The Last Word

Kirk Landers

Vice President
and
Editorial Director

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December 2004

Will 'Good' Be Good Enough?

Economists who are forecasting anything less than a good year ahead for the U.S. and Canada are about as visible as weapons of mass destruction in Iraq, and the feel good prognosis extends all the way to the road and bridge industry.

Early forecasts for gross domestic product growth are running around 4% for the U.S. and just under 3% for Canada. There are lots of hedges in those forecasts. In Canada, the strength of the Canadian dollar relative to all the major currencies of the world affects the marketability of the country’s bountiful raw commodities.

In the U.S., the worry is that a perfect storm of trade debt, national debt, an overvalued currency (relative to Asian currencies), and global shortages of key commodities will let the inflation genie out of its bottle to wreak havoc with an economy that’s running pretty smoothly otherwise.

Anything can happen, of course, but few economists expect these threats to come to bear in 2005, so we are left with the prospects of a good, though not great, business year ahead.

Is a good economy good enough for the construction industry? All indications seem to be: yes.

Better Roads’ annual survey of road professionals shows that the highway market is progressing nicely, thank you, despite the absence of a federal transportation bill. That survey will be presented in detail next month, but preliminary data shows highway agencies at every level of government are reporting that last year’s budgets were better than originally forecast, and more than one out of three anticipate budget increases this year. Agencies forecasting budget cuts are tracking at less than 15%, the lowest level in years.

The relief from what had been dire budget years before has allowed state and provincial agencies to invest more in bridges and in major highway interventions than they had forecast, and spending plans for 2005 suggest even greater aggressiveness in these areas.

Roads and bridges aren’t the only segment of the construction economy showing new life.  General construction contractors have been doing well all along, and equipment manufacturers and distributors have enjoyed a surge in sales. Equipment manufacturers are coming off their biggest growth year since the ‘90s — sales increased 15 to 25% in many segments in 2004  — and they fully expect more growth in 2005. The darkest clouds on their horizon are steel prices. Manufacturers can’t raise prices fast enough to compensate for the cost increases of 2004, so profit margins are being compromised. Fortunately for them, volume has been so brisk the pain has been minimal.

No one seems to have any idea how long this growth cycle will last. The past three years have been reminiscent of the early years of the last economic cycle, which was marked by a long, slow start and a very long period of sustained growth. Could it happen again? Absolutely. But before you bet the ranch on it, take another long, deep look at those clouds the economists keep talking about.

November 2004

What's Next for Roads?

By the time you read this, the 2004 U.S. elections will be over (hopefully), and those interested in the country’s surface transportation act will have a pretty good idea of what is possible when Congress re-opens the subject early next year.

A victory for President Bush virtually assures passage of something akin to his very modest proposal in early 2004. A victory for Senator Kerry opens up the possibility for something more aggressive — the Senate’s $318 billion package or maybe even something more than that.

Either way, there have been some promising signs for the highway industry leading  into the elections.

First and foremost, Congress and the Administration agreed to transfer revenues from the gasohol tax to the highway trust fund. Previously, those revenues had gone to the general fund and were not available for transportation investment.

This is hardly earthshaking, but it is significant because it represents a compromise — a very modest compromise, to be sure — on the part of the Bush Administration. The transfer of money out of the general fund at a time when the country is running large deficits is contrary to the President’s economic strategy, but it was a reasonable compromise to make with congressional leaders who sought a more aggressive transportation bill than the Administration could live with.

It also raises hope that the next Congress can pass legislation that taxes gasohol at the same rate as gasoline, removing the long-time subsidy for alcohol blends.

The other promising sign for the road industry has been the significant growth in highway and street spending this year, despite the failure of Congress to pass a new transportation act. Department of Commerce data indicates that road spending is up about 8% through August compared to the same period in 2003. The fact that spending could increase so much with federal spending essentially flat indicates that state and local government revenues are recovering nicely from the recessionary doldrums of 2002 and 2003.

At the same time, Bureau of Labor statistics show that the producer price index for highway and street construction increased 7.5% from June 2003 to June 2004. Presumably, much of the increase is due to inflationary pressures from rising costs for steel, cement, petroleum-based products like asphalt, and aggregates. So the new funds for roads aren’t fueling more construction activity as much as they are making it possible to sustain previous levels of work.

For contractors, and for producers of asphalt, concrete and aggregates, the current situation is not at all hard to live with. There is enough work to keep everyone busy and reasonably profitable, and not so much as to create problems retaining employees and getting materials.

October 2004

Let's deal with health costs

If your business is like ours, health insurance costs for the past four years have created unending financial pressures on your company and your employees.

