Positive outlook for 2005

While reauthorization of the Transportation Equity Act for the 21st Century (TEA-21) is still up in the air and the best forecast you can get out of most economists is one that's "cautiously" optimistic (It's like a meteorologist's partly cloudy or partly sunny forecast. You may or may not want to make plans for outdoor activities.), let's take a positive outlook on the industry's business prospects for 2005.

First, TEA-21, the law that funds highway and transit programs, has been extended through May 31, and according to the American Road and Transportation Builders Association (ARTBA), it "should give state and local DOTs more predictability and firmer footing for highway design and letting programs in 2005." Many states have postponed, reduced or eliminated projects because of the uncertainty of how much federal funding will be available when a new law is finally passed.

But what should be encouraging for asphalt and other highway contractors is that voters, who turned out for the November 2nd election, supported increasing their tax burden to fund transportation improvements. According to ARTBA, "Americans in 21 states voted on at least 55 transportation funding-related ballot initiatives (46 asked voters to initiate, extend or increase taxes to fund transportation improvements; and 36 of the bond and tax measures were approved); and large majorities in two states — Missouri (79 percent) and California (84 percent) — told the state government to stop using highway user revenue to fund non-transportation programs or services." The bottom line — taxpayers are willing to continue investing in a quality transportation infrastructure.

Also, ARTBA's economist is forecasting a 4.5 percent growth in the U.S. highway construction market for 2005, but that projected growth should be viewed with "cautious" optimism, since much of it may be absorbed by rising construction costs attributed to dramatic increases in steel, cement and petroleum prices. But it still boasts a positive indication of construction activity for the year.

And, finally, the Association of Equipment Manufacturers predicts a 10.4 percent increase in U.S. sales of bituminous machinery (asphalt plants, rollers, asphalt pavers, cold planers, soil stabilizers and road wideners) in 2005, coming off a 15 percent gain in U.S. sales during 2004 — more good news for the industry.

So as you take all of these indicators into consideration and analyze the economic mood of your particular market, keep in mind that it's not enough to have a sharp pencil in winning the bids that are let in 2005. You also need to continue developing strong partnerships with the government agencies and private customers you want to serve. If you're committed to providing your customers with the right solution for their pavement needs, a solution that maximizes their investment dollars, your value will go beyond that of low bidder.

And I'm going out on a limb by forecasting a sunny highway construction market. Have a great 2005!

Greg Udelhofen
Editor

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