using member data from 23 states and more than 600 individual source tests, discounted the environmental group's claim and proved to EPA that the federal standards do more than an adequate job of protecting public health and welfare from fugitive dust emissions from aggregate processing plants.

NSSGA will issue a summary of the final rule soon after April 16 for all members. The association will also host several webinars demonstrating the changes to the rule and how it affects their individual operations. -- Mark S. Kuhar

PCA: Home construction tied to sales

2009-04-07T03:43:00.000-07:00

What will jump-start the home-construction market? According to the Portland Cement Association, a recovery in housing starts must be preceded by increased sales, followed by a reduction in inventory. A new PCA economic research report indicates the conditions needed for this process to begin will not be in place until mid-2010.

“Housing construction activity cannot begin until sales recover,” said Edward J. Sullivan, PCA chief economist. “Increased foreclosures, coupled with deteriorating labor markets and tight credit conditions, will delay significant sales activity until mid-2010. Improvements in housing starts are not expected to be significant until 2011.”

Although the housing recovery bill, along with bank efforts to rewrite toxic mortgages will mitigate the magnitude of potential defaults and foreclosures during the next 18 months, PCA expects a weak labor market and declining home prices will increase the number of foreclosed properties being added to the housing market inventory.

“Without further government cash injections into the banking system, tight lending standards could characterize the economy and mortgage lending through mid-2011 dragging down home sales,” Sullivan said. “Under such a scenario, the housing recovery and overall economic recovery could be delayed significantly.” -- Mark S. Kuhar

Construction outlook released

2009-04-03T01:27:00.000-07:00

McGraw-Hill Construction, part of The McGraw-Hill Companies, has released its 2009 Construction Outlook Spring Update, providing updated 2009 forecasts of construction starts for various project types. The major findings of the forecast, authored by Robert Murray, vice president of economic affairs for McGraw-Hill Construction, include:

* New construction starts for 2009 are estimated at $463.1 billion, down 15 percent, but cushioned by support provided by the recently enacted stimulus legislation, the American Recovery and Reinvestment Act of 2009.
* Public works will see the most immediate benefit from the stimulus act, with construction starts climbing 10 percent, including a 15 percent rise for highways and bridges. Without the stimulus funding, it is estimated that public works in 2009 would have fallen 10 percent, restrained by the deteriorating fiscal health of state and local governments.
* Institutional building in 2009 will retreat 6 percent, as the weak financial environment takes its toll on educational and healthcare facilities. The stimulus funding will provide a lift to military facilities and energy upgrades for federal buildings, which will moderate this year’s overall institutional decline.
* Commercial building in 2009 will drop 27 percent, steeper than the 17 percent slide reported last year. The tight lending environment has made it extremely difficult to obtain project financing, leading to more projects being deferred or cancelled. All commercial project types will register declines in 2009, with the most severe retrenchment anticipated for hotel construction.
* Residential building in 2009 will drop an additional 31 percent, continuing the downward trend that’s been underway since 2006. Similar declines are expected for single family housing (down 30 percent) and multifamily housing (down 31 percent). Steps taken in early 2009 to address the foreclosure problem should help to ease the rate of descent for housing as 2009 progresses.

“The construction industry is facing divergent forces in 2009,” said Murray. “The economy has weakened substantially, and despite all the efforts last fall directed at thawing frozen credit markets, there’s yet to be any sign that lending conditions for construction have improved. On the plus side, the federal stimulus bill is now in place, which will provide quick support to public works this year.”
-- Mark S. Kuhar

A boost for equipment buyers

2009-04-02T07:23:00.000-07:00

With the tax-filing deadline fast approaching, we figured a tax-related item here would be appropriate. We recommend that business owners review Section 179 of the tax code because it might be helpful to your aggregates operation. Section 179 allows a small business to deduct, for the current tax year, the full purchase price of financed or leased equipment that qualifies for the deduction. All businesses need equipment on an ongoing basis, be it machinery, computers, software, office furniture, vehicles or other tangible goods. It's likely that your business has purchased many of these goods during the past year, and will do so again. Section 179 is designed to make purchasing that equipment during this calendar year financially attractive. The equipment purchased or leased must be within the specified dollar limits of Section 179, and the equipment must be placed into service in the same tax year that the deduction is being taken. For tax year 2009, this means the equipment must be put into service between Jan. 1, 2009, and Dec. 31, 2009. After the Economic Stimulus Act of 2008 was passed, the deduction limits rose to $250,000 (from $125,000), and the total amount of equipment allowed for purchase increased to $800,000 (from $500,000). These limits were set to expire for 2009, but were extended until Dec. 31 under the American Recovery and Reinvestment Act. Look through Section179.org and determine whether this continued benefit in the tax code will benefit you this year. -- Brian Richesson

Sand and gravel fatality

2009-03-30T03:34:00.000-07:00

Joseph A. Lerma Jr., journeyman heavy equipment operator, age 41, was injured on Jan. 6 while operating a skid steer loader underneath a belt conveyor that was being dismantled, according to MSHA's latest fatality report. Two coworkers were in an elevated man lift cutting braces from the leg supports of the belt conveyor support structure. A 12-ft. x 4-in. piece of steel box tubing fell into the cab of the skid steer loader as it approached the work area, striking Lerma. He was hospitalized and died on Jan. 9.

According to MSHA, the accident occurred because management failed to establish procedures to ensure that persons could safely dismantle the belt conveyor support system. A risk assessment to ensure all hazards were identified and controls were used to protect persons was not conducted. Persons were not trained on hazards and safe work procedures before performing the task. Persons were permitted to work underneath the belt conveyor support structure while braces were being cut above them. -- Mark S. Kuhar

Inside the numbers

2009-03-27T12:22:00.001-07:00

USGS' latest mineral industry survey shows a 17 percent decline in aggregates production in 2008 from the previous year and a 23 percent decline in the fourth quarter compared to 2007. But how do the production numbers break down in terms of geography? Let's look a little closer. From our earlier posting, we already know that the estimated production-for-consumption of aggregates in the fourth quarter of 2008 decreased in all of the geographic divisions compared with that sold or used in the fourth quarter of 2007. The largest decreases in percentages were recorded in the South Atlantic (31 percent) and the Pacific (29 percent) divisions. What we didn't tell you is that production-for-consumption of aggregates in the fourth quarter decreased in 46 of the 48 states that were estimated. The five leading states, in descending order of production-for-consumption, were Texas, California, Ohio, Missouri and Pennsylvania. Their combined total production-for-consumption was 151 million metric tons and represented 29 percent of the U.S. total. The estimated production-for-consumption of crushed stone in the fourth quarter of 2008 decreased in eight of the nine geographic divisions compared with that sold or used in the fourth quarter of 2007. The largest decreases were recorded in the Mountain (32 percent) and the South Atlantic (32 percent) divisions. Production-for-consumption of crushed stone decreased in 38 of the 47 states that were estimated. The five leading states, in descending order of production-for-consumption, were Texas, Missouri, Pennsylvania, Illinois and Ohio. Their combined total production-for-consumption was 99.1 million metric tons and represented 33 percent of the U.S. total. The estimated production-for-consumption of construction sand and gravel in the fourth quarter of 2008 decreased from fourth quarter 2007 levels in all of the nine geographic divisions. The largest decreases in percentages were recorded in the West North Central (38 percent) and the Pacific (35 percent) divisions. Production-for-consumption of construction sand and gravel decreased in 41 of the 46 states that were estimated. The five leading states, in descending order of production-for-consumption, were California, Texas, Arizona, Wisconsin and Michigan. Their combined total production-for-consumption was 78.9 million metric tons and represented 37 percent of the U.S. total. -- Brian Richesson

Aggregates production tanks in 2008

2009-03-25T16:47:00.000-07:00

Well, the numbers are in, and they aren't pretty. USGS has released full-year 2008 production statistics. The estimated annual output of aggregates produced for consumption in 2008 was 2.34 billion metric tons, a 17-percent decrease compared with 2007. The estimated annual output of crushed stone produced for consumption in 2008 was 1.34 billion metric tons, a 16-percent decrease compared with 2007. The estimated annual output of construction sand and gravel produced for consumption in 2008 was 978 million metric tons, a 21-percent decrease compared 2007. Fourth quarter 2008 numbers were brutal, with total aggregates production down 23 percent year-over-year. Crushed stone dipped 21 percent, while construction sand and gravel plummeted 28 percent. The estimated production-for-consumption of aggregates in the fourth quarter of 2008 decreased in all of the geographic divisions compared with that sold or used in the fourth quarter of 2007. The largest decreases in percentages were recorded in the South Atlantic (31 percent) and the Pacific (29 percent) divisions. -- Mark S. Kuhar

Adding accountability

2009-03-23T13:14:00.000-07:00

As has been reported since February, $150 billion of President Barack Obama's $787 billion economic stimulus package has been designated for infrastructure projects around the country. The end result, of course, would benefit the aggregates industry. But sometimes it's difficult to know whether these funds are really being used in the way they were originally intended. On March 20, Obama announced guidelines aimed at preventing waste and fraud and limiting the influence lobbyists will have in carrying out the program. His guidelines specify that stimulus funds can't be used on projects like aquariums, zoos, golf courses, swimming pools, casinos and other gambling establishments. The law specifies states will lose their funds if they miss a deadline or don't allocate the money fast enough - keeping them on their toes. Obama also said priority will go to projects that will create the most jobs, including those that will help rebuild roads and bridges. Loads of information on the stimulus package can be found at www.recovery.gov, including links to states' progress and resources. -- Brian Richesson

Against all odds

2009-03-19T08:55:00.000-07:00

In setting up the Pit & Quarry booth at the Orange County Convention Center in Orlando last week, I wasn't sure what to expect in the way of turnout for the AGG1 show that would begin the next day. It was the debut of the National Stone, Sand & Gravel Association's AGG1 Aggregates Forum & Expo. The new show is an "all-in-one" event for the association, combining its annual convention and many of its yearly offerings into one setting.

And it was coming at a bad time.

Reports of attendance at other industry trade shows this year -- such as World of Concrete -- have been bleak, and there was little reason to believe AGG1 would fare any better. One very active member of NSSGA told me if this year's new show didn't fly, there would be little hope of holding the event next year ... in Ohio ... in February.

NSSGA had assured the media that advanced show registration was high, but I took that with a grain of salt given the swift downturn of the economy. While a successful show was in everyone's interest, I was skeptical -- and I wasn't the only one.

Tuesday morning arrived, and we walked through the front doors of the convention center to discover a throng of people gathering to take the escalators down into the exhibit hall. My coworkers and I looked at each other, knowing this was a good sign. And when we entered the show floor, the aisles and booths were filled with people.

Nearly every exhibitor we spoke with was surprised and pleased by the turnout. And some equipment manufacturers have already committed to 2010 with even larger booth space. Attendees were pleased, too. There was a lot of equipment to see and a wealth of educational seminars to attend.

The success of AGG1 2009, against all odds, has set up NSSGA for a successful 2010 event next February. See you in Cincinnati. -- Darren Constantino

Aggregates prices rise

2009-03-19T03:37:00.000-07:00

According to Reed Construction Data, the Construction Materials Price Index fell 0.6 percent in February extending the decline since the September peak to 9.1 percent. The spike in prices earlier in 2008 has now been more than reversed. The index stands at only 0.5 percent higher than a year ago. The price index is expected to decline slowly for a few more months but rise modestly by the end of the year and rise higher next year, perhaps up 4-5 percent from the 2009 average.

