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Two-Thirds of the Economic Benefits and Jobs Created By Road & Transit Investment Occur in Non-Construction Sectors, New Study Finds

Two-thirds of the economic benefits and jobs created by federal highway and transit investment occur in non-construction sectors, according to a new analysis from IHS Inc. (NYSE: IHS), a leading global source of critical information and insight. The study also finds that every dollar invested through the federal Highway Trust Fund (HTF) in state highway, bridge and public transit infrastructure programs returns 74 cents in tax revenue.

The report, “Transportation Infrastructure Investment: Macroeconomic and Industry Contribution of Federal Highway and Mass Transit Program,” reveals that 70 percent of the economic benefits, or value- added, of federal HTF investments in transportation improvements occur in non-construction sectors of the economy. Among the sectors that benefit the most are service industries such as business, education, health and leisure, and hospitality.

The study also finds that 62 percent of the jobs created from federal highway and mass transit investments are outside the construction industry. Over one-third of all jobs created are also in service industries like business, education, health and leisure, and hospitality.

“The study shows that investment in transportation infrastructure has a positive impact on every major sector of the U.S. economy. These far reaching economic benefits contribute to economic growth by improving the nation’s capital stock, which enables increased economic activity,” said Karen Campbell, a senior consultant at IHS, who produced the report with Bob Brodesky, a transportation expert and senior manager in the IHS Industry Consulting Group.

Current federal highway and public transit investment, which is about $50 billion annually, generates an average $31 billion in personal income tax receipts per year and $6 billion in federal corporate tax receipts per year due to increased economic activity, according to the analysis. This amounts to 74 cents returned on every dollar invested 

IHS notes that current levels of federal investment on highway and public transit spending contribute nearly one percent to the U.S Gross Domestic Product (GDP), the measure of goods and services produced by the economy. Among the other economic benefits:

  • Every $1 in federal highway and mass transit investment increases the nation’s GDP between $1.80-$2.00
  • Current federal transportation spending contributes on average $410 to real income per household each year

IHS also studied the resulting impacts from five percent annual increases in federal highway and transit investment from 2014-2019, and found the added investment would create:

  • Between 78,000 and 122,000 new jobs by 2019 (includes direct, indirect, and induced jobs);
  • An annual average increase of $40 in real household income each year;
  • An additional $9.6 billion in real GDP for the U.S. economy by 2019; and
  • On average an additional $4.9 billion per year in federal, state and local government

“Federal transportation spending expands the capital stock of the U.S. economy, drives the production and delivery of goods and services, and positively affects business and household incomes,” the study’s authors write. “It also enhances the transportation system’s operational capacity by reducing travel times and costs. This results in greater accessibility for individuals, households and businesses, more efficient delivery of goods and services, improved lifestyles, and standards of living, and safer roadways.”

The members of the Transportation Construction Coalition (TCC), which commissioned the study, said they would send it to all congressional offices to help them better understand the urgency for a permanent solution for the Highway Trust Fund well before May 2015, when funding for the highway and transit program will once again be in jeopardy for the sixth time since 2008. The TCC is issuing this report ahead of the upcoming congressional recess, when many coalition members will be meeting with their elected officials at home. 

Select Comments & Reactions to the Dec. 10 IHS Study:

Transportation Infrastructure Investment: Macroeconomic and Industry Contribution of Federal Highway and Mass Transit Projects

“The TCC study is a wake-up call to lawmakers who have had their heads in the sand on this issue for far too long. The evidence is clear; the condition of our roads, bridges and transit systems significantly impacts every sector of our economy. We call on Congress to summon the political courage necessary to strengthen the Highway Trust Fund in a way that delivers long-term certainty to transportation planning and opens on ramps to job creation in this country.

Tens of thousands of Operating Engineers depend on these investments for their livelihoods. It is time for Congress to do its work, so that we can do our work building America’s transportation system.”