When we formed our small company about four years ago, one of our goals was to provide 100% company-paid health insurance for all full-time employees. We were able to do that in the company’s formative years, even though we were losing money, because the premiums weren’t that bad.

Ironically, as we became profitable, health insurance became so staggeringly expensive that we have not only gone to employee co-payments, but we have also had to dramatically reduce the quality of our coverage. Most of the people affected by this have an ownership interest in the company and voted, reluctantly, for each reduction in the benefit because it just made business sense. In four years, the cost of our company health insurance doubled.

No doubt, your company has had similar experiences.

Inevitably, the question arises: Where is the money going? Who is getting rich from all this?

Well, it’s not the doctors. They have their own problems with insurance costs, and they are getting killed on collections as Medicare and large insurance companies arbitrarily reduce what they pay for medical services. The average family practice in America collects about 60% of its billings, and many are leaving medicine for other pursuits.

It’s not the hospitals. They are going out of business and consolidating at a frightening rate.

Tort lawyers and insurance companies are getting some of the money, but as popular as they are to bash in political stump speeches, their profits only contribute to the spiraling cost of health care and health insurance. They don’t account for all of it.

The biggest part of the escalating cost of health care in the U.S. is our undisciplined approach to medical progress. Miraculous new technology, procedures, and drugs are routinely added to the repertoire of life-saving, life-extending, and life-enhancing measures available to physicians and patients, and they are generally covered by insurance. For physicians not to use these innovations — and for insurance companies not to cover them — would be unthinkable. This is life we’re talking about, after all.

So the technology of modern medicine has progressed without the kind of fiscal discipline that has governed advances in other fields. You no longer get a chest X-ray, you get an MRI. The MRI is infinitely better than the X-ray, but it also costs much more, exponentially more. The MRI finds more cancers while they can still be treated, and the treatments for cancer are much more effective than they were a couple of decades ago. But looked at in the cold financial realities of health insurance costs, those saved, extended, and enhanced lives made possible by the MRI machine represent untold millions of dollars of new cost for the insurance pool to bear.

Multiply that by all the other great advances and you have the serious financial crisis we have today.

If we are ever to solve our health insurance crisis, we will need a two-tiered approach to coverage, with the basic plan covering medical technologies and practices that were in place at a given time, and an optional supplementary plan covering everything else, but at an added price. Changes to the basic plan would only include improvements in medical technologies and practices that cost the same or less than those already in place. That’s how it works in most other industries and, there’s a good chance that innovation would still progress at a pleasing rate — it would just be more cost-efficient.

Tort law reform would help the health insurance crisis considerably, but it isn’t a solution by itself. We need to prod our elected representatives to find solutions that address the rest of the problem, too.

October 2004 Special

The Politics of the Highway Bill

Nothing in the construction industry produces more political spin than the release of the Urban Mobility Study, conducted by the Texas Transportation Institute.

In this annual Fall classic, TTI assembles impartial data relating to traffic congestion in cities and towns across the U.S., and others interpret what it all means.

Here's how the process works. The TTI study always finds that congestion delays are worsening, and provides 20-year trend data to show how dramatically worse things are getting.

Lobbyists for the road construction industry and highway user groups like commercial truckers immediately issue statements saying the data illustrate the necessity of investing more aggressively in road and transportation capacity.

Simultaneously, lobbyists for environmental interests and anti-government groups like the Heritage Foundation say the data prove that you can't build enough roads to alleviate congestion.

In this presidential election year, there is a new voice in the spin cycle: the Bush Administration has issued a statement praising its own innovative, traffic-fighting solutions for short-term congestion relief and claiming it has proposed record levels of funding for highways and transit systems.

Nothing against the Bush Administration, but this is nearly as specious as the claims by environmental groups that roads create congestion. The Federal Highway Administration's "innovative" solutions to traffic congestion have been instituted by many highway departments over the past decade and, while they help, measures like traffic signal timing and dynamic message boards are overwhelmed by the sheer growth in numbers of cars and drivers competing for space on roads that have increased only a few percent in capacity in the past decade.

As for the administration's proposed "record funding" for the transportation program, the road industry says the Bush proposal actually reduces the federal highway program. What's great about statistics is, they're both right. The administration's proposed 6-year budget includes more total dollars than the 6-year TEA-21 program, which set records for road and transit investment. However, TEA-21 budgets increased with each successive year, topping out at just over $30 billion in 2003. The administration program essentially holds that level of spending for six years. Nominally, that's an increase in spending. In reality, when you factor in inflation, the proposed program is a step back. 

