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Summer Has Ended … and so will the most recent (34th) extension of the highway bill

Summer Has Ended

Visitor & guest editorial staffer.

Visitor & guest editorial staffer.

By Greg Sitek

… and so will the most recent (34th) extension of the highway bill

In a Recent American Society of Civil Engineers (ASCE) newsletter the civil engineering group noted:

Summer comes to an end next week as Congress returns to the Capitol after a five-week recess. Deadlines will be the theme this fall, with the first being the Oct. 1 funding deadline to keep the government open. The second important deadline for ASCE is Oct. 29, when MAP-21, the surface transportation bill, expires. With a D+ cumulative GPA, the topic of America’s infrastructure should be at the top of their to-do lists. Congress has several opportunities to address some of the nation’s infrastructure needs in the coming weeks. Here’s what to watch:

  1. Transportation

Before the U.S. Senate adjourned for August recess, they passed the DRIVE Act, a six-year surface transportation bill.  The DRIVE Act would end the current cycle of short-term program extensions and increase federal funding for surface transportation programs.  The U.S. House of Representatives has until a new deadline of October 29 to act to pass their own multi-year bill before the current law expires. ASCE has been focused on communicating with House members on the need to act quickly and pass a long-term bill. You can help by contacting your House members and urging them to #FixTheTrustFund.

  1. Appropriations for Federal Infrastructure Programs

So far this year, the House has only passed six of 12 annual appropriations bills and the Senate has not yet passed a single one. There is an Oct. 1 deadline to complete this year’s appropriation. Among the major dilemmas holding up the appropriations process are disagreements over the overall funding amounts for the federal government, policy riders that bog down spending bills and fundamental differences on what level to fund federal environmental, healthcare and military programs.

While it’s difficult enough for Congress to fund popular established bipartisan programs like the Drinking Water and Clean Water State Revolving funds (which are facing 23% cuts), newer programs, like the Levee Safety Initiative, have not received any funding since the Water Resources Reform & Development Act (WRRDA) passed. If these programs do not receive appropriations, then the progress made by creating them becomes stagnant and no real progress is made in addressing the infrastructure the legislation aimed to improve.

And the ARTBA newsletter had the following to say:

On Sept. 17, 1787, delegates to the Constitutional Convention in Philadelphia signed the document they had created. The American Road & Transportation Builders Association (ARTBA) is using the 228th anniversary of the U.S. Constitution signing to remind Congress that Article One, Section Eight, makes support for transportation infrastructure investment a core federal government responsibility. It’s time, ARTBA says, for Congress to fix the Highway Trust Fund.

“It only took the Founding Fathers 209 days—from a call for action on Feb. 21 to the signing ceremony on Sept. 17—to draft, debate and endorse the U.S. Constitution, one of mankind’s greatest documents,” ARTBA President & CEO Pete Ruane says. “In contrast, why have our elected leaders taken over 2,000 days since 2008 trying to figure out how to permanently address the Highway Trust Fund revenue problem?”

Ruane says members of Congress should heed and respond to the words of U.S. Constitution signatories Alexander Hamilton, James Madison, Benjamin Franklin and George Washington and make expanding transportation infrastructure investment a federal priority to support economic growth and improve the nation’s competitiveness.


Hamilton 66dcce51-dd63-45b4-a5db-96ea411c41f4Hamilton said: “The improvement of the roads would be a measure universally popular. None can be more so. For this purpose a regular plan should be adopted, coextensive with the Union, to be successfully executed, and a fund should be appropriated sufficient… To provide roads and bridges is within the direct purview of the Constitution.”



Madioson f26c5ec4-7ea9-4737-8ac8-5706d29e464cMadison noted: “Among the means of advancing the public interest, the occasion is a proper one for recalling the attention of Congress to the great importance of establishing throughout the country the roads and canals which can best be executed under the national authority. No objects within the circle of political economy so richly repay the expense bestowed on them.”



