Better Roads Digital Magazine
Issue link: https://read.dmtmag.com/i/85902
the refuse-to-spend-anything stands of some hardline politicians. Transportation investment may also be reason- ably popular in the new Congress of 2013 which could be more supportive of transportation infrastructure funding than this one. One thing that did happen in 2011 and that must continue in 2012 is the role of contractors in pressing Washington. Pressure in 2011 helped build the bipartisan- ship that unlocked stalled reauthorization negotiations. Industry groups urged contractors to be aggressive with members of Congress when they came back to their home districts, and get them out to jobsites and company facilities. Just how much of an effect such visits had is hard to pin down, certainly there have been major politi- cal and economic pressures, but there's little doubt that contractor visits by congressmen helped start the ball rolling away from intransigence and towards bipartisan- ship. One leading Washington industry group lobbyist told Better Roads in December, "You can tell when you walk into the office of a member of congress who has made visits and who hasn't, it's a different atmosphere. They get it." But as another said, "Our message is still not compelling enough." Our Survey A Better Roads' December survey of both agency and contractor readers reinforces the impression of uncertain- ty in the near future. But it also reinforces a growing hope for the long term, something that has been largely absent in our last two surveys. It's almost as if the respondents were in a holding pattern mindset, working with less of everything – money, equipment, manpower, jobs – and looking beyond 2012. Increase Decrease Stay about the same From the Better Roads 2012 Outlook survey Contractors Do you expect changes next year in dealing with government agencies, e.g. contract bids, environmental regulations, sustainability require- ments, etc.? Yes No 59.7% 40.3% It's a fine distinction, but interestingly, government agen- cies are a little more optimistic than contractors. But when it comes to specifics, the uncertainty is equally shared. Only a few contractors (9.7 percent) plan to increase spending on new equipment or fleet replacements, 43.1 per- cent expect to spend the same as 2011 but 47.2 percent ex- pect to spend less. A lot of contractors (43.1 percent) expect- ed their financial results in 2012 to be about the same as 2011, with little more than a quarter (26.4 percent) predicting better results, but 30.6 percent expecting to fare worse. Both surveyed groups expect more maintenance and less big new projects, something we have come to expect in these times. Better Worse About the same 26.4% 30.6% 43.1% Increase Decrease Stay about the same 20.2% 26.8% 53.0% 12.5% 38.9% 48.6% It has been my sense that the industry is changing and will never return to a pre-recession structure, that changes wrung by the recession will exert a long-term in- fluence. Precisely how is, of course, still largely guesswork An Expert Opinion: Edward J. Sullivan, vice president and chief economist, Portland Cement Association A year ago the economy seemed poised for stronger, sustainable economic growth. And then, due in large part to the European sov- ereign debt crisis and rising energy prices, consumer and business confidence waned. Private-sector growth, as a result, entered a period of slowdown. Furthermore, American Recovery and Reinvestment Act (ARRA) stimulus decreased as a positive for economic growth, forcing the Federal Reserve to enact a new round of monetary stimulus (QE2) to avert the potential of a double-dip recession. This was supplement- ed with fiscal stimulus including the "payroll tax holiday" and extended unemployment benefits. Real GDP, job growth and confidence recovered. Seemingly, the economy was again on a sustainable path of stronger growth and job creation in excess of 200,000 monthly. Once again, however, this proved to be a false start to stronger, sustained growth. The politi- cal games played by Congress over the debt ceiling exerted adverse influence on near-term growth. The debt ceiling debate injected new uncertainty and risk onto the economic landscape. Consumers, busi- ness and bank confidence was already weak and this added dose of risk hindered real economic activity. Only recently has better economic news begun to surface – ac- cented by the decline in the unemployment rate. This news could represent another false start. This first quarter of 2012, for example, could represent a significant challenge to economic growth. The payroll tax and extended unemployment insurance benefits will expire year-end. Federal aid to the states has already expired. Furthermore, the U.S. Energy Information Administration expects energy prices will rise. These conditions, and others, could result in significant first-quar- ter weakness. While PCA expects sustained, tepid economic growth, the potential for a new recession in 2012 cannot be dismissed. If such a path develops for the economy, it does not imply a further significant step down in construction activity. Quite frankly, residential, nonresidential and public construction activities are already near floor levels. Rather, such a scenario suggests a longer recovery period for construction activity – perhaps by a year or more. Perversely, it could very well be that weakened economic condi- tions could result in a shift in political thinking and add pressure to re- sult in a comprehensive new highway bill that addresses the country's future needs – and not just a patchwork of fixes. Demographics don't lie. In 20 years the United States' driving age population is expected to grow by 50 million more licensed drivers. Congestion will worsen and the adverse consequences associated with infrastructure neglect will multiply. The invisible taxes associated with inaction in expanded highway investment will increase. Better Roads January 2012 9