Transportation industry executives and lobbyists clearly are frustrated at not being able to gain Washington’s attention to enact long-term funding legislation they claim is critical to improving the sector’s dire outlook, as reflected in new market statistics released on Nov. 13.
The results were released by the Transportation Construction Coalition, a group of 28 contractor and supplier associations and unions in the transportation construction sector. They show that even with this year’s $27-billion federal stimulus infusion for transportation, 63% of 527 sector-company respondents say they have laid off permanent staff this year, 44% expect additional downsizing in 2010, less than 18% plan to buy new equipment or vehicles, and 76% expect less work to bid on next year from state highway departments .
“The industry is not getting any oxygen now,” says Ron DeFeo, chairman and CEO of equipment maker Terex Corp., Westport, Conn. “We received a bit of a tickle with the stimulus, but it’s time for some pretty serious action.”
Funding from the American Recovery and Reinvestment Act (ARRA) and from the Army Corps of Engineers for projects helped “keep the bottom from dropping out,” says Alison Premo Black, economist and vice president of policy for the American Road and Transportation Builders Association. But the coalition noted the preference to contract shovel-ready work first has delayed larger and more long-term projects. “Contractors are treading water and not hiring, and many firms are chewing up their backlog,” says Black.
Dean Word, president of Dean Word Construction, a New Braunfels, Texas, contractor, says he sees bid prices down from 30% to 50% or “brutally low.”
According to Word, nearly two-thirds of his firm’s equipment fleet “is parked in our home yard with nothing to do.” He says only his firm’s business outside the U.S. promises some revenue stability for the contractor in 2010. “We’re trying to hold onto core skills and weather this storm,” he says. “But we’ve got core long-term employees with less and less to do.”
Tonnage production of aggregates dropped 27% in the first half of 2009, says Joy Wilson, CEO of the National Stone, Sand and Gravel Association, “with some operations closed down or having significant reductions in labor.” But she says the group’s members “still have capacity to meet needs.”
In an attempt to refocus distracted congressional and Obama Administration officials on the need for a six-year transportation spending bill, coalition members say they will launch a media blitz “to drive home” the link between long-term investment and job-market recovery. “An 18-month extension is unacceptable to industry,” says DeFeo. “It’s not the message we want heard. The highway bill is the only way to plan for the America of 2050, not 1950.”
While the officials defend the need for unpopular fuel-tax increases, “We support a variety of funding approaches,” says Ken Simonson, chief economist of the Associated General Contractors.