Old Dog, New Tricks

Even with a strong foundation and a long history, you need to be willing and able to adapt to stay competitive today.

By John Latta

It’s not 2007 anymore.

Changes in the economy, the way work is decided on, planned and done, future expectations, even legislation (finally) and a variety of other factors, mean the highway and bridge industries have changed to the extent that successful companies – and agencies – must adapt to stay competitive and squeeze the most out of every dollar.

Most observers feel that the new surface transportation legislation, MAP-21, provides some short-term stability, certainly more than living under endless extensions of the previous legislation, SAFETEA-LU. But with its inadequate $40 billion a year and its very short two-year term, MAP-21 does not offer enough for contractors and agencies to be anything less than cautious going forward. Given that chaotic extension-fest, few would seem to be willing to anticipate a smooth road to an adequately-funded new bill when MAP-21 ends in September 2014.

There is another reason for concern about the amount of funding states will be able to send to jobsites because most state budgets remain tepid at best. And many states are just now facing the bill on a series of bonding measures passed over the past decade, so we’re likely going to see increasing portions of existing state DOT budgets dedicated to repaying bonds.

But companies must move forward.

The extension limbo and the recession, even with some “stimulus” money available, created a mindset of uncertainty, a dominance of short-term maintenance and repair jobs, less work and major unemployment. Continuing state and regional budget woes will tend to keep the situation somewhat static, and there are even predictions that total spending on highways and bridges may fall in the coming years unless state incomes rise. So even MAP-21’s emphasis on getting more bridges up to standard may bring only moderate upswings in longer-term work. Then again, that’s good news today.

Two of the major questions contractors now face are whether to hire back highly skilled workers, and whether to invest in new equipment. While the pressure to be careful remains intense in these economic times, the need to get back to a long-term money-making mode is pressuring the industry. MAP-21 may appear as such a positive sign to planners that is impossible to ignore. It does seem likely that both employment and fleet purchases will expand because the industry must emerge from the recession’s “hunkering down” mode.

The other shoe would seem to be the election. If the pent-up need to get going again is to be released, the first week of November may do it.

Cost Efficiency

A leading industry association executive says that in her opinion, “We will continue to see a huge emphasis on maintenance not new construction, and maintenance projects will typically need to be the most cost-effective possible.”