James T. Callahan, general president, International Union of Operating Engineers

“Our nation’s surface transportation network is in distress, and this study confirms that fact. Chronic underinvestment plagues every mode of transportation and is having a detrimental impact on our ability to compete globally. Congress must get to work and enact a robustly-funded, long-term surface transportation bill – and base the funding on a user-fee principle indexed for inflation. This may be the best way to resolve once and for all the devastating economic impacts that inadequate funding has had on our economy, jobs and the safety of our roads and bridges.”

Thomas J. Gibson, president & CEO, American Iron and Steel Institute

“This report echoes what civil engineers have been warning for years: if we fail to make the investment in our aging transportation infrastructure, our economy will suffer. Our transportation system is the backbone of the economy, and it drives growth in sectors beyond construction. Roads and transit received D grades and bridges received a C+ in the 2013 Report Card for America’s Infrastructure. The low grades are holding our economy back. This report should serve as further incentive for our Congressional leaders to fix the Trust Fund.”

Robert D. Stevens, P.E., Ph.D., president, American Society of Civil Engineers

“The new study echoes what Congress, stakeholders and the American people already know—surface transportation investment drives economic growth and job creation. The time is long overdue for policymakers to put aside partisan differences and provide the resources to rebuild our crumbling infrastructure. Congress must use the TCC study, as well as the countless other reports detailing highway and transit infrastructure investment’s broad economic impact, to build support for immediate and decisive action to invest in surface transportation projects.”

Brian P. McGuire, president & CEO, Associated Equipment Distributors

“A strong transportation network benefits every sector of our economy, and is essential to the prosperity of businesses and households. NECA urges members of Congress to heed the findings of this report, and to make a sound investment in our nation by enacting a robust, long-term transportation bill.”

John Grau, chief executive officer, National Electrical Contractors Association

“This report demonstrates how the benefits from investments in transportation infrastructure extend well beyond the equipment manufacturing sector. For many Americans, this is a pocketbook issue; today’s report shows that federal highway and transit investment supports hundreds of thousands of jobs and contributes $410 per year on average to every household’s real income. That’s why AEM is so proud to join with the TCC coalition to support continued, sustainable investment in our highway and transit infrastructure to help create shared opportunity.”

Dennis Slater, president, Association of Equipment Manufacturers 

“The importance of a long-term, robust and dedicated funding stream not only will keep our economy growing, but will provide the needed transportation infrastructure for businesses to be competitive and for American citizens the quality of roads and bridges they deserve. The Concrete Reinforcing Steel Institute firmly believes in the federal government’s role in planning and delivering transportation services and projects for a 21st transportation system. CRSI supports the passage of a comprehensive, visionary, multi-year reauthorization of surface transportation programs to improve our bridges and pavements, increase mobility and reliability, safety and sustainability.

Bob Risser, president & CEO, Concrete Reinforcing Steel Institute

“While there is strong bipartisan support for the crucial infrastructure upgrades, stopgap measures are not a cost- effective way to improve our most valuable national assets – our roads, highways and bridges. Our nation’s surface transportation infrastructure underpins the economy is essential to growth and prosperity. Congress must come up with a long-term funding solution as states and localities are hesitant to start new projects or finish existing ones out of fear that the federal government won’t meet its funding obligations.”

Mike Johnson, president & CEO, National Stone, Sand and Gravel Association

“What this report makes clear is that our entire economy benefits from federal investments in highway and transit projects. But that economic activity and those jobs are at risk if Congress and the Obama administration can’t figure out a way to pay to get our roads, bridges and transit systems back up to a state of good repair and to meet future travel and shipping needs.”

Stephen E. Sandherr, chief executive officer, Associated General Contractors of America & co-chair of the Transportation Construction Coalition

“What makes this study different is that it focuses on the outcomes of federal-level highway and transit investment and measures its significant impact on every sector of the U.S. economy. This is one policy area where Congress’ involvement could actually yield meaningful and long-lasting economic results for hundreds of industries and millions of households. Our message for the new Congress is simple: Find a permanent solution for the Highway Trust Fund early next year so that state governments have the resources they need to make strategic and economically-beneficial transportation investments.”

