With memories of 2010 fading quickly, contractors have to wonder what’s on the horizon. The stimulus package was a step in the right direction, but did its impact meet expectations and will the projects it “stimulated” set the tone for 2011? Or will a stalled highway bill and questions about the future of the Highway Trust Fund dictate near-term industry prospects? These are among the questions we posed to industry experts. Here’s what they had to say about 2010 and where the industry is heading in 2011.
Analyzing the ARRA's Impact
Q: What impact did the American Recovery & Reinvestment Act (ARRA) have on highway construction in 2010? Did it meet, exceed or fall short of expectations?
Jeffrey Solsby, Director of Public Affairs, American Road & Transportation Builders Association (ARTBA): Put simply, the ARRA was a lifeline for firms throughout the industry. For some, especially those on the asphalt side, the blow from the recession was softened by the prevalence of asphalt work funded by the ARRA. But that doesn’t compensate for the complete obliteration of the private market, which is a large portion of many contractors’ work. Typically, they do a combination of public and privately supported jobs.
Ken Simonson, Chief Economist, Associated General Contractors of America (AGC): The ARRA kept highway construction from falling into a steep decline. Many contractors were able to avoid layoffs or to hire workers. The Act provided funds quickly to every state and the money was largely spent on high-priority projects. States got a great bargain and were in many cases able to fund more projects than expected because of lower materials costs and fierce bidding by contractors.
However, total highway construction spending in the first eight months of 2010 was 1.5% less than in the same period of 2009, so clearly not all highway contractors came out ahead. There is enough spare capacity in the highway construction industry to support an even higher level of funding.
Jack Basso, Director of Program Finance & Management, American Association of State Highway and Transportation Officials (AASHTO): The ARRA helped stabilize construction employment. Before the stimulus package, construction unemployment was heading toward 28% and now it is closer to 20%. We’re pretty happy, as well, with the amount of resurfacing and repair work and material used as a result of the program.
When this money disappears, so will about 300,000 jobs. The industry will need alternative funding.
Ed Sullivan, Chief Economist, Portland Cement Association (PCA): Ultimately, we are very disappointed in where the funds went. Introduced as an infrastructure bill, in actuality, very little went into infrastructure. Major infrastructure construction takes time to get into the marketplace; hence, most of the money was used to repair existing roads.
Over the next 25 years, there will be a projected 50 million more drivers on the highways. If we don’t invest more in new highway construction, drivers will experience horrendous traffic jams in cities, which ultimately will hinder our country’s economic growth.
Leif Wathne, P.E., Vice President of Highways and Federal Affairs, American Concrete Pavement Association (ACPA): As a starting point, the concrete pavement industry welcomed the ARRA. In terms of the actual program, however, it had mixed results... There were some highway, roadway and airport pavement construction projects started and completed quickly and efficiently. But we simply need to do more to improve the capacity and condition of our nation’s surface transportation infrastructure.
There are three critical issues that are hanging in the balance:
1. Condition and capacity: Both the condition and capacity of highways and roadways in the U.S. are sorely lacking... and well documented. Road builders and agencies have been lagging behind for generations as federal funding has fallen short of the critical needs of our system.