Franklin 8cd18e8a-bb5b-4723-b5f9-76bbb64a543aFranklin challenged legislators: “And have we not all these taxes too… and our provincial or public taxes besides? And over and above, have we not new roads to make, new bridges to build… and a number of things to do that your fathers have done for you, and which you inherit from them, but which we are obliged to pay for out of our present labor?”



Washington b5580c6c-4743-465b-835d-51db410776e1And George Washington, who presided over the Constitutional Convention, said: “The credit, the saving, and the convenience of this country all require that our great roads leading from one public place to another should be straightened and established by law… To me, these things seem indispensably necessary.”

With election-mania already in motion, gathering momentum with every news cast, what do you think the prospects of a worthwhile highway bill are?


This article appears in the October 2015 issues of the ACP magazines

ACP September Editorial: Highway Bill – No Highway Bill

Visitor & guest editorial staffer.

Visitor & guest editorial staffer.

By Greg Sitek

Note: This editorial appeared in the September 2015 issues of the ACP publications.

… We’ve been managing to keep our highways functional legislatively the same way we do in real life, i.e. scratch and patch. Fill the potholes, mill and resurface with a 2-inch overlay; they’ll last for a year or two, maybe even more.

I’ve been a strong supporter of the Highway Bill for 40 +/- years thinking it was the best solution. And it was 40+ years ago. Today I’m not so sure…

On May 5, 2015, Michigan citizens throughout the State sent a very compelling message to the Governor and to the State Legislature. Regarding Proposal One, a $1 .8 billion per year tax increase to fix our roads, the citizens, by a margin of 80% to 20%, said no thank you. Michigan has 83 counties, and every one of them said no.

Jack Brandenburg State Senator 8th District commented in a recent newsletter: “If I may, I want to go off topic just a bit and talk about taxation, which I often refer to as confiscation. Taxation of citizens’ earnings and the amount of government spending, which has dramatically increased through time, is a debate that has raged on for years and years. Sadly for some, the only way they know how to fix a problem is to increase taxes. They just cannot understand that the citizens are maxed out when it comes to paying taxes. Good people are literally screaming at those serving in elective positions and saying: Live within your means, like we have to’ Bottom line, common sense is the order of the day. The answer is not more taxation. The answer is less spending. We already have an $18 trillion national debt.     Debts do not occur because we are taxing too little, they occur because we are spending too much.’ Want to know who said that last sentence?   His name was Ronald Reagan.

“I fully agree and understand that we need better roads in Michigan. However, let’s remember that the worst roads are in our urban areas. We have all the population, trucks, cars and industry. Our annual State Budget for this year is in excess of $53 billion. The funding for our roads must be found within that $53 billion.   I will not vote for any type of tax increase to repair our roads. I am very confident that the funding can be found inside our current budget.

“Since the failure of Proposal One last May 5, both the State House and the State Senate have passed their own legislative plan to fix the roads. Regarding the plan that came out of the state Senate I voted. No. The plan calls for a tax increase of fifteen cents a gallon for regular and diesel fuel to be phased in over the next 2 ½ years, amounting to a $700 million tax increase per year for the next 15 years.

“Obviously, something needs to be done, but just throwing money at the problem is not the answer. I want to take this opportunity to talk with you about what I and other Conservatives are advocating regarding our road problem.

“First and foremost, it is time to re-prioritize our spending. For far too long, too many other programs, projects and government entities were put at the head of the line before road repair. Now is the time to put road funding at the top of the list. All the other entities that have been fully funded through the years now will have to step back and let roads get their fair share for the next 7 to I O years. Some departments and people will not like this but far tougher things have happened to people in life.

“Second, the Michigan Department of Transportation (MDOT) and the Michigan Road Builders (MRB) have sold a lot of people in government on the idea that we need an additional (new money) $1.2 billion per year for at least 10 years to get our roads back in shape. Coincidently, MDOT and MRB have the most to gain from that additional funding.   However, in the last two years, they have failed to say what type of roads would be built and where all this money is going to be spent.