The bad news for motorists and the road industry is that TEA-21, for all its record-setting increases in investment, succeeded mainly in improving the condition of U.S. pavements, but it had little impact on expanding capacity. 

The House and Senate have both passed larger transportation programs and spent the summer trying to hammer out a compromise with each other and the Bush Administration. The rumor mill in the capitol suggests all parties are near an agreement on a $290 billion, 6-year program. It would give the president the tax-neutral program he wants, the House and Senate some federal dollars to take home to the voters, and the road industry would get essentially a continuation of TEA-21. 

As for motorists, they get more congestion.

September 2004

Correcting the Right 

Even as left-wing environmentalists take issue with expanding road capacities to deal with ever growing volumes of traffic, right-wing anti-government conservatives are calling for an end to a federal highway program altogether.

And even if you are an ardent “small government” advocate, you may want to correct some of the misconceptions the right is communicating to the public.

In an August 4 Web Memo, The Heritage Foundation takes issue with rampant waste in the federal highway program. “Despite the federal government’s $700 billion (inflation-adjusted) of transportation spending since 1970, road capacity has only increased by 7%,” write authors Alison Fraser and Jonathan Swanson. They claim this lack of increased capacity is due to federal dollars being squandered on pork-barrel earmarks.

Next time you make a contribution to this group, you might explain about the cost of rebuilding and maintaining roads. You also might want to explain that the federal monies go primarily to the construction and maintenance of interstate and U.S. highways, and not to the care and construction of the tens of thousands of miles of local and county roads, so they might want to use a fairer base in calculating the effectiveness of the federal program.

And while pork-barrel projects are an indefensible and unpleasant part of the transportation bill, they constitute a small percentage of the funds spent on roads and mass transit. But that’s not how The Heritage Foundation totals it up.

“This year’s bill is 35% more expensive than any other,” say the authors about the current allocation for highway spending, “and only two-thirds of 1% of the money will fund general purpose highway projects.”

Really. That’s what they wrote. Their source for this information is another paper published by The Heritage Foundation, Reauthorization of TEA-21: A Primer on Reforming the Federal Highway and Transit Programs.

In point of fact, the American Road and Transportation Builders Association cites audited government data that shows nearly all of the federal highway monies go directly to fund highway projects. In FY 2003, for example, 1% of the $31.081 billion federal highway funds went to Federal Highway Administration administrative expenses, and another 1.4% went to federal lands highways and FHWA research programs. The remainder — 97.6% of the funds — went to the states to fund qualifying road projects.

And if you really hate big government, please rejoice in this statistic provided by ARTBA, by way of the U.S. Census Bureau: In 1992, there were 4,110 total federal employees in the highway program; in 2002, the number was 2,884 people, a reduction of 30%.

The Heritage Foundation Report concludes that the federal program should be terminated because, “Research shows that...local and regional governments can handle transportation issues better than the federal government.” No argument here. Just stunned silence. Will someone please tell these well intentioned people that the federal funds are spent by state and local agencies?

August 2004

Preservation Saves

As the U.S. economy continues to generate a mixed bag of strong gross domestic product growth, middling job creation, and somewhat weak advances in personal income growth, the prospects for a year or two of extremely robust economic performance such as that of the late 1990s are becoming less likely for this cycle.

The bad news for the road industry is that state tax revenues are not likely to increase any faster than personal income growth, the weakest part of this economic cycle so far.

The good news is, our government and our society generally perform better when conditions are just slightly positive compared to when they are very, very positive as they were in the late 1990s. We capitalists compete when times are tough and it brings out the best in us. When a blistering hot economy makes everything easy, we tend to gorge.

Put another way, when conditions are so good that any idiot can look good managing a company or institution, idiots take over the management of many of our companies and institutions.

In the road industry, highway agencies can expect some fiscal relief from the dire years of 2002 and 2003 in the months and years to come. They can also expect a modestly progressive federal transportation act to emerge from the Congress one of these days. But very few states will ever have the revenues to maintain pavement condition and also deal with the capacity/congestion problems they face — unless they change asset management strategies and tactics.

Prevention is the key. Everyone has heard the oft-cited statistic that every dollar invested in prevention saves three or four dollars in repair or replacement down the line. However, for many road managers, the next question is, how do you find more money for prevention without causing other parts of your program to disintegrate due to lost funds?

There are no easy answers to this quandary, but there are hard answers.

