Like many contractors stung by the recession bug, Al Luchterhand is scratching around for new ways to apply his firm’s people and skills. “We’re looking to move into infrastructure,” says the co-owner of Las Vegas-based Sun City Landscapes Inc. “It is what it is,” he says. “You’ve got to adjust.” Speaking at a quiet residential development along with Caterpillar Inc. officials in Henderson, Nevada, on Feb. 2, Luchterhand echoed what was heard on the other side of town at the annual World of Concrete show, held on Feb. 3-6. The landscaper mirrors its Peoria, Ill.-based supplier but on a much smaller scale. Last month, Cat slashed more than 22,000 jobs, and on Feb. 6, Chairman Jim Owens was named an economic adviser to President Obama. In contrast, Sun City has cut its payroll to 100 workers, a 79% reduction in force, and liquidated 50% of its fleet, leaving the owners dazed. “When you spend 18 years building a company and you have to dismantle it in a year and a half, it is depressing,” said Sun City co-owner Louis Polish Jr.
On the concrete show’s first day, attendees slowly wandered in, but by the end of the week, 65,287 had pounded the pavement—23% less than last year, according to officials with show owner Hanley Wood Exhibitions. “Obviously, we would have loved to have more attendees, but most of the exhibitors I talked to thought the quality was certainly there,” said show director Tom Cindric. “There aren’t as many tire-kickers,” noted Rob Foster, spokesman for Mt. Prospect, Ill.-based Bosch Power Tools. Despite the drop in turnout, total exhibit space was down only 2%, at 880,000 sq ft.
Hopeful attendees were focused on a potential resurgence in road, bridge and other infrastructure projects that may receive a federal boost. “We are holding our breath to see what the stimulus brings,” said Randy Bach, spokesman for Gomaco Corp., an Ida Grove, Ia.-based concrete-paver supplier.
Skokie, Ill.-based Portland Cement Association used World of Concrete to tout cement’s maintenance advantages, sustainability and cost competitiveness over asphalt. Oil-market volatility has more refiners installing cokers for increased high-end petroleum production, and the improved efficiency leaves less liquid asphalt—long considered a byproduct—thus pushing prices higher. Asphalt paving costs have increased 97% during the past five years and more than 30% during the past 18 months, reports the U.S. Bureau of Labor Statistics.
“If concrete were used 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,” claimed PCA Vice President Mark Justman.
But the stimulus plan is not likely to help as much or as soon as expected, warns PCA Chief Economist Edward Sullivan. While highway officials report that 5,280 “shovel-ready” projects could create 1.8 million jobs, some of the work is in pavement patching and resurfacing, said Sullivan, who noted that greater project complexity yields greater employment growth. Bridges, for instance, have a seven-to-one job growth for every dollar spent.
“Shovel-ready projects aren’t going to occur in 90 days or even 120 days. We won’t see any job creation from those projects until the fourth quarter, at soonest,” Sullivan said. “Obama’s plan isn’t going to do it. It does help the economy, but it’s not enough.”
Reviews were mixed on the show floor. James Hughes, executive vice president of Little Ferry, N.J.-based exhibitor Doka USA, said “the jury’s still out” on the stimulus issue. “Everyone’s hoping.” But in one of the outdoor booths, Ahern Rentals President Don Ahern said the company is not pinning its hopes on stimulus. Despite a global credit crisis, the Las Vegas-based manufacturer of Xtreme telehandlers is plowing ahead with expansion plans in 2009. “The stimulus package is a joke. I have zero faith in our government,” said Ahern. “We are going to have to stimulate ourselves. Every businessman will have to get it done.”
Many vendors exhibited fiscal belt-tightening this year. New Holland and Kobelco backed out of the show at the last minute. Volvo Construction Equipment turned out but sent more pre-show invitations than usual to attract customers. Mexico-based Cemex, a show regular, opted months ago not to shell out the $30-per-sq-ft charge. A few others stayed at home, but otherwise, “Our core group of exhibitors were there,” Cindric said.
Competition still abounded. Officials with concrete-pump maker Schwing America Inc., usually this show’s largest exhibitor, said this time it shaved 14% off its stand, to 12,000 sq ft. That decision had it playing second fiddle to China-based Sany Heavy Industry Co., whose red pumps occupied a larger space nearby. Not to be upstaged, Schwing offered incentives, such as fuel cards worth $5,000 to $50,000, and displayed equipment it claimed was up to 62% more fuel efficient and “greener” than the competition.
As they made their way deeper into the convention center, attendees gawked at Putzmeister America’s display, which showcased the “Juggernaut.” Sitting on a 10-axle Kenworth tractor-trailer, it carries the world’s longest concrete-pump boom, at 70 meters, and lists for an average of $1.7 million, according to the Sturtevant, Wis.-based firm. One unit shipped last year; the floor model was on its way.
Even though green building was an attraction, for some it was a deterrent. International Truck and Engine Corp. Senior Vice President Jim Hebe called for more time to implement federally mandated cuts of nitrogen oxides in 2010 diesels. Though many suppliers plan on using selective catalytic reduction, including a urea solution that will be injected into the tailpipe, International plans to use credits from earlier engines that exceeded federal standards to “buy down” emissions in its initial run of 2010 engines. “We believe SCR will be more hassle than it will be worth,” said Hebe. “This just isn’t the right thing for this industry at this time.” Competitors countered that SCR will bring a 3% improvement in fuel economy. “What we really need to remind people is that we have been doing this in Europe since 2002,” a Cummins spokesman said.