“Third, this is a little known fact, but up until four years ago, none of the 6%, sales tax revenue generated at the gas pumps was ever used for road repair. This revenue from the sales tax on gas all went to our general fund, public education and local governments. Michigan was one of only eight states not to use sales tax revenue from gas to repair its roads. Even now this money has to be appropriated for road repair on an annual basis and the percentage can vary. I believe this revenue should be a permanent funding mechanism for our roads, in the full amount.

“Fourth, Representative Pete Lucido from Shelby Township has come up with an interesting idea, which I support. The Michigan Catastrophic Claims Association (MCCA) has a S20 billion balance. Lucido ‘s legislation calls for the interest from that $20 billion to be used for road repair. The principal amount would not be touched, only the interest. If you figure an average of 3’% annually, that is a $600 million new revenue stream that we could use for roads, with no additional cost to the taxpayers.”

You have to ask yourself if this doesn’t, in fact, make more sense than raising taxes. Isn’t it time to ask, how much does it cost to administer the highway trust fund? How much better would our roads be if we took the politics out managing them?

Wells Fargo Monthly Economic Outlook – September 2015 Video

Wells_Fargo_Securities_logoIn this video update, Wells Fargo Chief Economist John Silvia, and Economist Sarah House discuss global growth, exports & imports, employment, inflation, and more.

To view the video on the Wells Fargo YouTube Channel, please click the following link or copy it into your browser: https://youtu.be/18Fm95L5klo

Or click on below:

ABC Reports: Construction Materials Dip for Second Consecutive Month


CEU2“Commodity markets were particularly frenzied in August due to a series of events in China, Brazil, Iran and other parts of the world.” —ABC Chief Economist Anirban Basu

PPI_Aug15 Prices for inputs to construction industries declined 0.1 percent in July after increasing 0.2 percent in June, according to the Aug. 14 producer price index release by the Bureau of Labor Statistics. Year-over-year prices were down 3 percent in July and have been down on an annual basis for each of the past eight months. Prices of inputs to nonresidential construction industries declined 0.3 percent on a monthly basis and are down 3.9 percent on a yearly basis.

Prices for inputs to the construction industry fell 0.9 percent in August after shedding 0.1 percent in July. Inputs to nonresidential construction behaved similarly, losing 0.8 percent for the month and 4.7 percent for the year.

On a year-over-year basis, prices were down 3.9 percent for the month and have fallen by at least 2.8 percent in each month this year. Prices have now fallen on a yearly basis in nine consecutive months, the longest such streak since March to November of 2009.

“Commodity markets were particularly frenzied in August due to a series of events in China, Brazil, Iran and other parts of the world,” said Associated Builders and Contractors Chief Economist Anirban Basu. “The result is that input prices continue to slide lower, defying predictions from earlier this year suggesting that commodity prices would stabilize and at some point head higher. Global demand remains low and there is a chance that prices could fall even lower during the months ahead.

“This is good news for most contractors, with the obvious exception being those in commodity-rich communities,” said Basu. “Already, North Dakota, Oklahoma, New Mexico and Alaska are deemed to be at risk of recession, and the ongoing slide in commodity prices will only serve to further weaken those economies and suppress overall construction activity.”

Only three key input prices rose in August. The key input prices that increased in August are:

  • Prepared asphalt, tar roofing and siding expanded 2.2 percent for the month and 2.4 percent for the year.
  • Natural gas prices expanded 2.2 percent on a monthly basis but are down 29.2 percent for the year.
  • Plumbing fixtures and fittings expanded 0.2 percent from July and are up 1.2 percent from August 2014.

