ARTBA forecast: Drop in 2011 highway, bridge construction market

|  December 08, 2010 |

Continuing budget challenges for state and local governments, uncertainty surrounding a new long-term federal surface transportation bill, and winding down of infrastructure investment under the stimulus law will drive a 4.4 percent contraction in the U.S. highway and bridge construction market in 2011, according to the annual forecast from American Road & Transportation Builders Association’s (ARTBA) Vice President of Policy & Senior Economist Alison Premo Black.

The real value of highway, street and bridge construction is expected to fall to $78.5 billion, compared to 2010′s estimated $82.2 billion level, according to Black.

One positive note: The amount of work completed on bridges is expected to increase to $25.4 billion in 2010, Black says. The value of real work in the bridge market has nearly doubled in the last decade as state and local governments have increasingly addressed long-deteriorating conditions.

Black notes that the stimulus, known as the American Recovery & Reinvestment Act (ARRA), had positive impacts on the market in 2010. According to October 31 Federal Highway Administration data, the value of ARRA-related transportation projects under construction was $18 billion. Nearly $16 billion has been paid out for construction work performed, and the value of projects completed was $6 billion.

State and local governments continue to struggle with the current economic situation and in the aftermath of the recession.

“Although state and local investment typically accounts for 57 percent of the value of construction work, this percentage fluctuates and the state and local market share will often decline after a recession,” Black says. “States also tend to hold back on larger projects and simply maintain their programs until they know the new transportation funding levels from the federal government.”

Nevertheless, individual state highway and bridge programs will show growth next year, although it will be uneven, she says. There are 23 states that increased their contract awards during federal fiscal year 2010, which ended September 30, according to an ARTBA analysis of contract award data from McGraw Hill. Although some of these states have seen program declines over the last few years, the increase in contract awards is one positive indicator of state level market activity in 2011.

The model in the ARTBA forecast takes into account current economic conditions, state and local funding and federal investment. It assumes that there is no major increase in federal investment over the next five years. “This is not to rule out an increase in the federal-aid program, but we simply do not have any indication of what that investment level would look like without passage of a new highway/transit bill,” Black cautions.

The model also uses the projected Highway Trust Fund (HTF) outlays from the Congressional Budget Office for future federal investment. It assumes that the United States will return to modest economic growth between 1.8 and 1.9 percent for 2011 through 2015. Increases in material prices and project costs are expected to be in line with general inflation at about two percent.

According to ARTBA, the market outlook would change if either federal, state or local governments provided significant increases in their investment levels.

The outlook for other modes in the ARTBA forecast:

Airports: The real value of work done on airport runways is expected to fall 10 percent to $5.3 billion. Flat funding for the Airport Improvement Program and continued failure by Congress to pass a new aviation reauthorization program are key reasons for the reduction. The airport runway market also benefited from increased ARRA-related spending in 2009 and 2010.

Rail & Transit: The real value of transit and rail work is forecasted to drop slightly from $15.3 billion in 2010 to $14.9 billion in 2011. The longer term outlook for this sector will depend on federal investment through the New Starts program, private rail investment and the general state of the U.S. economy, Black says.

Do you want some tips to stay safe on the job site?

Equipment World has created an entire section devoted to safety.

Click here to check it out. »

 

Here are the most recent tips we've posted:

Hauling headaches: Know your load limits when trailering equipment

One-man machines: The operator should be the only person on a wheel loader

advertisement
advertisement
advertisement
advertisement