Pete Ruane, president & CEO, American Road & Transportation Builders Association & co-chair of the Transportation Construction Coalition

“Good infrastructure is exceedingly important to manufacturers and as the condition of infrastructure has deteriorated over time and spending levels have dipped – awareness has increased among manufacturers and concern over the quality and condition of infrastructure is mounting. Infrastructure is deteriorating due to age and we are not keeping up with the demands placed on the system. Status quo funding levels will not even begin to tackle the problems and address backlogs. The TCC study offers yet another well-researched body of evidence that current approaches are not enough to grow our economy at home and go head-to-head with our competitors abroad.”

Chad Moutray, chief economist, National Association of Manufacturers

 For a copy of the IHS report, Transportation Infrastructure Investment: Macroeconomic and Industry Contribution of Federal Highway and Mass Transit Program, go to www.transportationconstructioncoalition.org.

EXECUTIVE SUMMARY

Federal transportation spending expands the capital stock of the US economy, drives the production and delivery of goods and services, and positively affects business and household incomes. It also enhances the transportation system’s operational capacity by reducing travel times and costs. This results in greater accessibility for individuals, households and businesses, more efficient delivery of goods and services, improved life styles and standards of living, and safer roadways.

IHS used two models to evaluate the macro and micro economic effects of Highway Trust Fund spending. Both showed the availability of funds delivered to state and local governments have far-reaching indirect effects – for every $1 of federal transportation investment returns between $1.80 – $2.00 of additional real goods and services produced in the economy.

Macroeconomic results revealed that current levels of federal spending on highway and mass transit contributes nearly 1% to the US production of goods and services. The current level of funding contributes on average 614,000 jobs per year over the 2014-2019 time period and adds an average of $410 to each US household’s real income each year. A 5% increase in annual spending through 2019 would result in an average of 59,400 additional jobs per year and an annual average increase of $40 in real household income. Federal spending also produces indirect benefits and induces growth in key economic sectors. The sector that experiences the largest benefit, in terms of jobs created, is the Business and Professional Services sector. The Trade, Transportation and Utilities sector, which includes wholesale and retail companies, is a close second.

In summary, over the 2014 to 2019 time frame:

 Infrastructure spending has an amplified impact on the economy. It leads to overall productivity enhancements and creates jobs.

 Every $1 in federal highway and mass transit investment returns between $1.80 – $2.00 in goods and services produced.

 Current federal transportation spending contributes on average $410 to real income per households each year (which is comparable to a month’s worth of groceries).1

 Current federal transportation spending supports an average of 614,000 employees each year in all sectors of the economy. It catalyzes dynamic effects of greater productivity, more efficient delivery of goods and services, and higher wages and salaries.

 For every 3 construction job created, 5 jobs are created in other sectors of the economy.

 Current federal transportation spending generates $31 billion in federal personal tax receipts per year and $6 billion in federal corporate tax receipts per year on average. Current federal spending also generates higher revenue for state and local budgets, which are, on average, $21.7 billion higher each year than they would be without the Federal Highway Program.

 Five percent annual increases in federal spending would create:

o Between 78,000 and 122,000 new jobs by 2019 (includes direct, indirect, and induced jobs).

o An additional $40 in real household income each year.

o An additional $9.6 billion in real value to the US economy by 2019.

o On average an additional $4.9 billion per year in federal, state and local government revenue, which covers more than 50% of the annual spending needed to cover the backlog in highway and bridge capital expenditures.2

Clearly, transportation infrastructure investment is critical to the economic wellbeing of the US.

For a copy of the IHS report, Transportation Infrastructure Investment: Macroeconomic and Industry Contribution of Federal Highway and Mass Transit Program, go to www.transportationconstructioncoalition.org

AEM President Slater on 2014 Elections

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Dennis Slater, AEM President

Dennis Slater, AEM President

Dennis Slater, president of the Association of Equipment Manufacturers (AEM), made the following statement following statement following the results of the 2014 midterm elections:

Yesterday evening, voters across America made it clear that they think Washington is broken, and they expect our elected leaders to come together to fix it.