The key input prices that fell or remained flat include:

  • Crude energy materials prices fell 9.5 percent in August and are down 40.5 percent from the same time last year.
  • Fabricated structural metal product prices remained unchanged for the month and are down 0.4 percent on the year.
  • Iron and steel prices fell 2.9 percent for the month and 17.6 percent for the year.
  • Prices for steel mill products fell 0.7 percent from last month and 14.1 percent from last year.
  • Nonferrous wire and cable prices are down 1.1 percent in August and 6.9 percent from the same time last year.
  • Softwood lumber prices fell 3.2 percent on a monthly basis and 7.5 percent on a yearly basis.
  • Prices for concrete products inched 0.2 percent lower in August but are up 2.6 percent from the same time last year.
  • Crude petroleum prices plummeted 20 percent in August and are down 57.3 percent from the same time last year.

To view the previous PPI report, click here.

ABC Reports: Construction Activity Increases as Backlog Edges Higher

Untitled-2Associated Builders and Contractors’ (ABC) Construction Backlog Indicator (CBI) expanded by 1 percent to 8.5 months during the 2nd quarter of 2015. Backlog declined 3 percent during the 1st quarter, which was punctuated by harsh winter weather and the lingering effects of the West Coast ports slowdown. CBI stands roughly where it did a year ago, indicative of an ongoing recovery in the nation’s nonresidential construction industry.


“The nation’s nonresidential construction industry is now one of America’s leading engines of growth,” said ABC Chief Economist Anirban Basu. “The broader U.S. economic recovery is now in its 74th month, but remains under-diversified, led primarily by a combination of consumer spending growth as well as residential and nonresidential construction recovery. Were the overall economy in better shape, the performance of nonresidential construction would not be as closely watched. The economic recovery remains fragile despite a solid GDP growth figure for the second quarter, and must at some point negotiate an interest-rate tightening cycle. Recent stock market volatility has served to remind all stakeholders how delicate the economic recovery continues to be.

“Though CBI expanded during the second quarter, performance continues to be uneven,” Basu said.  “A surge in heavy-industrial investment in the Middle States, including in the auto sector, and technology-led growth in the West were responsible for the bulk of second-quarter momentum. Backlog actually slipped in the infrastructure category, which remains hamstrung by uncertainties lingering around the Highway Trust Fund. Backlog was not statistically significantly different in the South between the first and second quarters.

“The national outlook continues to be positive,” said Basu. “The most consistently upbeat information regarding U.S. economic performance continues to emerge from the labor market. The nation added more than 2.9 million jobs between July 2014 and July 2015, enough to help drive down office and other commercial vacancy rates in many major markets despite ongoing construction.

“Also consider the tendency for commercial construction to follow residential construction. To the extent that remains true, the recent uptick in residential starts should translate into more commercial starts going forward. All of this should set the stage for further rebounds in CBI during the quarters to come, even in the absence of a long-term policy regarding infrastructure investment in the U.S.”

For additional analysis click here.

Regional Highlights

  • The West experienced a significant expansion in backlog, rising 1.2 months following the resolution of the West Coast port slowdown, however backlog in the region remains nearly 2.5 months below its year-ago levels, the largest drop of any region.
  • Backlog in the South has essentially returned to where it was two years ago, in part because of a slowdown in energy-related investment. The implication is that the average contractor remains busy, but boom-like conditions no longer prevail in energy-intensive communities.
  • Despite this, backlog in the South continue to hold the longest average construction backlog.
  • Backlog slipped for a second consecutive quarter in the Northeast, but remains above levels registered during the second half of 2013.


Year-Over-Year CBI Map of Regions and Backlog Months
Second Quarter 2014 v. Second Quarter 2015Untitled-3

See Charts and Graphs

Highlights by Company Size

  • On a quarterly basis, backlog rose or remained flat across all firm sizes.
  • Average construction backlog is higher or roughly the same as year-ago levels for firms of all size categories with the exception of a half-month drop in backlog among firms generating $100 million or more in annual revenues.
  • TThe largest firms, however, continue to have the lengthiest average backlog at 10.7 months.

See Charts and Graphs


To read more about the latest CBI, click  here