Pit & Quarry, October 2009
The chart on the right shows the major segments of demand from our county based web aggregates forecasting model The DCG forecast shows higher demand in 2010 due to increases in nonbuilding highways bridges etc and residential demand Nonresidential offices schools stores etc will continue to be a drag on aggregates demand until 2011 as vacancy rates are too high to warrant new capacity and job growth will remain non existent into 2010 The biggest source of higher aggregates demand in 2010 comes from nonbuilding where federal stimulus money is slowly making its way to the street The pressure to get new work under way is increasing and will yield modest gains in 2010 up 8 percent yr yr The increase is not higher due to the continuing fiscal problems of most state and local governments Residential while the smallest source of aggregates demand will have the largest percent increase more than 50 and be a second source of higher aggregates demand Demand for new housing is already increasing and will increase more as we enter 2010 Just as the 2005 07 period As part of NSSGAs ongoing effort to promote the findings of the Transportation Construction Coalitions Aggregates UNITED STATES Level was one of over building the 2008 09 period is one of underbuilding Demographic demand pressure is building and as long as mortgage rates remain below 7 percent housing demand will continue to increase The weak link in demand is nonresidential where there is little hope of higher demand for many months Even if new financing becomes available vacancy rates are too high to justify new capacity If reckless deficit spending doesnt sabotage TCC safety study a brief Internet video advertisement targeting Capitol Hill lawmakers and staff has been developed The video emphasizes the role of deficient roadway conditions as a contributing factor in roadway fatalities The video can be downloaded and viewed at www transportation constructioncoalition org A higher definition version of the video is also available for the use of any interested coalition member Established in 1996 the TCC includes 28 national associations and labor unions with a direct market interest in the federal transportation programs R O A D T O R E C O V E R Y AGGREGATES FORECAST 3500000 3000000 2500000 2000000 1500000 1000000 500000 0 1000s Metric Tons 2005 2006 2007 2008 2009 2010 2011 2012 Council Stimulus helps create 1 million jobs According to the Council of Economic Advisers the stimulus package and other policy actions caused employment in August to be slightly more than 1 million jobs higher than it would have been without the legislation The act has had strong effects in manufacturing construction retail trade and temporary employment services the council said By the end of August 1514 billion of the original 787 billion had been outlaid or gone to taxpayers and businesses in the form of tax reductions An additional 1282 billion has been obligated Video highlights link between road conditions fatalities the recovery nonresidential demand will begin increasing by late 2010 and contribute to higher aggregates demand in 2011 David Chereb 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 dc@ davidcherebgroup com Survey QUESTION WHEN DO YOU EXPECT YOUR OPERATION TO RECOVER FROM THE RECESSION We never experienced a downturn 6 Its already started to come back 6 Sometime next year 28 Beyond 2010 48 Things will never be the same 12 Actual Res NRes NBld Total 24 PIT QUARRY October 2009 Sponsored by John Deere Construction
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