Americans have grown tired of the gridlock and partisan bickering that has plagued Capitol Hill in recent years. With tonight’s election, they have sent a clear signal that they want action on the problems facing this nation. It is far past time for our lawmakers to put aside partisan differences and work together toward crafting constructive solutions. The new leadership in the U.S. Senate must now demonstrate they can move America forward.

That means no more threats of government shutdowns or risking defaulting on our national debt, and an end to pointless show votes that serve no purpose but to energize each party’s ideological core at the expense of productive legislating.

Equipment manufacturers and the broader business community share voters’ frustration. The good news is that there is ample opportunity for President Obama and Congress to work together on commonsense solutions. Those efforts should begin without delay; there’s no excuse for Congress to waste the next two months by failing to deal with issues that demand their attention now.

An immediate order of business for Congress should be responsibly fixing the Highway Trust Fund by restoring the gas tax to its 1993 buying power while oil prices are at recent record lows. Congress can continue to boost access to affordable energy by approving construction of the Keystone XL Pipeline.

They can rally around commonsense legislation to reauthorize the Export-Import Bank for the long term and give American manufacturers the tools they need to compete in the global marketplace and support jobs in the United States. Lawmakers should give President Obama improved authority to negotiate trade deals and move toward swiftly approving pending trade deals with our European and Asian partners.

And there is both ample room and great need for Congress to find a bipartisan solution to fixing a tax system that has become so complex and burdensome that it is now a barrier to job creation.

The 114th Congress faces a choice: They can repair their broken bond with voters, or they can continue down their current path and risk turning their relationship with voters into something more toxic.

On behalf of the equipment manufacturing industry, I sincerely hope that President Obama, Speaker Boehner and our Senate leaders opt for progress over provocation.

AEM / AEMP Draft Telematics API Standard now availabl

AEM LogoAEMPISO global acceptance sought for industry-wide data sharing standard

The AEM / AEMP Draft Telematics API (Application Programming Interface) Standard is now available to end-users, including contractors, fleet managers, rental managers and dealers/distributors, as well as OEMs, systems management firms and other interested construction/industrial and related industry professionals.

This new industry-wide draft standard provides end-users with more OEM equipment data and more convenient access, which allows them to better manage and analyze information across their fleets, and helps them save time and money on the job site or within their operations.

The standard is a collaborative effort of the Association of Equipment Management Professionals (AEMP) and the Association of Equipment Manufacturers (AEM), working on behalf of their members and the industry.

To achieve a globally recognized standard for conformity worldwide, the AEM/AEMP Draft Telematics API Standard will be submitted for acceptance by the International Organization for Standardization (ISO).

“The release of this Draft API Standard is a significant achievement and will be of great benefit to all heavy equipment fleet management professionals as the association continues its efforts to encourage integration to telematics into today’s modern fleets. It clearly demonstrates AEMP’s Equipment Triangle approach to solving industry issues. AEMP is pleased have played a key role in advancing this critical industry initiative,” said Thad Pirtle, VP of Equipment for Traylor Bros, Inc and Chairman of the Board of AEMP.

Expanded equipment data, one program to manage mixed fleets

The AEM/AEMP Draft Telematics API Standard expands the original AEMP Telematics Standard to include 19 data fields (with fault code capability).

The Draft API standard also changes how the data is accessed: via an Application Programming Interface (API) with standardized server-to-server communication protocols, so end users with mixed equipment fleets can use their own business systems and software without the need to work across multiple telematics provider applications.

The API standard’s secure Internet protocol allows for manufacturer protection of proprietary information; disclosure to third-party companies for the purpose of aggregation is not permitted.

Must sign up online to receive Draft API standard

While access to the AEM/AEMP Draft Telematics API Standard is free, industry professionals must sign up directly via the or AEMP or AEM websites to be sent the Draft API Standard and to receive any future updates or additional documentation. Anyone who has previously signed up should receive the draft standard during the first week in September.

