Vital private construction investment needs pro-growth measures from Washington
While some Washington number-crunchers insist that there are signs of the new growth of an economic spring after a long hard winter, America’s contractors are not seeing the greening of the economy in quite the same way.
“The only green shoots contractors are seeing are the weeds sprouting around their idle construction equipment.” said Stephen E. Sandherr, the association’s chief executive officer of the Associated General Contractors of America.
He was reacting to evidence that the construction industry continues to suffer from significant declines in privately-funded construction investments. Private construction investments declined by 20.6 percent between September 2008 and September 2009 according to new Census Bureau figures. What these number reveal, says AGC, is that there’s no sign of an economic recovery yet for the nation’s construction industry.
“These figures show just how dire business conditions are for the nation’s contractors and their six million plus employees,” said Stephen E. Sandherr.
Congress must act
AGC says congress and the administration must embrace pro-growth measures to stem private spending declines to avoid greater job losses.
The federal figures show the annualized rate of private construction spending declined from $774 billion a year in September 2008 to $614 billion a year in September 2009, Sandherr noted. On the nonresidential side alone, construction spending for lodging declined by 37.4 percent, 33.3 percent for offices, and 36 percent for commercial structures over the past 12 months.
Manufacturing and power construction were the only parts of the private construction market to see increased investments, with 11 percent and 4.8 percent gains respectively, he said.
Publicly funded investments in construction did increase over the past year by 6.1 percent, from $308 billion to $326 billion, said Sandherr. Public spending on commercial facilities and power structures grew the most, with 28.8 percent and 27.2 percent increases, respectively, over the past year. However, water supply and sewage investments actually declined by 1.9 and 1.8 percent respectively.
“Increased public investments in construction and infrastructure are welcome news, but this industry will continue to suffer while demand for private construction continues to plummet,” Sandherr said. He called for a quick extension of the first-time home buyers tax credit and expansion of the carry back of net operating loss provision from two to five years for all businesses for 2008, ‘09 and ‘10 as a way to stimulate new private demand for construction.
Announcing AGC’s “blueprint for reinvigorating the nation’s construction industry” in September, Sandherr said,“ Simply put, you can’t fix our economy until you fix the construction industry.
“These figures show just how dire business conditions are for the nation’s contractors and their six million plus employees.”
– Stephen E. Sandherr, Associated General Contractors of America
The plan “calls for repealing the alternative minimum tax and increasing and extending a series of tax credits and cuts – including the 2001 and 2003 tax cuts – to boost investments in real estate development,” he said. We’re also calling for new incentives on global investment in real estate to make it easier for international investors to put Americans back to work.”
The AGC blueprint also calls doubling federal investments in transportation infrastructure, renovating dated and inefficient federal facilities and investing in clean water, flood control and navigation projects.
“The plan also identifies regulatory revisions that will allow construction investments to flow more rapidly and be used more efficiently,” said Sandherr. “These include streamlining environmental reviews, accelerating licensing of new nuclear power plants, and establishing a federal multiyear capital budget for public works.
“And we need to do more to encourage green construction, while avoiding counterproductive measures like government mandated labor agreements and Buy American requirements,” he said. “Of course, a plan this ambitious doesn’t come for free. We’ve gone to great lengths, however, to pair new costs with new revenue. Doing away with the AMT and extending tax cuts will be partly offset by increases in income, sales and corporate tax receipts that will come with the increased business activity this plan will stimulate.”v
Australias’s transit balancing act —
In with the old, in with the new
Australia, it seems, is facing the same challenges we are when it come to transit. So says the Transit Cooperative Research Program (TCRP) report, “Balancing Infrastructure Reinvestment with System Expansion.”
Australia’s transit experts, says the report, face these familiar problems: rising populations, traffic congestion, budget constraints, and the new imperative to be “green.”
The Aussies are apparently using an approaching to these problem that includes balancing old tech and new tech, or as the report says “combining some very simply solutions with cutting-edge technology.” They are, says the report, “employing a balance that is effectively getting the best from each approach.”
On the simple solutions side is the practice of keeping transit vehicles in service past what we would consider their useful life. It’s a low tech way to maintain inventory “and it appears to work.” By doing this the Aussies cut back, or completely do away with, “the need to retrain operators or retool maintenance facilities.”
What’s more, riders don’t seem to mind. On the cutting edge side of the equation the Australians are “pushing the envelope with their use of new technologies, such as video surveillance, smart cards, and real-time schedule information on Blackberries/ personal digital assistants.”
Tollway Board Meeting Goes Live Online – Will Others Follow?