The Construction Sand, Gravel and Crushed Stone price index actually rose, gaining 0.9 percent month over month, 2.3 percent over a three-month period, 6.3 percent over the past year and a whopping 24.3 percent over the past three years. Cement prices declined 1.1 percent after very little price decline over the past year. But this is not yet reflected in concrete products prices which generally rose slightly.

February’s price drop was lead by steel products. Structural steel prices fell 2.9 percent with similar drops for steel pipe and builders’ hardware and a smaller decline for metal plumbing fixtures. Nonferrous price changes were missed in February. Extruded aluminum prices fell 3.2 percent but copper pipe and tube prices jumped 5.8 percent as copper ore and scrap prices both increased sharply. The countercyclical move in copper prices is supply driven and likely short term. -- Mark S. Kuhar

AGG1 a success!

2009-03-14T05:05:00.000-07:00

The just-concluded 2009 World of Asphalt Show & Conference and co-located AGG1 Aggregates Forum & Expo were an unqualified success, posting strong attendance numbers despite a down economy and travel restrictions by many companies. The shows were held March 9-12, 2009 at the Orange County Convention Center in Orlando, Florida. With final registration numbers of 5,800, including 16 percent international, the co-location meant a big attendance boost for World of Asphalt, which had attracted about 3,650 to its last show, held in 2007. And, it provided a very strong start for the inaugural AGG1.

“The comments we heard from attendees were very positive, that the trade show floor was where they needed to be to keep in touch with what’s happening in their industry segments,” noted Show Director Sara Truesdale Mooney. “We’re very gratified by the response and recognition of our shows, and exhibitions in general, as a quality environment for networking and commerce.”

Attendees came from more than 60 countries besides the United States, including all major world regions. Official delegations came from China, India, Mongolia and Russia. Nearly 70 percent of attendees hold key management roles in their companies. Nearly 400 exhibitors took 85,900 net sq. ft. of exhibit space at the shows to showcase their latest technology and products.

“The aggregates and asphalt industries are integral to each other, so the co-location of AGG1 and World of Asphalt gave attendees access to the whole spectrum of products and services ‘from rock to road,’ as we like to say,” stated Rick Feltes of Lafarge North America and NSSGA’s AGG1 Management Committee Chairman. -- Mark Kuhar

Media outreach

2009-03-13T10:43:00.000-07:00

Recent items we've posted here encourage aggregate producers to improve their relationship with the community through positive stories in the media. This is easier said than done, but it is possible. Working as a newspaper reporter and copy editor for about 10 years, I've been on the other end of the process. I have some insight as to how producers can get their stories in print. It starts with giving the media a reason to write about or televise your operation. Host a community event, an open house, a school tour. If you're doing this already, that's great. But you can strengthen the impact by inviting the media to cover these events. You'll need to touch base with the newspaper's editorial department (where the stories are generated). Find out who covers your community or general assignments for the local newspaper, and pitch your event in that direction. Also tell the reporter that great photo opportunities exist at your operation. This positive media coverage will provide a welcoming face to your operation and help build a relationship the community needs to understand the aggregate industry. -- Brian Richesson

Restoration by the river

2009-03-06T12:21:00.000-08:00

One of our previous items referred to the sometimes-negative perception communities have when quarries exist within their borders. We mentioned how aggregate producers should reach out to their communities with positive stories in the media and through plant tours. We came across something recently that made us think about this relationship with the community and how one producer might be nurturing it. Rockville, Md.-based Aggregate Industries restored the historic Hayfield Manor, a pre-revolutionary Georgian manor built on the banks of the Rappahannock River and located just outside Fredericksburg, Va. The manor was abandoned, vandalized and on the Association for the Preservation of Virginia Antiquities’ most-endangered list before Aggregate Industries’ stabilization and renovation project began in 2006. Hayfield now offers the house and surrounding property as an alternative venue for meetings, events or lectures, making it an active part of the community. The ultimate goal for Hayfield is to expand education about the house, the restoration project and the mining practices taking place on the property and the importance of mining in everyday life. Visit Hayfield's web site by clicking the link above and view some nice photos. If aggregate companies can help develop more community projects like this, maybe critics will be swayed, relationships will improve and our industry will be better off in the long run. -- Brian Richesson

Kremer honored with Wendt Award

2009-03-04T16:43:00.000-08:00

The National Stone, Sand & Gravel Association named Randy J. Kremer, vice president-manager of construction materials for Watsonville, Calif.-based Granite Construction Inc., recipient of the 12th annual Barry K. Wendt Memorial Commitment Award for his dedication to the construction aggregates industry, his family and his community. The award was conceived and is judged by the Manufacturing and Services Division of NSSGA comprised of companies that manufacture and market equipment or provide services to the aggregates industry.

Over the past 35 years, Kremer has helped to bring Granite Construction from a singular, albeit vertically integrated, role as a heavy civil contractor to become a nationally recognized aggregate, asphalt and concrete construction materials supplier. Along the way, Kremer also has been a tremendous champion for the aggregates industry.

"It is fitting that such a respected leader of our industry is honored with the Wendt Commitment Award," said NSSGA President and CEO Joy Wilson. "In my dozen-plus years with the association, I have personally seen Randy's commitment to association operations conferences, and to Board, political, policy and technical activities. He has insisted on the highest-quality all-volunteer-led education offerings that could be developed for the AGG1 Academy. He looks ahead for the workforce of tomorrow. We are deeply thankful for his efforts at NSSGA and, undoubtedly, he has helped better not only ours but all of the organizations in which he has become involved."

The award is named for Iowan Barry K. Wendt (1946-1997), a Cedarapids, Inc., employee and industry leader who was universally recognized as a leader in the aggregates industry. He had served as chairman of the Manufacturers Divisions of both the former National Aggregates Association and National Stone Association. Each year, the Memorial Commitment Award goes to an individual who exemplifies the qualities of leadership and commitment demonstrated by Wendt. It is the association's highest individual honor and service award. -- Mark Kuhar

Community involvement

2009-02-27T09:59:00.000-08:00

We ran news recently of a Saint Index survey of the most unwanted real estate projects in U.S. communities. Landfills were most reviled at 78 percent, while casinos (77 percent), quarries (62 percent) and nuclear power plants (60 percent) followed. Personal experience leads me to believe that landfills rank No. 1. My parents live near a landfill in Northeast Ohio – in the same house where I grew up. Their frustrations stem from a number of factors – an unsightly heap of land nearby, the smell of garbage, the constant worry that the air and water could be contaminated, sinking property values. They feel officials aren’t trustworthy and people are making money at others’ expense. This survey and my family’s experience make me wonder how quarries fit into all of this. If residents have similar feelings toward aggregate producers, what can be done? I believe the answer falls under communication and action. Talk to the community, utilize the media to tell positive stories and conduct plant tours to explain the importance of your work – and simply show you care. And maybe this is already happening. The Saint Index survey, which polled 1,000 adults nationwide, also showed that opposition to quarries fell 2 percent from a year ago. -- Brian Richesson

PCA looks beyond stimulus

2009-02-23T16:09:00.000-08:00

According to John Shaw of the Portland Cement Association (PCA), additional funding for transportation and infrastructure is needed that directly addresses our deteriorating roads and bridges. “There are many commendable portions of the economic stimulus bill, but there is still much work to be done,” Shaw, PCA’s senior vice president of government affairs, said. “The best way to get America working again is through the most measurable metric – road and bridge construction. We hope that Congress will continue to address our nation’s crumbling infrastructure and continue putting Americans back to work by making transportation-related legislation a priority in the 111th session.”

PCA studies report that infrastructure funding creates jobs on both an immediate and long-term basis in all areas of the economy. For every 10 construction jobs created by a project, the community gains 17 additional jobs that stay in the region.

Repairing our nation’s infrastructure will not only add jobs, but can put money back in the pockets of motorists. According the 2009 American Society of Civil Engineers Report Card for America’s Infrastructure Americans spend 4.2 billion hours a year stuck in traffic at a cost to the economy of $78.2 billion, or $710 per motorist. Additionally, congestion on our crowded roadways contributes 27.2 million tons of carbon dioxide emissions each year.

Shaw stresses keeping the states and local agencies accountable for the money that has been allocated to them is vital to moving the economy forward. “The Administration has recognized the importance of transparency and accountability for the programs within the bill. Our infrastructure must be constructed with the highest quality materials that reduce future maintenance and ensure durability,” Shaw said. “By investing properly we can free up more money for states and communities to use for vital services like schools and police.”

For example, according to Shaw, concrete pavements can last up to 30 years or longer before resurfacing is required. Asphalt needs to be resurfaced every 8 or 9 years. “It is an economical and sustainable choice for meeting our growing infrastructure demands.” -- Mark S. Kuhar

AGC lauds economic stimulus bill

2009-02-18T03:56:00.000-08:00

Industry experts and association heads are now weighing in on the American Recovery and Reinvestment Act of 2009. “In just a few short weeks President Obama and Congress have created real and meaningful opportunities for unemployed workers and struggling businesses that will counter the effects of the economic downturn," said Stephen Sandherr, chief executive officer of the Associated General Contractors of America. "They understand that significant investments in infrastructure and construction projects can play a vital role in our economic recovery. Millions of construction workers and tens of thousands of construction companies are now ready to lead the way in proving them right.” Your comment?

AGG1 is the one

2009-02-16T04:03:00.000-08:00

NSSGA needs your attendance at AGG1. Click here to register for the show, being held March 9-12 at the Orlando County Convention Center in Orlando. This registration will provide a show badge to the expo floor and allow you to purchase tickets for as many AGG1 Academy education sessions as you’d like to attend. You’ll also be able to find information on housing, tours, the MSHA Law seminar and information about the World of Asphalt – co-located with AGG1. Your comment?

Senate passes stimulus bill

2009-02-12T02:03:00.000-08:00

After days of leading bipartisan negotiations, Sens. Ben Nelson (D-Neb.) and Susan Collins (R-Maine) announced late on Feb. 6 an agreement on an amendment to the Economic Recovery Act now being considered in the Senate. The Nelson/Collins amendment reduces the total cost of the package to $780 billion, which is $110 billion less than the original Senate stimulus bill.

The amendment keeps the highway spending mark at $27 billion plus the additional $5.5 billion proposed for supplemental discretionary grants for surface transportation, including highways. This amendment replaced the entirety of the original bill and all amendments proposed or passed during the Senate's debate of the issue last week.

However, the Nelson/Collins amendment does include two amendments that already passed with broad support: a $15,000 tax credit for 2009 homebuyers and a tax deduction for those who purchase a new car. With these additions, the grand total of the bill rises to $827 billion. "This deal represents a victory for the American people," said Collins. "We came together to tackle the most immediate problem facing the nation." She went on to say, "This bill is not perfect, but it represents a bipartisan, effective and targeted approach to the crisis facing our country."

Yet Republican congressional leaders have expressed misgivings about the stimulus package. Sen. John Ensign (R-Nev.) and Rep. Mike Pence (R-Ind.) voiced the concerns of many Republicans that the legislation has too much spending and not enough tax cuts.

Consideration of the bill resumed on Feb. 9 with a roll call vote of 61 yea, 36 nay on the motion to cut off debate on the Nelson/Collins amendment. The amendment was passed on Feb. 10 by a vote of 61 to 37. Only three Republicans supported the amendment: Sens. Susan Collins and Olympia Snowe of Maine, and Arlen Specter of Pennsylvania. Final passage of the Senate stimulus package occurred shortly after on a vote of 61 to 37. Senate conferees named were Sens. Daniel Inouye (D-Hawaii), Max Baucus (D-Mont.), Harry Reid (D-Nev.), Thad Cochran (R-Miss.) and Charles Grassley (R-Iowa).

