Highway Projects Kicking In

When the federal Transportation Equity Act for the 21^st Century (TEA-21) was passed in 1998, paving contractors looked forward to the highway projects that would be available to bid on stemming from the law.

Three years later, funds have been disbursed to state transportation departments, and these agencies have in turn conducted bidding processes on the highest priority projects. Now the summer of 2001 is seeing a lot of the road widening, bridge building and other improvement projects taking place, providing work for both paving contractors and concrete crushing subcontractors.

According to a report prepared by Farkas Berkowitz & Co., a Washington-based engineering consulting firm, how much TEA-21 funded activity is taking place varies from state-to-state. “Only recently have highway funds from this 1998 law really begun flowing on a national basis,” says Alan L. Farkas, a principal of the firm. “State implementation of TEA-21 has been extremely uneven, avoiding a one-time spike in demand [for engineering and construction services].”

It remains to be seen whether the economic slowdown will help solve one dilemma that has plagued the construction and recycling industries: a labor shortage. “Labor shortages are constraining growth and will continue to do so as more highway projects enter the construction phase,” Farkas predicts.

A report from FMI, Raleigh, N.C., another construction management consulting firm, predicts highway construction spending will grow in 2001, after declining in 2000.

The growth in 2001 is pegged at just 0.2% by FMI, an increase of $100 million in spending. FMI credits “the Bush Administration [budgeting] an additional $2 billion in highway spending along TEA-21 guidelines” for reversing last year’s decline.

In 2000, highway construction spending declined 4%, or $2 billion.

Despite the manufacturing slump, FMI is still predicting a healthy non-residential construction segment, which should provide opportunities for C&D recyclers. Among FMI’s predictions for 2001:

- Industrial construction should grow 6% in 2001, with $14.7 billion spent in this sector. Another $9.7 billion could be spent on industrial expansions and improvements.

- Some $44 billion will be spent on new school buildings, with more than $20 billion spent on expansions and improvements. Those numbers reflect a 12% growth rate for new construction and 15% growth in improvements.

- Office space will continue to be created, with FMI predicting more than $50 billion in new office construction spending—up 13% from 2000. Another $11 billion on office expansions and improvements is expected.