Asphalt Industry News November 2005

Economist predicts double-digit rise in 2006 construction material prices in wake of Hurricane Katrina

At AGC’s Midyear Legislative Conference in Washington, D.C., Ken Simonson, chief economist for the Associated General Contractors of America (AGC) discussed the impact of Hurricane Katrina on construction activity, materials, and labor, and believes construction materials prices will rise at least 10 percent next year, instead of the 6 to 8 percent rise he had expected before the storm.

Drawing on first–hand accounts from AGC’s member companies, Simonson says, “Contractors can expect increased diesel fuel costs to operate off-road equipment. Fuel cost increases will also show up as freight surcharges on the thousands of deliveries to a typical construction jobsite.

“Most of the increased costs in construction materials throughout the country will result from a reduction in oil and natural gas production, and not from higher demand for those materials for the reconstruction projects in the devastated areas,” Simonson continues.

“Lost production and imports due to the storm will result in higher prices and/or supply disruptions for PVC pipe, other construction plastics, tires for large off–road equipment, galvanized steel, gypsum products and cement.

“The New Orleans customs district led the nation with 12 percent of total imports, which accounted for more than three percent of the nation’s cement shipments during the first six months of 2005,” Simonson notes. “Therefore, cement shortages are expected to worsen in some of the 32 states that were already experiencing shortages and spread to new states. Cement prices are likely to rise even more steeply than the 12.7 percent increase that occurred between August 2004 and August 2005.”

AGC sent a letter to the U.S. Department of Commerce urging the Bush administration to provide an immediate suspension of the anti-dumping duty on Mexican cement and allow imports of cement from all countries without duties or quotas in light of the emergency created by Hurricane Katrina.

“In light of the lost supply, it’s imperative that other supply sources be made available as soon as possible,” Simonson says. “Without it, construction projects and manufacture of concrete products in many states will have to halt, potentially laying off thousands of workers. Moreover, vital infrastructure repairs and reconstruction in the hurricane zone could be imperiled. One alternative is to import cement from Mexico by barge to all of the Gulf states and by rail into the Southwest. Such cement could arrive more promptly than cement from most of the current leading sources of imports, such as South Korea, China or Greece. But the current 55 percent anti-dumping duty makes Mexican cement prohibitively expensive.”

Final Rule on Work Zone Safety and Mobility fact sheets available

The Federal Highway Administration (FHWA) has adopted new rules on work zone safety and mobility, which become effective on October 12, 2007. The rule updates and broadens the former regulation at 23 CFR 630 Subpart J to address more of the current issues affecting work zone safety and mobility. The changes to the regulation will encourage broader consideration of the safety and mobility impacts of work zones across project development, and the implementation of strategies that help manage these impacts during project delivery.

FHWA has published a brochure and four fact sheets related to the rule. These materials were developed to support state DOTs, other transportation agencies, consultants and contractors in their efforts to comply with the requirements.

• Implementing the Rule on Work Zone Safety and Mobility (HTML, PDF 1.3MB). This document provides a general overview of the rule, as well as guidance, examples, best practices, tools, and resources to help implement the rule’s provisions.
• Final Rule Language provides the final text of the rule, as well as the various notices of proposed rulemaking.
• Informational Materials provide background information, an overview of the rule, and information on various aspects of the rule.
• Presentations offer links to presentations on the rule given at various meetings and conferences.
• Examples provide information on what some agencies are currently doing to support rule implementation.