Significant differences exist between the House and Senate versions of the economic stimulus package, primarily over tens of billions of dollars in aid to states and local governments, tax provisions and programs for education, health and renewable energy. For instance, the Senate devotes $27.06 billion to highways, while the House allots $30 billion.

The bill now proceeds to Conference committee to reconcile differences between the two versions. Each chamber will vote on the Conference Report and, if passed, the stimulus will be sent to the president for signature.

NSSGA continues to contact members of the House and Senate to stress the importance of the transportation infrastructure portion of the economic stimulus package to the aggregates industry and urge the highest funding level possible.

Materials prices decline

2009-02-11T01:56:00.000-08:00

According to Reed Construction Data, the construction materials price index dropped 7.8 percent from September to December and is expected to decline, albeit more slowly, through the winter as worldwide commodity demand continues to shrink. Commodity prices fell in January again for metals, lumber and some energy based products because construction activity and manufacturing production are now declining in most major countries and commodity inventories are well above normal levels. Preliminary data put the January price decline at more than 20 percent for aluminum, 10 percent for steel and 10 percent for lumber, 7 percent for diesel, less than 5 percent for copper but no decline for cement. Futures prices and inventory levels suggest that spot prices will continue to fall for several more months. Lumber futures prices are 30 percent below spot prices. Crude oil storage facilities are full with some product now being stored on anchored tankers. Your comment?

AEM pushes stimulus bill

2009-02-10T01:43:00.000-08:00

As you probably know, the Senate will vote shortly on the economic stimulus package. AEM has been in constant communication with Washington leaders to inform them of the best ways to help the industry and AEM member companies put people back to work. The economic recovery package will likely be the biggest spending bill in U.S. history, and the scope of the bill affects AEM member-company interests in many ways.

AEM is actively lobbying in support of proposals to:

• Increase the proportion of spending in the bill devoted to infrastructure investment,

• Improve the business tax relief provisions,

• Streamline environmental reporting requirements so that infrastructure projects can get underway with a minimum of delay,

• Strengthen the provisions of the bill aimed at revitalizing the nation’s housing market, and

• Prevent inclusion of protectionist language that would anger our international trading partners and provoke retaliatory measures, threatening our member companies’ overseas markets.

This last provision, known as "Buy American," has engendered a great deal of controversy, and AEM is working with like-minded allies – including business as well as lawmakers, academics and international trade experts – to prevent it from harming AEM member companies' access to markets and infrastructure projects in the U.S. and overseas. President Obama has urged Congress not to include any provision that U.S. trading partners would consider protectionist, which could cause U.S. companies to potentially be shut out of projects included in stimulus packages being written in other countries. Your comment?

Will Senate dilute bill?

2009-02-05T10:51:00.000-08:00

Acccording to Jim Haughey, Reed Construction Data chief economist, early in 2008 the GDP loss from reduced housing construction was twice as large as the GDP loss from reduced durables consumption and business equipment and software spending. The decline in consumer durable goods and business equipment and software purchases in the 4th quarter was more than six times larger than the decline in construction spending. The GDP loss from reduced durables consumption and investments, excluding construction, was $130 billion larger than the GDP loss from less construction spending.

As the stimulus plan evolved from conception to the plan approved by the House, the funds focused on general economic stimulus grew from twice as much as direct construction funding to six times as much. The direct construction funding in the house plan has drawn strong criticism from all quarters. The claims on how quickly the money will be spent are widely judged to be implausible.

Every day brings more news about layoffs outside of the housing and mortgage industries which dominated layoff news until a few months ago. The solution to this problem is not a new federal building that starts construction around Labor Day. Rather the solution is action that gives consumers more cash amore spending confidence as soon as possible – weeks not months.

The Senate may leave much of the House approved construction funding intact but their additions will be for more general programs. If total program costs continues to be a concern, the Senate may take a considerable share of the House construction funds for quicker and more general programs. Your comment?

Economic stimulus and recovery update

2009-01-29T09:38:00.000-08:00

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

2009-01-28T09:22:00.000-08:00

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

2009-01-26T12:25:00.000-08:00

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

2009-01-19T08:26:00.000-08:00

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

2009-01-15T10:23:00.000-08:00

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

2009-01-14T10:05:00.000-08:00

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?

2009-01-13T10:12:00.000-08:00

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

2009-01-07T12:02:00.000-08:00

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

2009-01-06T02:02:00.000-08:00

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?

Wait a minute . . .

2008-12-31T04:00:00.000-08:00

Jeffrey A. Miron, a senior lecturer in economics at Harvard University, has written a commentary for CNN that examines government spending, and the effects of tax cuts. he notes: "If the new spending is for projects that are beneficial for society overall, and if the private sector cannot or will not undertake these projects, then the expenditure is worthwhile independent of what it does to fight the recession. A standard example might be repair of the interstate highway system."

So far so good, right? He continues:

"This justification for additional spending is far from compelling, however. No doubt some roads need repairs, but the U.S. already spends huge amounts on its highway system. The U.S. could address existing deficiencies by increasing the use of toll roads and charging drivers extra at rush hour, or by repealing prevailing wage laws that inflate construction costs."

Okay, did you catch that? No doubt some roads need repairs. Isn't that a rather cavalier way of dismissing what the Federal Highway Administration estimated in 2005 was a critical $375 billion need? Today, more than $400 billion is needed to repair our failing infrastructure. Mr. Miron is obviously a smart man, but he is woefully underestimating the importance of investment in roads and bridge construction. Your comment?

Production prediction: 2 billion tons

2008-12-30T06:00:00.000-08:00

Here is some additional information on aggregates production from the third-quarter report just released by USGS. The estimated production-for-consumption of aggregates in the third quarter of 2008 decreased in all of the geographic divisions compared with that sold or used in the third quarter of 2007. The largest decreases in percentages were recorded in the South Atlantic (27 percent) and the Mountain (21 percent) divisions. Production-for-consumption of aggregates decreased in 39 of the 48 States that were estimated. The five leading States, in descending order of production-for-consumption, were Texas, California, Pennsylvania, Illinois, and Ohio. Their combined total production-for-consumption was 191 Mt and represented 28 percent of the U.S. total.

By my estimation, 2008 production of crushed stone is on pace to finish the year at at just over the 1 billion ton-per-year mark. Construction sand and gravel should finish the year at about the 900 million ton-per-year mark. If so, it would mean total construction aggregates in 2008 would be approximately 2-billion tons per year, a level so low it has not been seen since the 1992-1994 time frame. Your comment?

Analysts downplay infrastructure program impact

2008-12-29T09:04:00.000-08:00

According to an Associated Press report, an investor note prepared by JP Morgan suggests that financial markets are overly optimistic about the effects the infrastructure spending program proposed by President-elect Barack Obama will have on companies that have links to public-works projects. "Still unanswered is how fast the stimulus program can be put in place and how much of it will be devoted to construction," JP Morgan analysts wrote. They are suggesting that the impact on companies such as construction firms, heavy machinery makers and building suppliers may not be as immediate as many investors expect. "While a large federal infrastructure program would be unambiguously positive for all construction-related stocks, we think investors are underestimating the obstacles to the rapid spending of large amounts of money," the analysts said.

While the report notes that much of infrastructure spending comes at the state level, not through direct federal spending, and initial projects such as improving freight and passenger transportation will not come with the initial economic jolt, the proposed infrastructure program brings with it the potential for a cycle of confidence that should positively impact construction and materials companies incrementally throughout the new year.

Obama said earlier this month that he wants to create a public works program that will rival the building of the federal highway system in the 1950s, spending that would focus on projects such as repairing roads and schools. The measure would be intended to provide jobs and new resources for businesses at a time when unemployment is rising and companies are making cutbacks. Your comment?

ARTBA versus FHA

2008-12-25T09:26:00.000-08:00

It's ARTBA versus the Federal Highway Administration (FHA). A recent press release issued by FHA, commenting on the Traffic Volume Trends report for October, claimed that the 100-billion-mile decline in vehicle miles traveled on the nation’s highways during the past year was the reason why Highway Account revenues in FY 2008 were $3 billion less than in FY 2007. The release concluded that, “banking on the gas tax is no longer a sustainable option” to finance transportation investment in America.

According to ARTBA, the release seriously distorts the facts. The decline in Vehicle Miles Traveled (VMT) this year, while worrisome, was not why Highway Account revenues were $3 billion less in FY 2008 than in FY 2007, ARTBA said.

The association maintains:
* Revenues from the federal excise tax on gasoline in FY 2008 were, in fact, almost unchanged from FY 2007. While revenues did slip during the second half of the fiscal year with the decline in VMT, the federal gasoline tax actually generated $20.98 billion for the Highway Account in FY 2008, down only $70 million or 0.3 percent, from $21.05 billion in FY 2007. This accounted for just 2 percent of the $3 billion decline in Highway Account revenues.
* Total revenues from all federal excise taxes on motor fuel were actually $185 million higher in FY 2008 than in FY 2007. Although revenues from gasoline taxes were down $70 million, revenues from the tax on diesel fuel actually rose $256 million for a net increase of $185 million.
* The real reason for the $3 billion decline is that revenues from taxes on heavy trucks, mainly the 12 percent tax on retail sales of trucks and trailers, were down more than $2.4 billion in FY 2008. This accounted for 80 percent of the revenue decline and is consistent with reports that sales of new heavy trucks plummeted in 2008.
* The remaining 20 percent of the decline in revenues was a transfer of just over $700 million of taxes on kerosene to the Airport and Airways Trust Fund (AAFT) and the General Fund in FY 2008.

ARTBA said, in summary, that while revenues into the Highway Account were indeed $3 billion less in FY 2008 than in FY 2007, it was not due to the decline in VMT as U.S. DOT claims. The U.S. DOT misused that data to suggest the federal motor fuels tax can no longer finance federal investments in highway and mass transit improvements. The data in fact suggest that the federal motor fuels taxes can remain a viable source of revenues for highway investments for the foreseeable future. The trust fund’s real problem is not the decline in VMT, but rather the economic slowdown and the fact the federal motor fuel tax rates have not been changed since 1993. Your comment?

USGS: Production takes a dive

2008-12-20T12:10:00.000-08:00

According to USGS, an estimated 687 Mt of total aggregates was produced shipped for consumption in the United States in the third quarter of 2008, a decrease of 18 percent compared with that of the same period of 2007. The estimated production for consumption in the first 9 months of 2008 was 1.80 Gt, a 17 percent decrease compared with that of the same period of 2007.

An estimated 386 million metric tons (Mt) of crushed stone was produced and shipped for consumption in the United States in the third quarter of 2008, a decrease of 17 percent compared with that of the same period of 2007. The estimated production for
consumption in the first 9 months of 2008 was 1.02 billion metric tons (Gt), a 17 percent decrease compared with that of the same period of 2007.

The estimated U.S. output of construction sand and gravel produced and shipped for consumption in the third quarter of 2008 was 304 Mt, a decrease of 18 percent compared with that of the same period of 2007. The estimated production for consumption in the first 9 months of 2008 was 773 Mt, a 18 percent decrease compared with that of the same period of 2007. Your comment?

LaHood to head transportation?

2008-12-19T05:06:00.000-08:00

Retiring republican Rep. Ray LaHood of Illinois has reportedly been chosen as Barack Obama's secretary of transportation. LaHood represents Peoria, headquarters of Caterpillar, a good-karma move on Obama's part as he prepares to launch an ambitious public-works program, with an emphasis on road and bridge construction

Obama, in choosing a republican to head transportation, returns the favor of the Bush administration, which chose Norm Mineta, a democrat, for the same post eight years ago. LaHood is a former member of the House Transportation Committee, and more recently has been a member of the influential House Appropriations Committee. LaHood has a record of supporting funding for Amtrak and public transit.