AEMP and AEM also encourage participation in the API developer group to ask questions and receive any clarification that is needed. Request access here: https://groups.google.com/d/forum/telematics-standard.
The associations caution that while they are making the draft standard available now to help companies become familiar with its contents for business planning purposes, the document is still a work in progress. Final language is dependent upon completion of the ISO acceptance process.

More information is available on the AEM and AEMP websites – http://www.aem.org/SRT/Technical/Telematics/ or http://www.aemp.org/aemaemp-telematics-standard/.

 

AEM Reports: Midyear 2014 U.S. construction machinery exports decline 17.3 percent

AEM LogoU.S. construction machinery exports dropped 17.3 percent during the first half of 2014 compared with midyear 2013: $8.93 billion in exports were shipped to global markets compared to $10.8 billion for first-half 2013, according to the Association of Equipment Manufacturers (AEM), citing U.S. Department of Commerce data.

The AEM off-road equipment manufacturing trade group produces global trends reports using U.S. Commerce Dept. information to assist members’ business planning.

Africa was the only world area in the plus column, with a 4.3 percent increase. Australia /Oceania recorded the steepest decline, at 38.6 percent, followed by South America with a 33.1-percent drop.

At midyear 2014, exports of construction machinery to Europe declined 25.4 percent compared to first-half 2013, for a total $1.02 billion, and exports to Canada dropped 4.6 percent to total $3.51 billion.

Exports to Asia declined 13.9 percent to $1.04 billion for the first half of 2014. Mid-year exports to Central America decreased 23.7 percent to $949.3 million, and exports to South America declined 33.1 percent to $1.28 billion.

Australia/Oceania’s construction equipment export purchases decreased 38.6 percent for a total $460.7 million, while Africa took delivery of $682.1 million worth of construction equipment, a gain of 4.3 percent.

The top countries buying the most U.S.-made construction machinery during the first half of 2014 were: (1) Canada – $3.51 billion, down 4.6 percent; (2) Mexico – $770.4 million, down 24.6 percent; (3) Australia – $424.7 million, down 40.6 percent; (4) South Africa – $400.5 million, down 26.7 percent; (5) Brazil – $358.3 million, down 30.1 percent; (6) Chile – $299.8 million, down 37 percent; (7) Peru – $279.4 million, down 15.1 percent; (8) Belgium – $210.4 million, down 36.3 percent; (9) Saudi Arabia – $206.2 million, down 43.1 percent; (10) China – $189.8 million, down 21.8 percent; (11) Russia – $172.1 million, down 36 percent.

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ASCE Reports on Gas Tax Increase, Highway Trust Fund Shortfall, Important Bill Stall

Our transportation infrastructure has become a major issue as current funding faces a serious shortfall. More than halfway through the year and most road repairs are still waiting to be started let alone completed. If the country faces another winter like the one that just passed, we’ll need tanks or half-tracks to navigate the pot-hole dominated transportation infrastructure. The American Society of Civil Engineers (ASCE) as well as other associations, such as American Road & Transportation Builders Association (ARTBA) and Association of Equipment Manufacturers (AEM), are growing more concerned as Congress continues to battle over possible solutions to this problem.

Over the years a number of solutions have been proposed and all have been rejected because party politics are more important than user needs. ASCE has posted a number of statements on this situartion.

{08d819bc-1d22-4dd2-80f4-4bea43d54eb4}_ASCE_GovernmentRelations_WashingtonBipartisan Senate Duo Calls for Gas Tax Increase

U.S. Senators Chris Murphy (D-CT) and Bob Corker (R-TN) released a plan on Wednesday to raise the federal fuels tax and index it to inflation. Their proposal would increase the gasoline and diesel fuel tax (currently at 18.4 cents and 24.4 cents per-gallon, respectively) by 6 cents per gallon in each of the next two years, for a total rise of 12 cents, and index that tax to inflation using the Consumer Price Index (CPI). The plan would also include a tax relief offset to minimize the fiscal strain placed on consumers and businesses from any future rate hike. ASCE Executive Director Patrick Natale, P.E., applauded the announcement, calling it, “an encouraging step to improve our economy and raise the grades on the nation’s surface transportation infrastructure.” It is estimated that the proposal would raise enough revenue to fund federal surface transportation programs at current levels, and provide for a very slight increase in the out years because of indexing.