You pay good (tax) money for roads in your state. Watching it being spent and otherwise moved around would only seem to be fair.
Now people (only 100 right now) in Illinois can follow some of the decision making on how more than $6 billion in roadway project money is being used from the comfort of their favorite chair.
Taking the lead from other public agencies in the state, the Illinois Tollway Authority is providing direct access to its monthly board of directors meeting and committee meetings via live webcasts. These webcasts are available through the Tollway website, with availability limited to the first 100 people who sign on. Those who can’t view the live webcast can download an audio file event three business days following the meeting. Minutes also will be available after the following month’s board meeting, and copies of the webcast video also will be made available upon request.
The online video broadcast initiative is currently in beta testing, with users encouraged to provide feedback on their experience through the Tollway website at www.illinoistollway.com.
Glass as an aggregate
You won’t find any ‘Keep Off The Glass’ signs around this ground cover. Those empty glass jars spaghetti sauce and wine bottles we typically put in our recycle bins are getting a second life as a porous pavement system.
Although it hasn’t yet been indicated for highways, the porous pavement system — being sold under the name FilterPave — uses 100-percent post-consumer recycled glass for parking areas, trails and walkways, sidewalks, pedestrian patios, driveways and golf cart paths.
The glass particles used for the porous pavement system are specially processed to round the edges and then solidified with a flexible, high-strength polymer-bonding agent made from natural materials, resulting in a highly permeable surface.
The glass is processed through a tumbling and drying method so that the polyurethane will adhere to it. The processing cleans and tumbles the glass aggregate into a specific size that is optimal for maintaining a tight, smooth pavement, but open enough to maintain a high porosity — 38 percent.
NCDOT: Let’s build fast and save money
Such a deal!
By using an innovative contract approach at a time when lower-than-estimated bids are becoming common, North Carolina plans to speed up the completion of the multi-project I-485 outer loop in Charlotte by five years and save taxpayers somewhere between $50 million to $100 million doing it.
The plan is based on the use a design/build/finance model that has never before been used in North Carolina, although it has been employed elsewhere. This approach means one contractor will both design and build each project, and the winning bidders will also put up part of the financing.
Construction would begin in 2010 and be completed by 2015. The purchase of right of way land has already begun and requests for qualifications were to have been posted by press time.
“This innovative solution saves time, saves money for NC’s taxpayers, creates jobs and proves that North Carolina will develop new solutions to our 21st century transportation challenges,” said Governor Bev Perdue.
The plan involves three Charlotte-area projects, placed on a fast track together, with contracts to be awarded in 2010:
the last five miles of the I-485 loop ($185 million)
the interchange connecting the loop to I-85 north of Charlotte ($155 million) widening part of I-85 four lanes to eight ($200 million).
NCDOT says the key advantage of the fast-track approach is that it puts all three projects to bid in the current competitive construction environment. NCDOT has been saving an average of 20 percent below engineers’ estimates on ARRA and other contracts awarded this year.
NCDOT sees the design/build/finance approach as a model for future transportation initiatives. “We see this as one more tool for the future that we can use when it makes economic sense, as it does in this case,” said Transportation Secretary Gene Conti.
Design/Build/Finance contracts allow a project to be sped up. Under the traditional model, contracts are awarded separately for design and construction of a highway, and those steps occur sequentially. Under Design/Build, one contract is awarded for both functions, which allows teams of designers and contractors to simultaneously design and build to complete it sooner.
Design/Build/Finance adds a financing component, so that the contractor puts up a portion of the project cost, presumably by using bank financing.
Mack Trucks and Volvo Trucks North America, which already have common ownership under Volvo AB, merged Nov. 1 into a single organization called North American Trucks. A Mack spokesman says the company will continue to operate both the Mack and Volvo brands and maintain both sales organizations. The Volvo Group says the merger was made to improve the group’s profitability and efficiency as well as to align operations more closely to North American Trucks.
Allison Transmission announced the introduction of 2nd Reverse, available in mid-year 2010 on all Allison 4700 and 4800 Rugged Duty Series, Emergency Vehicle Series and Specialty Series models.
Navistar, on Nov. 2, concluded an agreement to acquire certain assets and the membership interests of Continental Diesel Systems to manufacture key fuel injection components for its MaxxForce diesel engines. The company says it also will establish a dedicated research and development facility to support its diesel power system components.
In the November 2009 issue, in the article “Want Optimum Density? Get Smart” (p 20), Dale Starry was incorrectly identified. Starry is director of strategic technologies for Volvo Construction Equipment.