Terence O'Sullivan, general president of the Laborers' International Union of North America, praised LaHood as "a friend to our union when it comes to construction and transportation issues." The buzz on LaHood from industry sources is that he is a stand-up guy who will bring a steady hand to the job, at a challenging time. Your comment?

Miles driven in U.S. decreases

2008-12-17T05:20:00.000-08:00

Americans drove more than 100 billion fewer miles between November 2007 and October 2008 than the same period a year earlier, said U.S. Transportation Secretary Mary E. Peters (left), making it the largest continuous decline in American driving in history.

"As driving decreases and vehicle fuel efficiency continues to improve, the long term viability of the Highway Trust Fund grows weaker. The fact that the trend persists even as gas prices are dropping confirms that America's travel habits are fundamentally changing. The way we finance America's transportation network must also change to address this new reality, because banking on the gas tax is no longer a sustainable option," said Peters.

The secretary noted that Americans drove 3.5 percent less, or 8.9 billion fewer vehicle miles traveled, in October 2008 than October 2007, making it the sharpest decline of any October since 1971.

For the second month in a row, the data show the South Atlantic region—a bloc of eight states and Washington, D.C. — experienced the biggest decline of any region, 5.0 percent fewer VMT compared to the previous October. At 8.4 percent fewer VMT, Montana led the nation with the largest single-state decline that month. Utah and South Carolina followed with declines of 7.4 percent and 6.7 percent, respectively.

The Highway Trust Fund, the federal government's primary source for financing highway, bridge and transit projects, took in substantially less in fiscal year 2008 than in the previous year. As a result of the continued decline in VMT and the use of more fuel efficient cars, the HTF, which is primarily funded through federal gas tax receipts, collected $31 billion in revenue between October 2007 and September 2008 — $3 billion less than it collected in Fiscal Year 2007, while federal transportation spending increased by $2 billion.

"This underscores the need to change our policy so American infrastructure is less dependent on the amount of gas American drivers consume," said Federal Highway Administrator Tom Madison.

Infrastructure investment: A conservative view

2008-12-11T17:52:00.000-08:00

Emil W. Henry Jr., assistant secretary of the Treasury from 2005 to 2007, has written a very compelling article on why Reagan Conservatives should get behind an infrastructure investment initiative such as the one being proposed by President-elect Barack Obama. He writes . . .

"In the wake of the recent electoral rout, we conservatives must redefine ourselves in a world that has changed since the birth of the Reagan Doctrine. One new reality is the imperative that our government modernize America's aging energy, water and transportation infrastructure.

"Many conservatives are uneasy with such talk -- clinging to the notion that government investment or oversight is anathema to Reagan orthodoxy and other core conservative beliefs. They fear the creation of another permanent bureaucracy, foresee a strain on the budget at a time of extreme economic distress and argue that such spending is an ineffective economic stimulus. These are all legitimate worries, but they miss the bigger point: Our infrastructure needs are at a critical juncture.

"Like the maintenance of a strong military -- investment that protects prosperity -- investment in key infrastructure is consistent with Reagan principles. Moreover, such "expansion" would promote several conservative ideals: economic growth, energy independence, national security and U.S. competitiveness. Your comment?

5,148

2008-12-10T11:11:00.000-08:00

America's roads and bridges need critical repairs that total $64 billion, and construction could begin within six months if the federal government makes the funds available, according to a report by the American Association of State Highway and Transportation Officials. The association noted that it has identified 5,148 road and bridge projects are considered ready to go. States that need the most money for road and bridge construction:

Utah: $10.8 billion
Florida: $6.9 billion
Texas: $6 billion
North Carolina: $5.1 billion
California: $5 billion

Your comment?

A green answer to the building bust

2008-12-09T07:33:00.000-08:00

According to an article on the CoStar web site, despite a slowdown affecting nearly all segments of the commercial property industry, green building is positioned to withstand the deepening economic recession and possibly emerge as a more influential force than before, sustainability advocates say. The optimism stems from a groundswell of popularity that carried green building to the forefront of the industry heading into the downturn, as well as the idea that sustainability can help building stakeholders cut costs.

Lately, the financial case for green buildings -- that they are cheaper to operate and display better fundamentals than conventional buildings -- has become the chief rallying cry for the movement. “There’s been a focus shift from just ‘green, green, green’ to actual feasibility,” said Shannon Sentman, a real estate attorney at Holland & Knight in Washington, DC, who specializes in green building. “People are realistic. Most realize that this is a bottom line issue and it’s not only economical to do it, it’s bad for the bottom line if you don’t.” Your comment?

Be like Ike

2008-12-08T07:04:00.000-08:00

The aggregates and construction industries continue to follow every word that President-elect Barack Obama says about an economic recovery strategy based on making the biggest investment in the nation’s infrastructure since President Dwight D. Eisenhower created the interstate highway system a half-century ago. Speaking over the weekend at a Chicago news conference and on NBC’s “Meet the Press,” Obama said state governors have many projects that are “shovel ready,” meaning they could be undertaken swiftly and have an immediate impact on jobs. He also said the states would face a "use-it-or-lose it" ultimatum regarding the funds they would receive from the federal government. "If a state doesn't act quickly to invest in roads and bridges in its communities, they'll lose the money," Obama said. He declined to specify a price tag for his economic stimulus plan, saying his advisers are “busy working, crunching the numbers, looking at the macroeconomic data to make a determination as to what the size and the scope of the economic recovery plan needs to be. But it is going to be substantial.” Your comment?

ARTBA Forecast: Mixed

2008-12-04T06:57:00.000-08:00

After three years of steady nominal growth, the U.S. highway and bridge construction market is expected to flatten in 2009, as recent increases in federal highway investment will likely be offset by weakened state and local highway budgets, according to a forecast issued by the American Road & Transportation Builders Association’s (ARTBA) top economist.

Dr. William Buechner, ARTBA vice president of economics and research, projects the value of construction work put in place on highways and bridges will be $80.2 billion in 2009, a bare 1.5 percent increase over 2008’s $79 billion.

If construction material costs level off next year, as seems likely following the recent collapse of oil prices and the nation’s economic slowdown, the real volume of construction work should stabilize, and may even improve, after declining about six percent in 2008.

One factor that could considerably brighten the forecast, Buechner said, is for Congress and the president to enact an economic stimulus bill in early 2009 that includes transportation investment. Every $1 billion invested in quick-start highway and bridge projects would add about one percentage point to the 2009 forecast.

The federal highway program should provide a cushion for highway construction next year even without a stimulus bill. The $41.2 billion of highway investment enacted by Congress for FY 2008—a 5.5 percent increase over FY 2007—will have its biggest impact during the 2009 construction season as projects started in 2008 ramp up. Another $41.2 billion in the federal highway budget for FY 2009 helps maintain market stability.

“The most critical problem for the highway construction market in 2009 is that state and local governments are facing serious fiscal problems, and some may tap transportation funds or defer transportation investments to meet budgets,” Buechner said. “High gas prices this past summer, combined with a slowing economy, have resulted in a 3.3 percent decline in highway miles driven so far this year—thus reducing state gas tax revenue collections.”

The ARTBA economist noted that depressed new car and truck sales have also reduced vehicle registration fee revenues. Both will impact highway investment. At the same time, foreclosures and a decline in home values in many areas of the country are cutting into the property tax revenues that many local governments apply to their highway construction activities.

Construction materials prices decline

2008-12-01T07:17:00.000-08:00

According to Reed Construction Data, the construction materials price index fell 2.8 percent in October matching the decline in the overall Producer Price Index. October prices were still 10.0 percent above a year earlier but further, although smaller, declines in the index are expected in November and possibly December. Energy and metal prices fell further from mid-October to mid-November when the survey for the next PPI report was taken.

The most significant declines last month were 18 percent for asphalt (at the refinery), 18 percent for diesel fuel (at the pump), 8 percent for structural steel and nonferrous pipe and tube, 7 percent for lumber and 6 percent for plywood. The drop in raw commodity prices has yet to flow through fully to processed and manufactured construction materials. Steel scrap fell 38 percent and copper scrap dropped 29 percent in October. The decline in metals, energy and freight costs in the pipeline will push down the prices of manufactured products in the next few months.

The only significant prices increases in October were asphalt roofing (+7.3 percent) and gypsum products (+2.2 percent). Roofing prices do yet reflect the sharp drop in asphalt last month. Gypsum producers had announced a series on 11 percent monthly price increases but have been able to raise prices only about 6 percent in the last few months.

Heavy contractors benefit the most from the recent price cuts. The index for the mix of materials used in highway projects declined 5.8 percent in October to 15.2 percent above a year ago. The year will finish with several more large declines. Strained DOT and public works budgets will now be able to award more work than appeared likely a few months ago. Your comment?

Highway Trust Fund declines

2008-11-25T06:50:00.000-08:00

According to NSSGA, on Nov. 19, the Federal Highway Administration announced that vehicle miles traveled (VMT) declined for the final 11 months of fiscal year 2008, resulting in a $3 billion slide in Highway Trust Fund revenues. September driving fell 4.4 percent, or 10.7 billion VMT, from 2007 to 2008. The cumulative VMT total for 2008 is 3.5 percent below the same point in 2007. The September figures follow the largest single-month VMT decline since records began in 1942. The HTF took in $31 billion in revenue in fiscal 2008, $3 billion less than fiscal 2007. Despite the decline, government transportation spending increased by $2 billion over fiscal 2007. Congress approved an $8 billion infusion for the trust fund earlier this fall after low balances threatened to cut the fund's payments to states. The fund still faces long-term solvency problems, and how to fund it will be a crucial part of the upcoming debate when Congress considers a highway reauthorization measure in 2009. In the interim, NSSGA continues to advocate for another economic stimulus plan with a significant infrastructure investment component. Your comment?

Obama to emphasize infrastructure

2008-11-23T03:44:00.000-08:00

President-elect Barack Obama used his Saturday radio address to signal his intention to enact an economic recovery plan that includes infrastructure investment as one of its planks. He said: "I have already directed my economic team to come up with an Economic Recovery Plan that will mean 2.5 million more jobs by January of 2011 – a plan big enough to meet the challenges we face that I intend to sign soon after taking office. We’ll be working out the details in the weeks ahead, but it will be a two-year, nationwide effort to jumpstart job creation in America and lay the foundation for a strong and growing economy. We’ll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels; fuel-efficient cars and the alternative energy technologies that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead. These aren’t just steps to pull ourselves out of this immediate crisis; these are the long-term investments in our economic future that have been ignored for far too long." Wow. A president firmly behind investing in roads and bridges. That would be a refreshing change. Your comment?

AEM predicts equipment sales

2008-11-19T10:11:00.000-08:00

The construction equipment manufacturing industry expects continued business declines in the United States through year-end 2008 of 8.6 percent, followed by flat growth in 2009 of 0.04 percent, according to the annual “outlook” survey of the Association of Equipment Manufacturers (AEM).

“The overall slowdown of the past year or so, after record expansion, accelerated this fall with a worsening housing market and collapse of major financial institutions in the U.S. The continued financial turmoil is affecting commercial projects as well. While the strength of the global economy has spurred equipment export growth, we now face a slowdown here as well,” stated AEM President Dennis Slater. “This is certainly a challenging and unpredictable time. But we have learned from previous downturns how to operate more efficiently, and we are positioned for a rebound, hopefully as 2009 progresses, and into 2010,” he added. “Government measures to boost infrastructure investment will play a critical role in our industry’s recovery as well as strengthening the U.S. economy overall.”

