“To put it in perspective, in 2012 we will nearly return to 2003 levels of construction in current dollars.”

Nearly?

So what is being put into perspective?  It’s FMI’s latest forecast for construction put in place which calls for 2 percent growth this year and 6 percent growth next year in total construction. In constant 2006 dollars that’s only a 3 percent growth for 2012 and a 1 percent drop in construction this year, says FMI. That’s what is being put into perspective.

We are talking all construction in this report, not transportation construction, so the numbers are not specific to our industry. But they can, and should, hit us in the face.FMI concedes it’s not happy happy news, but the company sees the construction economy “inching along” with some good news buried in the numbers. And also in these numbers are indicators of the future of transportation infrastructure spending, job bills and reauthorization notwithstanding.

I think the one thing I would choose to take out of it, especially after warnings from on high, i.e. the Federal Reserve chairman, that our recovery is wobbly, is that there is optimism and growth. Both are weak, but they are indicators that we are headed in the right direction. We’re moving painfully slowly but that’s more encouraging that a complete stall or regression. So 2012′s relatively small growth number is more encouraging to me that a net 1 percent backsliding this year. In the end the report is ‘must’ reading to help understand the undercurrents that will influence where we will go, growth-wise.

FMI bills itself as the largest provider of management consulting and investment banking in the engineering and construction industry. The report is Construction Outlook: Third Quarter 2011 Report. You can read the full FMI report here.

The turnaround adds more uncertainty to the existing uncertainty about reauthorization.

Mica as ranking member of the committee and Oberstar as chairman worked well together. They had the ability to differ on a number of points but agree that there was a lot they did have in common — they both pushed as hard as they could for a six-year transportation bill — and they gave bipartisanship a good name. Mica of course has now said no to a raised gas tax so the problem they both faced of how to fund reauthorization at an adequate level remains front and center.

I was at a (pre-election)  AASHTO meeting a few days ago where FHWA Administrator Victor Mendez was asked about possible reauthorization timetables and scenarios, and he basically answered that any predictions were in fact guesses. His point, as I took it, was that there are so many variables that there’s very little science or empirically logical thinking that can be applied to coming up with a probable outcome and date.

But it was at that same meeting that former Transportation Secretary Rodney Slater pointed out that previous surface transportation legislation passed with voting numbers that were ample evidence of bipartisan support.

Mica still supports a six-year bill. It has the potential for bipartisan support, and perhaps, most importantly, of all the potential legislation for the new GOP-dominated House, transportation and infrastructure funding is a topic both sides of the aisle could/might agree on without offending their old or new support.

But Mendez is right. It’s still anybody’s guess.

The main focus of the industry at the moment has to be December 31. The gavel will not have changed, but the continuing resolution that keeps SAFETEA-LU alive will expire and a shutdown of SAFETEA-LU provisions and programs will be inevitable if something is not done before the end of that day to extend it. So I assume it will be done. But for how long the extension? A week, a month, two months, six months,  210 days, a year or longer?

Right now this is the key problem. Are there 14 extensions waiting in the wings as there were the last time this situation arose? Now, in the thrashings of a lingering recession short extensions are arguably the worst possible case for both government agencies and contractors. They would help cement uncertainty and indecision into place, and they would help rob planners and funders of long-term options. They would be especially destructive come January as we are already 15 months and four extensions beyond SAFETEA-LU’S original sell-by date.

There is of course also the inevitability that Republicans will not simply tinker with the Oberstar bill. So what are the changes we will we see when we read a new draft from the new Committee?

Oberstar’s party held all three branches. Mica’s party holds the house but not the other two.  So bipartisanship in some form is the only way. Readers of hieroglyphics and crystal balls will now spend weeks interpreting and analyzing. Mica may make that a little easier by being, to say the least, somewhat blunt in his speech. We may know quickly what he wants to do and even what he intends to do, but then we descend into guesswork again as a new Congress settles into place.

We are but parachutists. We jumped from the plane some time ago and we’ve been pulling the reauthorization ripcord, worried more than ever now that it seems to be stuck. The ground is coming up at us faster and faster. And if the chute does deploy in time will it be adequate to provide us with a satisfactory landing?

Sometimes there are processes in place, sometimes not. And sometimes they will work smoothly and deliver the best result possible and sometimes they won’t.

The example this time comes from Kansas. The state’s Transportation Seacretary Deb Miller knows her stuff and knows how to get things done. But she can only try and help the process, the decisions in the end are out of her hands.  The people in Kansas who have to do this will get it done. But there will be situations like this across the country and in the end they will lead to some cherry picking of some projects over others when all were important, and also of course to a net drop in the worth, in all senses of the word, of our transportation infrastructure.

Check out the dilemma facing Kansans here via the Kansas City Star story on kansascity.com

Two more states are reacting to the inevitable. They must have money for roads but the usual sources are inadequate. Privatization and tolling are coming up again and again as the default option. As Congress leads the way in stalling (if you can do that) by keeping reauthorization hidden away at least until after the November elections (and probably longer) states don’t have that luxury.

I have this sense of unease: if the states are forced to do more of this barrel-bottom scraping to find essential funds then the model that we have been used to for highway and bridge funding is getting farther and farther away from us, especially as Washington which is overseeing the deconstruction of the federal role. Perhaps change is good, heaven knows the system wasn’t perfect, but backing into a new model because there are no other choices isn’t the way to set up a new system.

