The Trickle Effect
At the end of 2009, many aggregates producers were happy to sing Auld Lang Syne and start fresh, but after the most difficult year in more than a decade, cautious restraint is the order of the day. For 2010, just 2.5 percent expect excellent business results, 6.6 percent look for a very good year, 27.4 percent predict a good year, 42.6 percent foretell a fair year, and 20.8 percent call for another poor year. Although one in five producers anticipating a poor year may seem ominous, it’s the lowest percentage predicting results in that category since 2007.
In terms of production statistics, respondents were much more positive. Although two in three experienced declining production tonnages in 2009, approximately two in three called for either increased or stable production levels in 2010. Among core product respondents, those who produce crushed stone were the most likely to anticipate an increase in production (27.5 percent) followed by crushed stone and sand & gravel producers (19.1 percent) and then sand & gravel producers (14.3 percent). In contrast, more sand & gravel producers expect stable production (57.1 percent) than any other product category.
Like survey respondents, most economists anticipate slow growth in 2010, but as Ken Simonson, chief economist for the Associated General Contractors, noted at a recent press conference, “One-time investments in transportation infrastructure like the stimulus help, but they’re simply no substitute for having a long-term investment strategy for our roads, bridges, and transit systems.”
Remaining stimulus dollars eventually will flow into the market. To build industry investment from a trickle to a pour, however, long-term transportation reauthorization is key.
On Dec. 10, the House passed a $450 billion omnibus spending bill that contained $41.07 billion for the core highway program. The funds are expected to be supplemented by an additional $850 million in general fund dollars allocated to the states using the standard apportionment formula, $240 million more in earmark, and $739 million in mandatory spending from the Highway Trust Fund. At Aggregates Manager press time, President Obama was expected to sign the bill (for more news on transportation reauthorization, see AggBeat on page 4).
The big question is whether the flow of transportation funds will begin in time to ensure better production and fewer layoffs during 2010.
The respondent pool
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