Sales of concrete and aggregate equipment by year-end 2008 are predicted to decline 8.6 percent for the U.S. while increasing 20.4 percent for worldwide markets. For 2009, sales are expected to increase 4.6 percent in the U.S., and predicted to gain 3.9 percent for worldwide markets. Your comment?

PCA calls for infrastructure investment

2008-11-17T10:22:00.000-08:00

As the nation struggles to deal with the largest economic crisis in decades, attention is focused on an economic stimulus bill that many believe should contain significant dollars for infrastructure improvements that will create jobs at both the local and state levels. According to Ed Sullivan, chief economist for the Portland Cement Association, if the government does not act quickly that nation could lose 2 million jobs in 2009.

"Times are tough. We need a government stimulus package that creates jobs throughout the nation," Sullivan said. “Infrastructure funding could create jobs on both an immediate and long-term basis. For every 10 construction jobs created by a project, the community gains 17 additional jobs that stay in the region even after a project’s completion.”

However, simply building and repairing roads is not enough for our continued economic stability. The projects must be constructed with the highest quality materials, according to PCA.

“If we used concrete instead of asphalt for all new roads built between now and 2015, state governments could save over $100 billion during the life of the roads. Concrete roads require minimal maintenance and can last nearly three times longer than a similar roads paved with asphalt,” Sullivan said. “This means more money for local economies that can go to schools, police, and other public services.”
Your comment?

White House turns back on infrastructure

2008-11-12T07:08:00.000-08:00

Despite support from the president-elect, both House and Senate Democratic leaders and the top Republican in the Senate, the White House has been slowly walking away from earlier statements from administration officials that appeared to embrace a new round of stimulus spending, according to NSSGA. Infrastructure, in particular, has been highlighted as spending that is not stimulus in nature due to assertions of "long lag time" between authorizing and actually spending the money. The ATM and TCC coalitions have repeatedly communicated 3,000 projects worth $18 billion that are "ready to go." Now, the White House is reportedly saying Congress must first pass a stimulus bill before the White House will start negotiating on what it finds acceptable for inclusion in that bill, effectively throwing a wrench into the legislative process.

While there is a strong desire in the Democratic caucus to pass another stimulus bill, a new Congress has been elected and the moving in and moving out process has begun complicating passage of any bills in a lame duck Congressional session. Some Democratic staff are signaling that the Senate could take up one of two previously House-passed stimulus measures and get it to the president quickly. The first bill was a stand alone extension of jobless benefits and the second bill is the $60 billion stimulus bill that includes infrastructure funds. Meanwhile, congressional Republicans are calling for certain tax reforms to stimulate the economy, an option Democrats would rather wait on until a Democrat is in the White House to improve their bargaining leverage.

Nevertheless, President-elect Obama said in a press conference late last week that, "If it [a stimulus bill] does not get done in a lame duck session, it will be the first thing I do when I reach the Oval Office." NSSGA's letter to the president and president-elect urges infrastructure be included in the stimulus package.

NSSGA and its Americans for Transportation Mobility and Transportation Construction Coalition partners will continue to press Congress on the need to make infrastructure investment a key component of the next stimulus bill and urge passage before final adjournment of the 110th Congress.

The Obama Agenda

2008-11-11T07:16:00.000-08:00

President-elect Barack Obama laid out an ambitious agenda during his successful campaign. NSSGA reviews specific agenda items of interest to the aggregates industry below:

Foremost on this list is transportation. Among the highlights are the creation of a "national infrastructure policy that recognizes that we must upgrade our infrastructure to meet the demands of a growing population, a changing economy and our short and long-term energy challenges." In addition, Obama and Vice President-elect Joe Biden state that "a robust federal infrastructure investment program today will help strengthen the U.S. economy and provide at least one million more U.S. jobs at a time when the housing and construction industries are slowing." Finally, Obama and Biden advocate the creation of a National Infrastructure Reinvestment Bank that would receive an infusion of $60 billion over 10 years in federal funds to finance transportation infrastructure projects across the nation by expanding and enhancing federal investments. According to their plan, these projects would create nearly two million new direct and indirect jobs as well as stimulate approximately $35 billion per year in new economic activity.

With regard to business, the Obama agenda focuses on small businesses and provides ideas on how to hold down healthcare costs as well as increase available capital for small and start-up businesses. One such proposal is the elimination of all capital gains taxes on such businesses in order to encourage innovation and job creation. From a tax standpoint, businesses that start or expand operations in the United States will see a reduction in their corporate income tax rate. On the environment, Obama has indicated that he will make combating global warming a top priority and will reinvigorate the U.S. Environmental Protection Agency.

PCA revises forecast

2008-11-07T02:07:00.000-08:00

The weak economy and tight credit conditions, coupled with severe job losses and the resulting decline in state government revenues, will translate into significant weakness for the construction industry through 2010, leading the Portland Cement Association (PCA) to again adjust its cement consumption forecast.

The latest PCA forecast of cement, concrete, and construction predicts a 12.8 percent decline in cement consumption in 2008, followed by 11.9 percent and 2.1 percent declines in 2009 and 2010, respectively.
The PCA report cites the continued drop in residential starts and the erosion of the strong fundamentals supporting nonresidential construction as major factors leading to reduced cement consumption. The weak economy also has affected the public construction sector.

“Several economic factors are negatively influencing the construction industry,” Edward Sullivan, PCA chief economist said. “High energy prices, the sub-prime crisis, the melt-down of our financial markets, inflation, job losses and tight lending standards are combining to create weak economic conditions and the emergence of huge state deficits. Public construction accounts for nearly half of all the total cement consumption in the U.S., and states in poor fiscal condition will need to cut back on this spending.”

PCA expects cement consumption in residential to decline 31.7 percent in 2008 and 16.9 percent in 2009, but a rebound of the market in the second half of 2010 will lead to a 12.1 percent increase in consumption in that year. Consumption in the nonresidential sector is expected to decline 22.2 percent in 2009 and the public sector will see 6.6 percent declines in 2009 and 2010.

“The nonresidential construction market typically takes 18 months from the onset of better economic conditions to rebound,” Sullivan said. “With weak consumer spending, this sector will be especially hit hard in retail construction.”
PCA predicts a recovery to begin in 2011 with a 10.3 percent increase compared to 2010 consumption and a return to near-record consumption levels by 2013. Your comment?

Owens comments on future

2008-11-04T03:19:00.000-08:00

Caterpillar's Chairman and CEO Jim Owens recently commented on the company's financial performance expectations for the future: "The 2009 economic outlook is extremely uncertain at this time, with substantial turmoil in financial markets and unprecedented government intervention around the world," Owens said. "Our current outlook for 2009 calls for sales and revenues to be about flat with our full-year 2008 results. In 2009 we expect pockets of strength in global mining, energy markets and in the area of emerging market infrastructure development to offset acute weakness in North America, Europe and Japan. Further, we are confident that our integrated service businesses, which have grown significantly this year, will offer revenue and earnings support in the coming year. That said, given the recent economic turmoil, we will issue our 2009 profit per share outlook with our year-end release in January. The world has experienced significant turbulence in financial markets, and we expect this will slow world economic growth over the next three or four quarters. While we are encouraged by the coordinated response by governments and central banks around the world and believe the actions they've taken will restore global liquidity, the depth and duration of economic decline and the timing and strength of the recovery are very uncertain. Caterpillar is prepared for volatility, and we remain very positive about our longer-term growth prospects. With our financial strength, global manufacturing and distribution network, our focus on the Caterpillar Production System powered by 6 Sigma and our diversified business portfolio, Caterpillar is poised to strengthen its global leadership position during this challenging period," Owens added.

2009 construction forecast

2008-11-02T03:04:00.000-08:00

McGraw-Hill Construction, part of The McGraw-Hill Companies released its 2009 Construction Outlook, which forecasts a drop in overall U.S. construction starts for next year, as the tough funding environment continues, construction projects are deferred, and financial stress gradually eases. Against this backdrop, the level of construction starts in 2009 is expected to decline 7 percent, to $515 billion, following a 12 percent decline predicted for 2008.

“The speed and scope of the events in September and October were startling,” said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction, addressing 400 construction executives and professionals at the Outlook 2009 Executive Conference in Washington. “Tighter lending standards are a major constraint for the construction industry. For single family housing, declines are continuing and showing no sign of an upturn. Home prices are continuing to drop, a 20 percent drop so far this year, and we expect another 10 percent decline through the first half of 2009. Then, things should level off. Store construction has taken the biggest hit; we’re looking at a 30 percent decline in retail square footage starts this year.”

Highlights of the 2009 Construction Outlook include:

* Single family housing for 2009 will be down 2 percent in dollars, corresponding to a 4 percent drop in the number of units to 560,000 (McGraw-Hill Construction basis).

* Multifamily housing will retreat 6 percent in dollars and 8 percent in units, after the sharp plunge witnessed during 2008.

* Commercial buildings will drop 12 percent in dollars and 15 percent in sq. ft., similar to the declines experienced in 2008. Stores and warehouses will continue to lose momentum, the office correction will be steeper, and hotel construction will finally pull back after its lengthy boom.

* Institutional buildings will slip 3 percent in dollars and 6 percent in sq. ft., as the financial crisis affects funding coming from states and localities.

* Manufacturing buildings will plunge 32 percent in dollars after an exceptional 2008 that was lifted by the start of several massive oil refinery expansion projects.

* Public works construction will fall 5 percent, given flat funding at the federal level combined with restraint by state and local governments.

* Electric utility construction will retreat 30 percent after surging 55 percent to a near record amount in 2008.

Gloomy global construction forecast

2008-10-31T06:05:00.000-07:00

According to an article posted by ARI, sustained worldwide economic recession is making itself felt everywhere, including global construction markets. Economic forecasting company Global Insight says that global construction growth is expected to dip by under +2 percent in 2009. The growth figures are expected to be the lowest since 2002.

The most severely effected of all is the North American market that will face a contraction of -9 percent, driven by the downturn in the U.S., while Western Europe will fare a little better with almost no growth. On the other hand, Eastern Europe may face a slight setback in terms of growth but will manage to stay in the positive territory. France and Europe may escape unscathed, but Spain and UK may be scalded with possible downturns in growth. Asia may still offer growth, despite a downturn in its export markets.

Global Insight predicts a bright future for the Middle East and Latin America even though the risk of falling commodity remains a source for concern. Many of the countries in these regions are relying on their foreign currency reserves and fiscal surpluses to cushion the shock of the global recession.

Global Insight expects the best opportunities over the coming years to be in the area of infrastructure construction in emerging markets, since developing economies are expected to continue to invest in infrastructure while their commercial, industrial and residential construction activity suffer a setback.

Recovery for the construction industry may not come before the year 2011. Global Insight director of construction services Scott Hazelton said, " No true recovery for construction markets is expected until 2011. However, the recovery could be steep and the needs of emerging markets remain great. The construction recovery, when it comes, should be strong." Your comment?

Black testifies on infrastructure

2008-10-30T07:09:00.000-07:00

In testimony delivered to the House Committee on Transportation and Infrastructure, Doug Black, CEO of Oldcastle Materials Inc., Atlanta, addressed his concerns on infrastructure spending and investment in the nation’s surface transportation system. Oldcastle is a key member of the National Stone, Sand and Gravel Association.

