Economy rebounding, but still no highway bill

Pit & Quarry, Dec, 2003 by Patrick Hernan

Although the U.S. economy appears to be on the mend, stone producers across the country continue to express concerns about the lack of a federal transportation package. Taken in the context of budget shortfalls at the state and local levels, the uncertainty about the funding stream is forcing executives to formulate plans based on invisible numbers.

The missing link, of course, is a replacement for TEA-21, which expired in September and has become a political football in Washington's power corridors. Although Congress passed a temporary measure to pay for highways and bridges through February, the industry has set its sights on the passage of a $375 billion, six-year transportation bill that not only will help repair roads, but also will create hundreds of thousands of jobs and help fuel the economy.

"Jobs are the missing link in the economic recovery," says Stephen E. Sandherr, CEO of the Associated General Contractors of America and co-chair of the Transportation Construction Coalition (TCC). "If Congress and the [Bush] administration are looking to create jobs, they need to look no further than a six-year transportation bill."

In the mail

As part of TCC's outreach, construction workers will send to the White House and Congress postcards that have the orange Men/Women Working road signs with the word "Not" stamped across them. TCC hopes to distribute 1 million of the cards and is driving the message home by inserting them in influential publications such as The Hill and by advertising in Roll Call.

Says Pete Ruane, president of the American Road & Transportation Builders Association and co-chair of TCC, "The TCC supports the six-year, $375 billion TEA-21 reauthorization highway- and transit-investment plan that has been proposed by the bipartisan leadership of the House Transportation & Infrastructure Committee.

"Their proposal would create 1.3 million new American jobs and be the sparkplug that could really jump-start the economy," Ruane points out.

Want to help the industry sell the proposal? Shape your argument around economic stimulus, jobs and security. Imagine the growth a responsible transportation package could create on the heels of reports showing the economy is starting to create jobs and the so-called "jobless recovery" might be a thing of the past.

The Fed

Even Federal Reserve Chairman Alan Greenspan is optimistic. "The oddsb ... favor a revival in job creation," he tells members of the Securities Industry Association. Meanwhile, the U.S. economy grew at the spectacular rate of 7.2 percent in the third quarter and the Commerce Department reports that construction spending in September topped off at a seasonally adjusted rate of $910.6 billion, an all-time high.

Accompanying that news was a Commerce Department report that private residential building surged to a seasonally adjusted rate of $471.4 billion in September, another record. With a pledge from the Federal Reserve that interest rates will remain low, private building could continue to set records.

Pat Jacomet, executive director, Ohio Aggregates and Industrial Minerals Association, says jobs "most definitely" are being created in the state and that "the general feeling is that everything is very positive.

"Unemployment is on the way down," he continues, adding that the passage of a federal highway package "will be a real boost."

But Jacomet, who notes producers stand to benefit from a gas-tax hike in the state, says not everything is rosy. "It's very hard to plan without an appropriations package. We definitely need a long-term bill of at least six years so folks can work with capital expenditures."

Industry analysts say they now expect an uptick in equipment orders, something that will further fuel the economy. Although the Association of Equipment Manufacturers (AEM) says business will remain slow for the balance of the year, it is anticipating growth "in the 3 percent to 5 percent" range next year.

Among the projections in AEM's annual industry "Outlook" forecast is that construction-equipment business in the United States will increase 5.5 percent in 2004.

"We are certainly more optimistic than we have been in the past few years," says Ron DeFeo, AEM chairman and chairman/CEO of Terex Corp. "We look for a general improvement in business conditions to positively impact the construction-equipment manufacturing industry."

What will help drive this growth? "Our customers' fleets are aging and need replacement," DeFeo says. "Also, the federal government needs to pass highway spending legislation, and this should boost equipment sales."

Need to act

Inaction in Washington is counterproductive, DeFeo says. "Reauthorization of federal transportation legislation is definitely a significant factor in any future industry growth," he observes. "Congress needs to allocate adequate money to repair and maintain our aging roads, highways and bridges, if we are to move goods and people safely and efficiently across the nation.

"An increase in federal transportation funding also translates into more American jobs, particularly important in this so-called 'jobless recovery' we're now experiencing," continues DeFeo. "It's estimated that every $1 billion in such funding creates 47,500 jobs annually."