A recent forecast from the American Road & Transportation Builders Association (ARTBA) anticipates a 6% decline in highway and bridge construction by the end of this year and expects that to remain flat through 2012. ARTBA also foresees a decline of 14% in the value of pavement placed in 2011 with little expectation that will rebound before 2015.
Uh-oh.
That type of work is done by the Big Guys -- the companies that own and operate hot mix asphalt plants and quarries and who make their money by volume of asphalt placed (and job bonuses). They have large operations and large overhead they need to cover -- so what do they do when their bread-and-butter work starts to dwindle? They look to the commercial and industrial sector and start paving the parking lots and cul-de-sacs (and maybe even driveways) they would prefer not to deal with.They also start venturing into pavement maintenance -- if only to keep cash flowing.
Not that there's a lot of commercial/industrial/residential paving work out there, but if ARTBA's correct, commercial and industrial paving contractors can expect increased competition from these Big Pavers -- the people you typically buy your hot mix from -- next year.
There is a glimmer of hope, though. Congress has yet to reauthorize the stagnant highway funding bill and if they can get around to doing that, fund it at reasonable levels and extend it for the long term many state projects will continue or start up -- and that would be great news for the paving (and pavement maintenance) contractors.
ARTBA 2012 Outlook: Paving Market to Hit Bottom in 2012