Black pointed out that the construction materials industry is shrinking at a time when the nation’s infrastructure needs are growing. “Jobs in the United States today are issue number one.” He suggested there is no better way to add jobs, and good-paying American jobs, than to invest in infrastructure. He urged Congress to pass a short-term stimulus bill that will allow companies like his own to keep its workforce, add jobs and help preserve the nation’s highway system.

He disagreed with the suggestion that infrastructure investment cannot be a short-term stimulus to the economy since projects take too long to get started and to complete. Black informed the committee that all infrastructure projects are not the same. Some projects, like building new highways, bridges, light rail lines, runways, and sewer systems can take years to complete. He pointed out, however, that most highway maintenance and repair projects can be advertised, bid, let and completed in a short period of time. This is particularly true of projects already existing that state and local governments have ready-to-go if funding were available.

Fatality #20

2008-10-28T06:11:00.000-07:00

According to MSHA, on October 17, a 45-year-old scaler operator with 8 years of experience was fatally injured at an underground stone mine. He was inside the cab operating a track mounted excavator, with a scaling attachment, when a rock fall occurred. A rock, about 13-ft. wide x 26-ft. long x 4-ft. thick fell from the back. Rescuers recovered the victim about 7 hours after the rock fell. Your comment?

Obama, McCain differ on infrastruture

2008-10-24T06:25:00.000-07:00

There is a good article on CNN Money about where Barack Obama and John McCain stand on infrastructure issue. Both presidential candidates have acknowledged the importance of rebuilding the roads and rails, but have offered very different solutions. McCain advocates shifting financing from earmarks to high-priority projects, while Obama's plan would create a federally-funded bank to invest in improvement projects. Your comment?

Fatality #17

2008-10-22T04:59:00.000-07:00

According to MSHA, the Metal/Nonmetal sector experienced its 17th fatality of the year. On October 7, a 56-year-old lead man with 18 years of experience was fatally injured at a crushed-stone operation. The victim was in a chute of an underground surge tunnel when material from above sloughed off and engulfed him. Your comment?

Housing starts at 17-year low

2008-10-17T11:07:00.000-07:00

The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced the following new residential construction statistics for September 2008, which put in historical perspective, marks a 17-year statistical low.

BUILDING PERMITS
Privately owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 786,000. This is 8.3 percent below the revised August rate of 857,000 and is 38.4 percent below the revised September 2007 estimate of 1,277,000. Single-family authorizations in September were at a rate of 532,000; this is 3.8 percent below the August figure of 553,000. Authorizations of units in buildings with five units or more were at a rate of 225,000 in September.

HOUSING STARTS
Privately-owned housing starts in September were at a seasonally adjusted annual rate of 817,000. This is 6.3 percent below the revised August estimate of 872,000 and is 31.1 percent below the revised September 2007 rate of 1,185,000. Single-family housing starts in September were at a rate of 544,000; this is 12.0 percent below the August figure of 618,000. The September rate for units in buildings with five units or more was 254,000. Your comment?

Market volatility, nonresidential construction

2008-10-09T03:21:00.000-07:00

This week's market volatility will have a downline impact on construction markets. According to Reed Construction Data Chief Economist Jim Haughey, a drop in commercial construction activity is coming, initially from the abrupt loss of access to credit and higher credit cost and then later, when credit markets stabilize, from the feedback on space demand from reduced spending in the economy. Together the two impacts will reduce expected profits from new construction and make buying rather than building a better option for real estate developers in an increasing number of markets.

The commercial mortgage backed bond market is virtually shut down because the usual bond buyers are conserving their scarce capital and demanding large premiums for what they now believe are more risky assets than they previously thought. Similarly construction financing from banks has been reduced to about half of previous levels. Funding is still available from insurance companies and other non-bank investors but at significantly higher rates than only a few months ago.

This situation will persist until banks have more capital more trust that their borrowers are solvent enough to repay them. The fixes are gradually being put in place. This includes the Treasury plan to buy and hence establish a price for depreciated mortgage bonds, continued cash injections from the FRB and other central banks and regulatory changes that end the requirements for financial firms to value some of their assets at temporarily distressed prices.

It is not yet clear how long this will take or whether enough resources have been committed to this task. Our forecasts assume that the dimensions of the problem are known and the credit problem is easing by the end of October.

How large the negative feedback from a slowing economy on construction spending will be is also unknown yet. Our only comparable experience is the post 9/11 period. The shock to the economy impacted everyone. Caution lead to deep cuts in spending over a few weeks. Then it became clear that the immediate threat had passed. There was a burst of make up spending and then a resumption of normal spending trends which, at that time, was very slow growth.

We assume the same pattern of shock, caution and slow recovery for the current shock to consumers’ retirement savings.

Other macroeconomic and construction forecasts are gradually being updated to Septembers’ credit crunch.

Converted to real, inflation, adjusted dollars, The Reed Construction Data forecast projects a 1.0 percent drop in nonresidential, including facilities, construction spending in 2009 and a 2.0 percent decline in 2010. The pace of decline will be much higher later this year and early in 2009. Spending will be rising at the end of 2010. Absent the credit crunch growth would have been marginally positive over the two years. Economy.com, a widely followed forecast has a generally similar outlook with slightly less drop late this year but 3 percent more next year. Wachovia bank projects a 12 percent fall in 2009 and a further 14 percent drop in 2010. The banks’ GDP forecast is about 1 percent below Reed Construction Data and Economy.com so they see some unique problems in the construction market, especially credit access for commercial developers.

Drops as large as projected by Wachovia bank have occurred before when a severe recession in the general economy occurred when the real estate market was overbuilt. Obviously, there will be surplus space in the next two years but we do not believe there was significant surplus space a few months ago. Reed works with closely on construction data and forecasts with Property & Portfolio Research, a Boston commercial real estate advisor. Their updated forecast is pessimistic for commercial rents, occupancy rates and building asset values but pessimistic enough to cause major cancellations of work underway or set to start soon. Your comment?

Simonson says

2008-10-03T04:23:00.000-07:00

The last year has been a tough one for many in the construction industry, according to an article published on the ARI website. The next one could be just as difficult, said Ken Simonson, the chief economist for the Associated General Contractors of America. Speaking at a meeting of the group's Middle Tennessee members, Simonson predicted that residential construction will remain slow, that well-performing commercial sectors will turn sour and that costs will keep rising.

Home building, which has been down about 40 percent this year, will not pick up until midway through next year at the earliest, Simonson said. Construction of rental properties, which has remained flat, should also start to fall, as foreclosures and poor condominium deals create a shadow market that will drag down rents.

The housing market will also put a damper on school construction. Declining home values mean fewer tax dollars for improvements and new buildings. Likewise, higher gas prices will mean less driving and less gas tax revenue for highway construction. Meanwhile, lodging, retail and office construction will slow with the weakened economy.

Simonson threw his support behind the White House plan to borrow $700 billion to buy mortgage-backed securities from banks to help cure the ailing U.S. economy. Over the past few months, Simonson has been hearing for the first time from construction companies that credit has dried up. Without better access to loans, the industry will not be able to get back on its feet, he said.

That said, Simonson said the stakes aren't as dire as some believe. The nation remains in a better position to weather a downturn than it was on the eve of the Great Depression nearly 80 years ago. Your comment?

Aggregates production down in Q2

2008-09-26T05:05:00.000-07:00

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

2008-09-25T05:09:00.000-07:00

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

2008-09-23T03:11:00.000-07:00

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!

2008-09-16T06:22:00.000-07:00

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

2008-09-11T02:43:00.000-07:00

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

2008-09-05T05:54:00.000-07:00

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

2008-09-03T08:13:00.000-07:00

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?

Exports rising

2008-08-29T10:10:00.000-07:00

Exports of U.S.-made construction machinery gained 24 percent at mid-year 2008 compared to the first half of 2007, for a total of more than $10 billion dollars worth of equipment shipped to global markets, according to data released by the Association of Equipment Manufacturers (AEM).

All major world regions recorded double-digit growth except Central America, with a 3-percent increase. Africa led the way with a 59-percent gain followed by South America with an increase of 30 percent. The AEM trade group consolidates U.S. Commerce Department data with other sources into a quarterly global export trends report for members.

“Exports remain a bright spot for the U.S. construction-equipment manufacturing industry in these uncertain times, and whoever is elected President in November needs to focus on passage of free and fair trade agreements that eliminate barriers to commerce across borders,” said AEM Senior Vice President Al Cervero.

“The lack of U.S. infrastructure investment is eroding America’s position as a global economic power as nations around the world substantially increase their commitments to modern transportation networks. In the United States, traffic gridlock is estimated to cost $78 billion dollars a year on the American economy and productivity, in addition to adverse effects on safety and the environment. Federal legislators must take this issue seriously, and invest adequately for current and future needs as part of a longer term comprehensive strategy,” he added.

The 10 countries buying the most U.S.-made construction machinery during the first half of 2008 were: (1) Canada - $3.35 billion, up 28 percent; (2) Australia - $824 million, up 18 percent; (3) Mexico - $544.5 million, down 7 percent; (4) Chile - $406 million, up 17 percent; (5) South Africa - $369 million, up 47 percent; (6) Belgium - $362 million, up 9 percent; (7) Brazil - $258 million, up 59 percent; (8) Singapore - $235 million, up 48 percent; (9) Russia - $231 million, up 40 percent; (10) Colombia - $230 million, up 44 percent. Your comment?

Fatality #14

2008-08-27T10:15:00.000-07:00

On August 18, 2008, a 28-year-old contractor mechanic/welder with 8 years experience was fatally injured on the surface at an underground stone mine, according to MSHA. A crane was being used to lower into place a 7,000-lb. counterweight for a scaling machine. The victim was checking alignment of the bolt holes for the counterweight when one of connectors on the rigging broke, causing the counterweight to swing and strike him. The second connector then broke and the counterweight fell on top of the victim.
Your comment?

Residential: bottomed out?

2008-08-21T10:21:00.000-07:00

According to Jim Haughey of Reed Construction Data, almost all market drivers for residential construction declined again last month. Permits, starts and sales fell although the monthly year to date average for starts remains above the low point last December. Mortgage rates inched higher to ration scarce mortgage capital. Home affordability fell although it is still above average. Consumer confidence remains at a recession level although it increased marginally when gas prices began to decline. Home prices continued to fall. However, the decline is slowing and is increasingly concentrated in a small number of very depressed markets. Remodeling activity appears to be up slightly but the data is not reliable enough to be sure.

Inventories of unsold homes, both new and existing declined. Ultimately, it is the absorption of surplus inventories that will permit a housing recovery to begin. Another tidbit of good news was the much delayed passage of housing legislation by Congress that takes effect October 1st. The short term impact will be positive. This includes subsidies to first time homebuyers, a more explicit guarantee for Fannie Mae and Freddie Mac bonds which will keep the two mortgage giants alive for at least a few more months, FHA guaranteed mortgages with principal writedowns for up to 400,000 households at risk of foreclosure and 4$ billion dollars of “walking around” money for local government officials. Long-term, there will be a boost in inflation from this fix.

Reed Construction Data still thinks that the housing market is at or near the bottom for this cycle with little further decline ahead in starts or job site construction spending but no significant improvement until late this year at the earliest. Don’t confuse the job site with brokers’ office. Downstream, the real estate and mortgage market continue to worsen, slowing the absorption of unsold homes. Foreclosure notices will not peak until fall and actual foreclosures will continue to rise well into next year. Your comment?

Fatality #12

2008-08-20T06:01:00.000-07:00

On August 6, 2008, a 38 year-old shift foreman with 15 years experience was fatally injured on the surface of an underground potash mine. It was the 12th metal/nonmetal fatality this year. The victim was electrocuted when he contacted an energized steel water line. One conductor of a 480-volt electrical circuit short-circuited to an abandoned heater tape where both circuits passed through a common condulet box. The heater tape, which was attached to the water line, overheated and energized the water line to 277 volts. Your comment?

