Pit & Quarry, June 2014

BY KEVIN YANIK Industry offers support for transportation bill N SSGA offered its support for the Grow America Act a 302 billion four year surface transportation reauthorization bill U S Department of Transportation DOT Secretary Anthony Foxx unveiled We welcome the administrations involvement in the reauthorization debate through introduction of a multiyear reauthorization bill says Paul I Detwiler III NSSGA chairman and president and CEO of New Enterprise Stone Lime Co Inc It is essential that Congress act now to address the funding crisis facing the Highway Trust Fund and then move to pass a multiyear reauthorization bill before expiration of the current law on Sept 30 The Grow America Act is based on the plan President Barack Obama announced in February to address the nations infrastructure deficit The proposed surface transportation reauthorization bill would provide 87 billion to address the Highway Trust Fund shortfall and increase safety and efficiency according to DOT The bill would also reportedly create millions of new jobs improve safety across all modes of surface transportation provide certainty to state and local governments that must engage in long term planning and reduce the permitting and environmental review processes Mike Johnson NSSGA president and CEO commended Foxx and the Obama administration for coming forward with a multi year reauthorization bill Funding to stabilize and provide future solvency to the Highway Trust Fund is essential Johnson says The provisions intended to further expedite permitting of projects and environmental reviews will also assist in moving forward many needed projects The bill would however rely on President Obamas proposed progrowth business tax reforms a funding method that concerns Johnson While we support tax reform it seems unlikely Congress will be able to pass major tax legislation before the end of the year Johnson says There is broad agreement that an efficient and cost effective surface transportation program is essential to economic growth job creation and preserving Americas global competitiveness AGGREGATES FORECAST DCG Inc U S Aggregates Forecast billion metric tons Economic signs remain positive The economy is picking up steam and almost reaching a point of sustainable reinforcing growth If it werent for our artificially low interest rates the prior sentence would have no qualifier almost in it We may get through Federal Reserve tapering and a return to market driven interest rates without major problems but that is not the most likely path The most likely path is that markets and companies have become so addicted to low interest rates and no inflation that a return to normal interest rates will cause major problems For now our forecast shows no major problems and in fact shows demand picking up strongly in 2014 as both housing and public works improve Regionally more states are benefiting from new growth as the housing overhang disappears 2010 2011 2012 2013est 2014est 2015est RESIDENTIAL 031 034 038 049 060 045 NON RESIDENTIAL 048 054 057 057 054 061 NON BUILDING 120 110 106 098 107 115 TOTAL 199 198 201 204 221 221 Yr Yr Ch 25 05 15 15 83 00 and more buyers enter the market Most states are now in much better fiscal condition and are investing again in public works A few states and metro areas i e Detroit with very high debt slow growth and poor credit ratings are only going to get worse Ironically Detroit having now hit bottom will get better as new entrepreneurs move in to take advantage of low costs The truth is bad guys still exist in certain parts of the world In 1946 1974 1992 and 2014 the United States began to experience large declines in military spending based on our view that a threat was declining This makes sense if the theory is correct Unfortunately the theory was not correct Some nations took advantage of these spending declines to become more aggressive I think we are repeating this same tendency to underestimate the threat As a consequence the reductions in military spending will be reversed within a few years to combat new threats For construction it means areas with large aerospace and military installations will recover in a few years from their current low points David Chereb Dr David Chereb has many years of experience forecasting construction materials and his web based forecasting models have captured every major turning point in materials demand for more than 15 years Chereb received his Ph D in economics from the University of Southern California He can be reached at david chereb@ sc marketanalytics com 6 PIT QUARRY June 2014 www pitandquarry com