Full-Speed Ahead?

2004 Transportation Market Will be Mostly Up

by Scott Judy

With continuing increases in federal funding and a stronger national economy, the American Road & Transportation Builders Association is predicting 4 percent growth in the U.S. highway construction market in Fiscal 2004.

Overall, the market should see approximately $33.6 billion in federal highway investment, an increase of $2 billion over the year before. The total value of work performed will be up similarly, to approximately $62.5 billion, compared to 2003's $60 billion level, ARTBA predicted.

At present, there is optimism as well as concern. The concern comes because Congress has yet to reauthorize a federal transportation spending bill, though a short-term extension of the existing Transportation Equity Act for the 21st Century (TEA-21) keeps federal dollars flowing at the current rate.

The optimism comes from some of the proposals in Congress, most notably a $375 billion plan by Rep. Don Young, R-Alaska, that would include $298 billion for highways over six years.

Significantly, however, Young's House Transportation and Infrastructure Committee failed to specify a source for those funds.

In the Senate, meanwhile, lawmakers have proposed a $311.5 billion successor to TEA-21, while the Bush administration has put forth a $247 billion package.

If passed, ARTBA indicated Young's $375 billion plan could generate an average 7 percent growth in the highway construction market over the next six years, while the Senate's $311 billion plan could create roughly 4.8 percent annual growth.

advertisement

Regional Ups and Downs

Regionally, heavy/highway contractors will see mixed opportunities in 2004. According to McGraw-Hill Construction's Dodge Analytics Group, the engineering markets of Florida and South Carolina will decline 15 and 4 percent, respectively. North Carolina's market will grow substantially, by 19 percent, while Georgia's engineering sector will increase 3 percent in 2004 after a 31 percent fall in 2003.

Likewise, the budgets of the four state transportation departments will reflect some ups and downs. The Florida Department of Transportation has budgeted almost $2.7 billion for construction expenditures in its 2004/2005 fiscal year, down from the previous year's spike of $3.8 billion.

"The outlook for 2004 is good," said Robert Burleson, president of the Florida Transportation Builders Association. "Obviously a couple of question marks are still up in the air - the federal reauthorization which should take place (in) February, and the attempt by the Florida Legislature to take money from the transportation fund in order to balance our state budget.

"Even with those things lurking, 2004 will be a good year," Burleson continued. "We need to watch what happens after that, particularly if there's an effort to take money out of our trust fund."

In the Sunshine State, interstate highway expansions and improvements will dominate. Of the 21 Florida projects listed on Southeast Construction's ranking of regional highway projects, 14 involve widening or other improvements to interstate highways.

Some of the largest projects will be concentrated in the Tampa area. That's where Gilbert Southern Corp. of Sunrise, Fla., is just starting its $156.5 million Interstate 4 expansion contract, and where PCL Civil Constructors is in the midst of a $140 million contract to build a reversible-lanes bridge for the Tampa-Hillsborough County Expressway Authority.

Also in Tampa, Granite Construction Co.'s Tampa office is moving ahead with its nearly $80 million FDOT contract to reconstruct the tangled Interstate 275/I-4 Interchange, known locally as "Malfunction Junction."

In Georgia, Gov. Sonny Perdue recently announced a $424 million "Georgia Gets Going" bond package that includes funding for traffic-mitigation measures in metro Atlanta as well as widening of state rural roads. The Georgia Department of Transportation was expecting a roughly $2.1 billion overall budget for fiscal 2004, up approximately $500 million from 2003.

GDOT's construction expenditures should increase similarly from 2003, when the agency spent an estimated $1.1 billion on construction.

As in Florida, interstate highway expansion will gain a large share of the construction budget. The state's largest project currently under construction is Douglas Asphalt Co.'s $75 million contract to expand 13.6 mi. of Interstate 75 and reconstruct three bridges in Lowndes County.

Another major project, scheduled to be let in the spring or summer, is an estimated $64 million reconstruction of the Interstate 85/State Road 316 Interchange in Gwinnett County. With an estimated three years of construction planned for this project, GDOT is expecting massive impacts to both I-85 and 316 during construction.

Steve Parks, executive director of the Georgia Highway Contractors Association in Fayetteville, Ga., was mostly concerned about the 2004 construction season.

"We have the same kinds of uncertainty here (as nationally)," he said. "Our revenues - particularly general sales tax revenues - have been down, and we've had quite a burden on federally matched funds. We're hoping that we'll be able to maintain the same (activity) level, or slightly better, as we have in the past, but current (bid) levels seem to be down a great deal.

"We're told by DOT that it's going to get better," he continued. "We hope to see some kind of (additional) financing that will keep a very diverse and broad program in effect."

In South Carolina, the value of the DOT's contract lettings will be down again, as the state continues through its "27-in-7" program, which peaked a couple of years ago. The program is the South Carolina Department of Transportation's initiative to build 27 years' worth of projects in approximately seven years.

Through the creation and use of a State Infrastructure Bank, the state launched the program approximately six years ago to fund about $5 billion worth of road construction.

That money has funded some massive efforts, including the project at the top of Southeast Construction's "Top Highway" ranking, the $632 million Cooper River Bridge project near Charleston.

Other major highway projects for the state include expansion of Interstate 95, including two contracts totaling roughly $130 million held by Lane Construction Corp. of Meriden, Conn.

As the 27-in-7 program continues, SCDOT's work program budget has declined. The department's 2003 work program was an estimated $1 billion, and is expected to decline roughly 40 percent to about $600 million in 2004 before leveling out at about $500 million beyond that.

The 27-in-7 program won't eliminate SCDOT's needs, though. In fact, officials indicate that an increase in the state's gas tax for road construction is needed badly.

"We've got tremendous needs in South Carolina," said Don Freeman, state highway engineer with SCDOT. "Just looking at resurfacing and bridge replacements - just a few capacity-increase type of projects and maintenance of the existing system - we can show very easily that we need about $1.8 billion more per year than we currently have."

Freeman estimated current funding at about one-third of that level.

One of the department's biggest concerns is the state's resurfacing program, where an estimated 25,000 mi. of roads don't qualify for federal-aid funds, and have gone mostly without maintenance for the past four years.

To address this and other issues, SCDOT officials have been discussing with state legislators ways to increase state funding levels. Freeman said the last time the state gas tax was increased was 1987.

"We desperately need an increase in funding," he said.

In North Carolina, the engineering market will show the greatest increase of any of the four states in the region, with growth of 19 percent expected to take it to roughly $2.4 billion in contract activity. That would bring this market close to its 2001 peak of approximately $2.5 billion.

The North Carolina Department of Transportation will definitely be doing its part to keep contractors busy. Of the four states, North Carolina contributed the second-greatest number to this year's ranking of regional highway projects, with 18.

The largest of those was the $131 million contract belonging to North Carolina Constructors to build a new 9.6-mi., six-lane freeway and 23 bridge structures near Raleigh. North Carolina Constructors is a joint venture of HBG Flatiron of Longmont, Colo., and Lane Construction Corp. of Connecticut.

Other major projects include a $101.6 million contract awarded to the Thompson-Arthur Division of APAC, Atlanta, to build a 4.3-mi. stretch of the Greensboro Western Loop; the $84.5 million Wilmington Bypass project that GLF Construction Corp. is constructing; and more than $275 million of combined contracts in the Charlotte/Mecklenburg County area for work related to the interstate or Outer Loop project.