Cemex loses plant in Venezuela

2008-08-19T06:07:00.000-07:00

Venezuela seized foreign-owned cement plants on Tuesday in a show of strength as President Hugo Chavez (left) moves forward with a plan to make the top oil exporter in South America a socialist society. To cheers from workers gathered at the gates, Venezuela took control of installations belonging to Cemex exactly at midnight after failing to reach a deal in cement nationalization talks. Chavez, determined to build a state-dominated economy in Venezuela, has already taken oil and telecommunications companies from private hands and is buying a large Spanish-owned bank and a steel company. Despite losing a referendum last year that would have given him wider scope to remake the economy, the former paratrooper last month used decree powers to pass a package of laws giving the state greater powers to intervene in sectors such as food.

"Their time is up and they move into the hands of the state," Chavez said at a political rally late on Monday. Chavez wants the cement companies, as well as a major steel plant he is buying from an Argentine group, to help meet the home-building and infrastructure goals his administration has struggled with. Source: Wire reports. Your comment?

Stock analysis

2008-08-14T15:16:00.000-07:00

According to Longbow Research analyst David MacGregor, the sell off in construction materials stocks has left many companies trading at less than half of their replacement value. Given this apparent disconnect, Mr. MacGregor said, “While we struggle to find near-term positive catalysts that equity markets will recognize due to continued weakness in residential construction, softening in some commercial segments, and uncertainty regarding infrastructure spending for FY09, at some point, we believe that either a) equity markets will recognize the disconnect and will begin to bid the shares back up to levels closer to replacement value or b) strategic buyers will step in to acquire attractive long-term assets at a steep discount.” Your comment?

Infrastructure investment

2008-08-07T03:31:00.000-07:00

According to NSSGA, before Congress adjourned for its summer recess, Sen. Robert Byrd (D-W.Va.) introduced a $24.1 billion stimulus-spending bill with the hope that it can get to the Senate floor in September. In the House of Representatives, Speaker Nancy Pelosi (D-Calif.) has referenced a similar effort, but with a $50 billion price tag. The administration has noted repeatedly that the first stimulus checks are still reaching recipients, and they need to be given time to have an impact on the economy before another stimulus-spending bill is considered.

Included in the infrastructure spending section is $3.6 billion for highway investment, $893 million for transit, $100 million for Amtrak and $200 million for ready-to-go airport projects. In addition to the $4.8 billion, there is $400 million divided between equally the Clean Water State Revolving Fund and USDA for water and wastewater projects in rural areas. Under the categories of natural disasters, the bill would provide $1.2 billion for reconstruction of flood damaged roads or bridges, $250 million for infrastructure and economic recovery in communities affected by Midwest flooding, $360 million for repair of eligible levees and dredging, and finally $50 million to repair dams through the Watershed Rehabilitation Program. Added together, all forms of infrastructure would receive more than $7 billion in funds from the bill.

HOT lanes

2008-08-05T04:17:00.000-07:00

According to an article in USA Today, Transportation agencies are increasingly looking to reduce congestion and make more use of sometimes under-utilized high-occupancy vehicle (HOV) lanes. Some are developing plans to allow vehicles that don't have the required number of passengers to use the lanes if they are willing to pay. There are high-occupancy toll (HOT) lanes in Seattle, Denver, San Diego, Minneapolis and Salt Lake City. Construction in at least five states is slated to begin in the next year. "Congestion has grown dramatically in the United States in the last 25 years," said Tyler Duvall, acting undersecretary for policy at the U.S. Department of Transportation (DOT). "There's a fundamental problem — a supply and demand imbalance." Your comment?

Rendell on a roll!

2008-07-28T07:18:00.000-07:00

Gov. Ed Rendell of Pennsylvania is at it again. He is quickly becoming the political point person for infrastructure investment in this country. In Minneapolis over the weekend, Rendell, together with Mayor Michael Bloomberg of New York and Gov. Arnold Schwarzenegger of California, urged the major political parties to adopt an infrastructure plank in their party platforms. He is also touting a website, Building America's Future, designed to act as the major information portal for the effort to secure greater investment in the country's roads, ridges, dams and sewer systems. The nation's media is starting to take notice. Read this great editorial from the Minneapolis Star-Tribune.

Bridge deficiencies highlighted

2008-07-27T06:00:00.000-07:00

USA Today is calling attention to bridge deficiencies in the U.S. with an article, complete with charts and budgetary data. From the article: "The fatal collapse of a bridge in Minneapolis a year ago jolted states into better inspections of the nation's 600,000 bridges, but they aren't coming up with the billions of dollars needed to ensure that all of them are sound." Read the rest of the piece here.Your comment?

LEED the way

2008-07-25T05:35:00.000-07:00

McGraw-Hill Construction surveyed a representative sample of one million U.S. households (equating to three million consumers) to find those individuals who had purchased LEED certified and other green homes over the last three years and question them about their attitudes. The vast majority (83 percent) said their new homes will lower operating costs; lower energy bills within the first year after purchase (79 percent); and also lower water bills within the first year after purchase (68 percent).

Going green was the top reason cited by survey respondents for remodeling their home. Environmental benefits such as lower energy costs and healthier air were identified by 42 percent of respondents as their main reason for home improvements; 34 percent cited increased comfort; only 24 percent said improved appearance was their main benefit from remodeling.

Other key findings of the McGraw-Hill Construction survey include:

70 percent of buyers are either more or much more inclined to purchase a green home over a conventional home in down housing market.

More than half (56 percent) of those surveyed who have bought green homes earn less than $75,000 per year; 29 percent earn less than $50,000.

Overall, lower income buyers say they found tax credits and government programs, indoor air quality benefits and green certifications to be the most important incentives for them to buy green homes.

Making homes greener is now the number one reason for home improvement (42 percent) over remodeling for comfort reasons (34 percent) or to improve appearance (24 percent).

Almost half (44 percent) of homes renovated between 2005 and 2007 used products chosen for their green attributes. Your comment?

Saving the HTF

2008-07-24T10:13:00.000-07:00

According to NSSGA, on Wednesday afternoon, the House of Representatives voted 387 to 37 on a bill to infuse the Highway Trust Fund (HTF) with enough revenue to ensure it remains solvent until Congress can reauthorize the massive multi-year highway bill next year. Due to the parliamentary procedures used to consider the bill, which prevented any amendments, a two-thirds vote of support was needed to pass. The next legislative hurdle for the legislation is the Senate, which is unlikely to consider the bill before September. H.R. 6532 would recapture about $8 billion in HTF revenues transferred to the general fund when Congress passed TEA-21 in 1998. The legislation was introduced by the chairman of the Ways and Means committee, along with virtually all of the Transportation and Infrastructure committee including the chairman and senior Republican. Your comment?

Let the states do it

2008-07-15T18:38:00.000-07:00

If the president and congress won't do it, maybe the governors will. According to an article, improving the nation’s crumbling bridges, roads and sewage systems is a $1.6 trillion problem that governors intend to address in the next year. “It’s not the sexiest of issues, but in many ways, it’s as important as anything we do,” Pennsylvania Gov. Ed Rendell (left) said July 14, as he accepted the chairmanship of the National Governors Association and formally kicked off his infrastructure initiative. Rendell said million-dollar projects like the infamous “bridge to nowhere” in Alaska make voters skeptical that the government is up to the task. “The view is that infrastructure is just a pork-barrel process … We need to bring back public confidence.” Some 70 current and former governors attended NGA’s centennial that celebrated governors’ role in crafting important national policies and programs in the last 100 years, such as welfare reform and the interstate highway system. Your comment?

Housing starts to sink 36 percent

2008-07-07T07:27:00.000-07:00

Housing starts in 2008 are expected to be 36 percent lower than 2007 levels, creating three straight years of declines. according to a recent Portland Cement Association (PCA) economic research report. The toxic mix of weak economic conditions, tight credit conditions and tepid sales are causing huge housing inventory overhangs that must be cleaned up before housing construction can begin its recovery.

"Despite large home price declines and improved affordability, sales remain sluggish and offer little hope that the inventory glut will be worked off anytime soon," said PCA Chief Economist Ed Sullivan. "The economic environment remains weak, being dragged down by high energy costs and weak employment fundamentals."

Sullivan says current home inventories stand at a 10.5-month supply, more than double the 5-month supply that normally accelerates start activity. Continual cutbacks in starts and marginal gains in sales are expected to be more than offset by increases in housing foreclosures that will be added to the market's inventory in 2008 and 2009.

PCA projects an additional one-percent start decline in 2009, with recovery to take place in 2010. Even then, the onset of recovery will vary among regions and states. States that fully participated in the housing boom, like California, Arizona, Nevada and Florida, will have a disproportionally high number of defaults and foreclosures and even more delayed housing start recoveries. Your comment?

Four trends to watch

2008-06-30T17:46:00.000-07:00

FMI, management consultants and investment bankers to the construction industry, identifies four major themes the industry will face in the coming decade:

1. Significant changes in the funding for infrastructure. Current funding will not meet expected needs. The Highway Transit Fund will have a $4.3B deficit by FY 2009, resulting in a $27.3B highway program. The primary funding vehicle (gas tax) is losing purchasing power. Highway construction materials prices are currently up 43% from 2003 and total highway costs, labor and overhead are up 27%.

2. Demand driven by demographics. Growth and congestion are becoming issues of national priority. The cost of travel delays and wasted fuel is currently estimated at more than $67 billion annually. System capacity is considered imperative to remain competitive in the global marketplace – China and India are making tremendous investment in their transportation infrastructure.

3. Competition for scarce resources creating “hyper-competitive” markets. Topping the list of scarce resources is labor shortages. The pool of skilled labor/field management/project managers is shrinking. This is the top issue identified by contractors. In 2008 alone, there were 6 million more jobs than employees and this number is expected to exceed 10 million by 2012. Basic materials such as cement, aggregates, hot mixed asphalt and ready mixed concrete are becoming scarce commodities as well.

4. Technology infiltrating construction in ways that matter to contractors. How will this look? Technology will play a larger role in mitigating workforce shortages, attracting “techno-wonks” to the industry, solving interoperability, construction conflicts, flattening hierarchical organization and changing management from art to science. Your comment?

Highway Trust Fund woes

2008-06-27T09:06:00.000-07:00

According to NSSGA, the House of Representatives passed legislation (H.R. 6327) on June 24 that provides a three-month extension of taxes and spending authority for Federal Aviation Administration (FAA) programs, but dropped from the bill a provision that would have provided an $8 billion fix to restore solvency to the Highway Trust Fund's (HTF). The $8 billion in revenue is needed to ensure that there will not be a 34 percent or higher reduction in highway funds to states below SAFETEA-LU's authorized funding levels in FY 2009 and a loss of 380,000 jobs.

"We are extremely disappointed that Congress did not seize the opportunity to ensure solvency of the Highway Trust Fund," said NSSGA Chairman Steve Sloan, president and CEO of Midwest Minerals, Inc. "We encourage, in fact urge, ourmembers to contact their legislators during the July 4th congressional recess and ask them to take action on the HTF funding deficit or risk the delay, postponement, or cancellation of needed highway projects and the accompanying job losses."

The HTF provision was dropped from the House bill following opposition of Rep. Jerry Lewis (Calif.), the senior Republican on the House Appropriations Committee, and Rep. Paul Ryan (Wis.), the senior Republican on the House Budget Committee. They announced their opposition to the HTF fix in a joint press release which quoted Rep. Lewis as saying, "This bill just exacerbates our transportation funding problem by using an $8 billion taxpayer-funded band-aid on the terminally ill Highway Trust Fund. We need real reform and practical solutions, not more buck passing."