Late last year, ASCE supported legislation introduced by Congressman Earl Blumenauer (D-OR), H.R. 3636, the “UPDATE Act of 2013,” which would increase the fuels tax by 15 cents per gallon over the course of three years and also index it for inflation. This Congress marks the first time, in a long time, that both the House and Senate have openly discussed, and had members endorse, increases in the federal gas tax. Prospects of this Congress actually enacting such a measure remain unclear, though the best chance may be in the interim legislative period known as the “lame duck” session which begins after the November election and could stretch until the end of December. ASCE will continue to urge Congress to enact legislation that provides a significant, long-term sustainable funding source for surface transportation programs and projects.

New Report Looks for Solutions to the Highway Trust Fund Shortfall

On Wednesday, joining a chorus of advocates looking to move on the Highway Trust Fund, the Committee for a Responsible Federal Budget (CRFB) released a new report looking for solutions.

In the paper, CRFB calls for a long-term solution, which brings highway spending and revenue in line. Short of that, they also suggest that transferring money into the Trust Fund from general revenue would be acceptable if and only if that transfer is fully paid for with other spending cuts or revenue increases. The paper includes a huge number of potential options to help close the Highway Trust Fund shortfall that help add to the policy debate on Capitol Hill.

Read the report

Senate Debate on Combined Transportation, Science Appropriations Bill Stalls

On Thursday, the U.S. Senate pulled three fiscal year (FY) appropriations bills – Commerce, Justice and Science; Transportation, Housing and Urban Development; and Agriculture – from the floor because there was not agreement on how to proceed with votes over amendments. The Senate had originally planned to debate the bills into next week with hope of speedy passage. The U.S. House of Representatives has already held votes on Commerce, Justice and Science, and Transportation, but has not yet passed Agriculture.

On Transportation, the House approved legislation to fund the U.S. Department of Transportation (USDOT) at a slightly lower amount than is contained in the Senate bill. Both the House and Senate provide $40.3 billion for highways, and the House provides $600 million less for transit, $450 million less for TIGER grants, $130 million less for the Federal Aviation Administration (FAA) and $200 million less for Amtrak.

The Commerce, Justice and Science section provides a total of $51.2 billion in proposed discretionary budget authority for programs at the Departments of Commerce and Justice, the National Science Foundation (NSF) and the National Aeronautics and Space Administration (NASA). This is a decrease of $398 million below the fiscal year 2014 level and is funded at the same amount as the bill that cleared the House, although the two chambers’ versions differ in details. Specifically, the Senate bill provides:

• $7.2 billion for NSF, an increase of $83 million over fiscal year 2014. The House version provides $7.4 billion.
• $900 million for NIST, $50 million above the fiscal year 2014 enacted level. The House version contains $856 million for NIST.
• $17.9 for NASA, $254 million above the fiscal year 2014 enacted level. The House version also funds NASA $17.9 billion.

Should the Senate quickly resume debate and adopt these appropriations bills and should the House approve Agriculture, there exists sufficient time before the August recess for both chambers to remedy any differences and enact legislation on-time before the start of the new fiscal year on October 1. However, if recent history is any indicator, it is more likely that an appropriations patch, or “continuing resolution”, of some short-term length will be required this fall.

ASCE has been urging Congress to agree on a fix for the Highway Trust Fund which is facing insolvency in the next couple of months. Appropriations bills and current enacted funding levels will be inadequate to prevent a funding crisis if there is not enough money in the trust fund to provide project reimbursements. That is why ASCE is urging the public to act now and tell their Members of Congress to “Fix the Trust Fund“.