By the way we are talking this time about New Jersey and Georgia.

New Jersey will have to consider turning to private companies to finance transportation projects as the fund financing roadwork runs short of money, the head of a panel studying the issue told lawmakers.

New Jersey’s Transportation Trust Fund Authority, which is supported by the state’s 10.5-cent-a-gallon gasoline tax, will be hard pressed July 1 when payments on $12 billion in outstanding debt consume its $895 million in annual revenue, said former U.S. Representative Richard Zimmer, who leads the panel. The highway account is scheduled to issue as much as $1.75 billion in bonds later this month.

“We’re just headed toward a brick wall,” Zimmer, a Republican, said following a hearing in Trenton today on privatization proposals from the governor. “There’s a pretty grim situation. By the process of elimination, public-private partnerships are going to be part of that solution.”

The plan would “pick up the slack” when most of the highway stimulus funds under the $814 billion American Recovery and Reinvestment Act are used up next year, said Mike Betts, an analyst with Jefferies Group Inc. in London, according to the Bloomberg report.

Obama’s proposal would provide an economic boost and help make companies like Caterpillar more competitive, said Jim Dugan, a spokesman for the company, Bloomberg reported.

“These types of road projects put people to work quickly, which benefits the economy in the near term,” Dugan said in an e-mail, according to the report.–Tina Grady Barbaccia

Both processes derive their momentum from severely sinking state revenues coupled with the lack of a six-year highway bill from Washington which is keeping available funds at an level inadequate to even maintain existing roads.

Both processes help address the funds shortage. But while we see the need for them don’t forget a very old rule of political thumb: reversing practices like these when times are better is no slam dunk. We are liable to see gravelled rural roads and toll booths still being created long after the economy has recovered.  Just as we will surely hear some Washington politicians telling us that since there are now less paved roads to maintain, and since there are more income-providing toll booths, states and other agencies responsible for roads ands bridges don’t really need new money as much as they used to.

Anyway, check out USA Today’s story on the states fervor to toll.

Daily build rates at the Mt. Holly and Cleveland plants are rising sharply in response to strong 2010 order activity.

In April, DTNA and the UAW reached agreement on new labor contracts for the plants. The new contracts include baseline production commitments, which will provide job stability and security for plant employees.

DTNA, a recognized industry pacesetter for EPA10 readiness and performance, is reaping significant rewards for its forward-thinking business investments. Customers have placed orders for more than 21,400 EPA10 vehicles to date, including 16,565 Freightliner-brand trucks.

The APA is a coalition of the National Asphalt Pavement Association, the Asphalt Institute, and the State Asphalt Pavement Associations

“While asphalt pavements serve a national market, they are built by people who live and work in the areas that they serve,” commented Christie Barbee of the Carolina Asphalt Pavement Association, co-chair of the team that created the document.

“Asphalt jobs truly are Main Street jobs that cannot be outsourced overseas. Asphalt jobs are also green jobs, because asphalt is America’s most reused and recycled material, and virtually every worker in the industry is involved in reuse and recycling in some way,” she continued.

“The asphalt pavement industry is proud to support the people who rely on our country’s infrastructure as well as those who have made the industry a career choice,” said Patty Long of the National Asphalt Pavement Association, also a co-chair of the team. “With one-third of our nation’s infrastructure in poor condition and construction unemployment at twice the national rate, there is a need to put people back to work preserving our infrastructure. This paper breaks down the industry by the numbers, to show the important role that workers in the asphalt and contributing industries play in the lives of all Americans.”

The three-page document points out that an asphalt road could not be constructed without civil engineers, technologists, researchers, raw material suppliers, asphalt mix producers, truck drivers, aggregate producers, equipment manufacturing workers, construction equipment distributors, and many others who work behind the scenes. In addition, $6.2 billion of economic activity is generated for every $1 billion invested in federal highways.

The “American Power Act” (APA), released May 12, would mandate that oil companies producing transportation fuels purchase emissions allowances based on their volume of carbon production. These costs would be passed on to consumers. Transportation user fees are historically dedicated to the maintenance and improvement of the U.S. transportation system — roads, bridges, transit systems, bike paths, pedestrian routes, and related programs.

ARTBA estimates the new fee would generate roughly $20 billion each year from the on-road transportation sector but only return a maximum of $6.25 billion to transportation infrastructure investments, with a cap of $2.5 billion per year contributed to the federal Highway Trust Fund. The majority of transportation-generated revenue, however, would be used for a variety of non-transportation purposes, including federal government debt reduction; discounts for certain heating oil and electricity consumers; reforestation programs; subsidies for the energy production industry; and incentives for nuclear power.

“The U.S. transportation infrastructure network is in desperate need of maintenance and expansion across all modes,” said Pete Ruane, president & CEO of ARTBA, in a press statement. “Diverting transportation revenues away from our roads, bridges and transit systems at a time when they need attention the most will hurt our economy, inhibit our ability to reduce emissions from congestion, and limit our ability to compete in a global marketplace.”

ARTBA says it is working to ensure all revenue generated from transportation system use, as part of a climate change bill, is dedicated to improving the nation’s highway and public transportation network.