A final attempt in the Senate to pass the FAA extension by unanimous consent with the HTF fix failed when Sen. Jim DeMint (R-S.C.) continued to object.

NSSGA is asking its members to continue to contact their senators and members of the House to restore solvency to the HTF. Your comment?

FasterBetterSafer

2008-06-25T04:02:00.000-07:00

The Association of Equipment Manufacturers (AEM) has been a strong advocate for infrastructure investment, and the organization has announced its support for the FasterBetterSafer campaign of the Americans for Transportation Mobility coalition. The campaign is intended to be a wake-up alarm to urge Congress and the next Administration to increase federal investment in the nation’s aging and overburdened transportation system.

“The business community must intensify its efforts now to educate elected officials on critical transportation needs as Congress prepares to reauthorize the surface transportation program next year,” said Dennis J. Slater, AEM President. “Infrastructure improvement is a top priority for our member companies and our industry. We are keenly aware of the investment that is taking place in other regions of the world, and there is widespread alarm at the lack of adequate investment to modernize infrastructure here in the United States.”

AEM is prepared to commit resources to support the FasterBetterSafer campaign. “The future economic health of our nation depends on a strong transportation network,” Slater noted. Your comment?

Flooding may impact stone producers

2008-06-20T06:02:00.000-07:00

Longbow Research mining and construction-materials analyst David MacGregor lowered his earnings estimates on Martin Marietta Materials and Vulcan Materials. Mr. MacGregor observed, “Both have significant operations near [midwestern] rivers, with most of VMC’s footprint in the Lower Mississippi region. MLM’s footprint near potential flood sites in Iowa is particularly concerning. While VMC appears to have significantly fewer quarries directly impacted by the flooding than MLM, we anticipate potential freight bottlenecks down the Mississippi will have a negative impact on VMC’s distribution network.”

Vulcan Materials Co.: Reducing Estimates on Weather and Flood Concerns

• We are reducing our estimates for VMC to account for inclement weather and flooding in the Midwest.
• While VMC has minimal operations in the region – mainly limited to southern Wisconsin and Chicago – we anticipate transportation bottlenecks could impact rail and barge transport downstream near the Gulf States.
• We are revising our below consensus estimates to $1.13 (-$0.04) for 2Q08 and $3.46 (-$0.06) for FY08. Our FY09E remains at $4.60.
• We continue to rate VMC a BUY with a $98 price target on a favorable view of VMC’s leading position in the aggregates industry, one which we continue to believe will enjoy attractive fundamentals going forward – particularly in key markets of California and Florida.

Martin Marietta Materials: Reducing Estimates on Weather and Flood Concerns

• We are revising our 2Q08 Street-low estimates to $1.78 (-$0.15) and to $6.25 (-$0.20) for FY08. Our FY09 EPS estimate remains at $7.10. We are concerned about the near-term impact of flooding and wet weather during the quarter in a number of MLM's Midwestern markets.
• Our channel checks in Iowa indicated a number of aggregates operators without power for over a week. While MLM’s extensive network throughout the state will afford the Company opportunities to shift production to non-impacted facilities, increased transportation bottlenecks should increase freight costs. We note that major bottlenecks typically disrupt the entire rail network and estimate, based upon reports from various railroads, that roughly 20 percent of the rail network could experience delays.
• We estimate approximately 12-14 percent of MLM’s shipments come from Iowa, Wisconsin and Indiana. While not all facilities are currently at risk for flood-related closures, we anticipate the near-term impact could extend to rail and barge bottlenecks which could then impact operations along MLM’s long-haul distribution network.
• In the long term, MLM could benefit from a recovery in operations caused by the flooding. MLM is the largest producer of railroad ballast in the country, and 10 percent of the company’s business serves nontraditional markets such as ballast and agricultural lime for the Farm Belt. Together with levee reconstruction and the rebuilding of homes and businesses, MLM is well situated to participate in recovery efforts, although the timing and potential positive at this point is unclear.
• While we like the long-term earnings power associated with attractive industry fundamentals and the company's capacity expansion initiatives, near-term concerns regarding FY08-FY09 demand and rising energy costs continue to weigh on our opinion. As a result, we remain neutral on MLM. Your comment?

Mid-Year Report

2008-06-17T05:17:00.000-07:00

McGraw-Hill Construction, part of The McGraw-Hill Companies, has released its annual Construction Outlook Midyear Update, providing insight into the performance of the construction industry through the end of 2008. The major findings of the forecast, authored by Robert Murray, vice president of economic affairs for McGraw-Hill Construction, include:
* New construction starts for 2008 are estimated at $558.5 billion, down 11 percent.
* Single-family housing continues to weaken, with 2008 declines of 28 percent in dollar volume and 31 percent in dwelling units, steeper than what occurred in 2007. The single family market is being adversely affected by falling home prices, mounting inventories, and tight lending conditions.
* Commercial building witnessed further expansion in 2006 and 2007, which carried over into the first quarter of 2008. However, the slower economy and tighter lending conditions are now causing projects to be deferred, and the loss of momentum will take firmer hold as the year proceeds. For 2008, commercial building will retreat 8 percent in dollar volume and 16 peercent in sq. ft. Stores and warehouses are the most vulnerable to decline in the near term, while lesser reductions are anticipated for hotels and office buildings.
* Institutional building in 2008 continues to see a strong amount of educational structures reach groundbreaking, helped in particular by more expansion for colleges and universities. The 2008 forecast for institutional building calls for a 2 percent gain in dollar volume, although square footage will settle back 3 percent.
* Public works construction in 2008 will also rise 2 percent in dollars. The push will come from greater federal funding for transportation projects in fiscal 2008, combined with an elevated focus on infrastructure repair and maintenance. Tighter fiscal conditions at both the federal and state levels of government are an emerging concern for the public works sector, but any restraint on construction is more likely to be experienced next year. Your comment?

Construction outlook mixed

2008-06-12T07:09:00.000-07:00

According to FMI's most-recent Construction Outlook report, economic indicators are somewhat mixed. Housing, credit tightening, consumer spending and inflation continue to hinder the economy. While the general economy begins to stabilize somewhat, nonresidential construction is expected to falter late in 2008 and into 2009.

“The Fed continues cutting rates to stimulate the economy, but inflation is becoming a threat and a pause is likely,” said Heather Jones, construction economist for FMI’s Research Services.

The Construction Outlook also reports that water is an important concern in our nation. Aging infrastructure, population growth and net migration are fueling demand for new and replacement construction especially in the Sunbelt and Rustbelt regions. Water supply and sewage and waste disposal construction will increase by 2 percent and 3 percent in 2008 and by 2 percent and 4 percent in 2009 despite a decrease in state and federal revenues.

Total construction in 2008 and 2009 will be down 4 percent and 1 percent based upon large decreases in residential construction that will not be offset by gains in nonresidential and nonbuilding construction. The decline in 2009 will be driven by a decrease in nonresidential construction for the first time since 2003. Your Comment?

Fatality #10

2008-06-09T15:43:00.000-07:00

According to MSHA, a 52-year-old truck driver with two years experience was fatally injured at a surface crushed-stone mine. The victim backed a truck to the edge of a stockpile to dump. The truck went over a cliff and fell approximately 30 ft. to the floor below. It was the 10th Metal/Nonmetal fatality of the year. Your comment?

Heavy construction update

2008-06-04T17:07:00.000-07:00

According to Reed Construction Data, spending in the heavy construction market is stalled at the September 2007 level, after adjusting for inflation. This is a combination of shortages in many highway trust funds, and a cut back on power facility construction in anticipation of slower expansion of electricity demand during the recession period. Tighter public budgets and the end to more than three years of rising corporate profits also contribute to the stall.

Commercial developers are slowing some ongoing projects and delaying some new project starts until they are more certain that they can lease them for an acceptable rate of return. No significant drop in construction activity is expected because the commercial market is not overbuilt as it was at the onset of recent recessions. A short, shallow recession will not prevent resumed growth later this year.

The institutional building market is stalled at the September 2007 level as the result of very cautious spending budgets adopted by most states for the current fiscal year after three years of booming public spending growth. The budgets are too grim for the recession scenario in the forecast so some relaxation of spending restraints is expected this spring. Your comment?

Production dips again

2008-06-02T17:15:00.000-07:00

U.S. aggregates production has taken another dive. According to the U.S. Geological Survey, an estimated 414 metric tons (Mt) of total aggregates was produced and shipped for consumption in the United States in the first quarter of 2008, a decrease of 16 percent compared with that of the same period of 2007. An estimated 248 million Mt of crushed stone was produced and shipped for consumption in the United States in the first quarter of 2008, a decrease of 14 percent compared with that of the same period of 2007. The estimated U.S. output of construction sand and gravel produced and shipped for consumption in the first quarter of 2008 was 166 Mt, a decrease of 18 percent compared with that of the same period of 2007. Your comment?

Diesel particulate: it matters

2008-05-28T04:29:00.000-07:00

According to reports from the field, the Mine Safety and Health Administration has begun enforcing an exposure limit of 160 micrograms of total carbon (TC) per cubic meter of air (160TC µg/m3) and said it has developed a practical sampling strategy to account for interferences from non-diesel exhaust sources when TC is used as a surrogate for measuring a miner's exposure to diesel particulate matter (DPM). The limit applies to underground metal and nonmetal mines.

The limit has been 350TC. MSHA measures a miner's personal exposure to DPM by analyzing a sample for TC, which is a DPM surrogate obtained by combining elemental carbon (EC) and organic carbon (OC). In its May 2006 DPM final rule, MSHA said it would propose a rule to convert the 160 TC PEL to a comparable EC PEL prior to the effective date of May 20, 2008, if sufficient scientific data were available to support a proposed rule. But MSHA chose not to issue the proposed rule, instead offering a protocol for calculating a location-specific adjustment for situations in which the EC on the miner's personal sample is less than 160 micrograms per cubic meter of air times the error factor for EC, and TC on the miner's personal sample is greater than 160 micrograms per cubic meter of air times the error factor for TC. MSHA said it believes there is still insufficient evidence suggesting an appropriate conversion factor. Read the entire article here. Your comment?

Housing starts up

2008-05-22T03:44:00.000-07:00

Well, at least it's a bit of good news. April 2008 housing-start figures released by the U.S. Census Bureau and Department of Housing were back over the benchmark level of one million units, on a seasonally adjusted annualized basis.

At 1.032 million units, April was the third lowest month in this latest cyclical downturn, according to Reed Construction Data. March, at 954,000 units, and December 2007, at exactly 1.000 million units, were even lower. The first four months of this year have averaged 1.039 million units annualized, which is -28.9 percent versus the first-four-month average of last year, at 1.462 million units.

Housing starts are now down nearly 60 percent from their peak in January 2006 to the present. A strong case can be made, however, that the past five months are likely to be the trough in this cycle for housing starts. All three major new home indicators have moved into alignment. Permits, starts and completions are all right around one million units. The fact that completions have finally fallen to the level of starts is quite positive. Completions-above-starts is one of the factors, along with falling sales, that causes a buildup of unsold inventories.

Employment prospects, which are so influential in terms of establishing consumer confidence, continue to be a sore spot. There were month-to-month job losses in each of this year’s first four months. However, first-quarter Gross Domestic Product (GDP) came in stronger than expected (+0.6 percent) and this may well point to better economic conditions ahead. Your comment?