Faced with the problem of rapid population growth and slower budget growth in the 1990s, the Nevada Department of Transportation performed an extensive study of its roads and the costs and benefits of various intervention tactics (see How Recycling Fits Nevada’s Pavement Program, Sohila Bemanian, July 2003 Better Roads). As a result of that study, NDOT put a higher emphasis on prevention, and focused their program on intervening in pavement degradation with the right tactic at the right time.

The “right” tactic was the one with the best lifecycle cost, not the lowest initial cost, and the DOT used its own pavement cost/performance data to project lifecycle costs.

Equally important, NDOT prioritized projects based on the rate of pavement deterioration, not on pavement condition.

The state’s initiative paid off faster than anyone anticipated. Originally, the DOT expected to substantially increase its prevention budget to reduce its backlog of projects to a workable level. But in the first six years of the program, annual expenditures for prevention averaged about $4 million a year less than the state had previously spent, and the backlog of projects was cut in half.

The success of the state’s program allowed NDOT to shift new revenues into the challenge of expanding road capacity to accommodate the nation’s fastest growing population.

While even the best prevention program will never eliminate the need to replace worn out bridges and pavements, an enlightened approach to lifecycle management will preserve more dollars for these big-ticket projects in the years ahead.

Urban Cost Efficiencies

Several years ago, one of the wilderness organizations that is prominent in the environmental lobby moved its offices from downtown Washington, D.C. to one of the city’s leafy suburbs, thus violating one of the cardinal rules of the lobby, to wit: Thou shalt urbanize.

The organization caught a few barbs from the media for the move, but by and large the announcement escaped any close scrutiny or discussion. Construction industry lobbyists left the issue alone, preferring to concentrate on communicating the industry’s positive points to elected officials and the news media.

You can’t fault the construction lobby’s strategy or tactics, but it’s a shame in many ways that we did not have a national debate over the conflict between environmentalists’ desires to urbanize America and the realities of the market place.

The environmentalist group that moved to the suburbs did so because its office space there was dramatically cheaper than in town. That is the same reason tens of thousands of other businesses have done the same thing over the years. It is also the same reason that millions and millions of American families have chosen to locate in the suburbs.

For vast numbers of our citizens and businesses, large inner cities are not cost efficient.

While the environmental lobby would like to force urbanization on our sprawling metropolitan areas by making highway transportation impractical, they are missing the real problem: Roads don’t cause urban flight, opportunity does. The more you make movement in and near the city impossible, the more the population will spread into the hinterlands.

We are reversing the urbanization of America that happened in the mid-20th century, especially after World War II when millions of rural-born Americans migrated to the great cities in search of opportunity. The jobs that brought those multitudes to the cities began migrating to the suburbs in the 70s and are now drifting out to the exurbs, to the small cities and towns that were considered rural centers in the 1940s.

Want to make cities more attractive for businesses and residents? Give them some competitive advantages. Reduce the cost differential. Where are the advantages for high-population-density living? Most services cost more in the city than they do in the suburbs, even the established suburbs. Taxes are higher. Roads are worse. Housing costs far more for much less. Many cities’ public schools are so bad that middle class residents have to factor in private school tuition. Public transportation is more feasible than outside the cities, but only in New York City is it so extensive as to eliminate the need for a car.

The objections to locating families and business in inner cities can’t be overcome by forcing bad roads on the suburbs and the exurbs. All that will do is stimulate more migration outward and exacerbate the problem of sprawl.

Roads are not a threat to cities. Roads take people and businesses where they want to go, and good roads take them there efficiently. When cities are desirable places for people and businesses, roads will get them there, and good roads will get them there efficiently.

The Small Government Economy

 As we go to press, the Senate and House leadership have finally agreed to the parameters for negotiating on a compromise transportation reauthorization bill — a vital step in the labyrinthine process to produce a new federal program, but nowhere near the end of the process.

What has made this bill such an ordeal has been the Bush Administration’s unflinching opposition to any expansion of the federal transportation program that would require a fuel tax increase. Thus, the administration’s six-year proposal calls for $247 billion for highways and mass transit, more than $100 billion less than the program the House Transportation and Infrastructure Committee espoused.

The House ultimately passed a $275 billion bill, and the Senate a $318 billion package. Though neither bill specifically requires a tax increase, they both require the shifting of money from the general fund to the transportation fund, and for this reason the administration has threatened to veto either one.

The problem is that none of the three choices addresses the nation’s transportation needs. The original House T&I Committee bill did that. At a six-year spending level of $375 billion, it took into account that the nation’s population has grown, that our highways have become our warehouses, and that as truck and car traffic have proliferated by once unimaginable amounts over the past decade, we are in a race to expand our roads’ capacity as well as their physical condition. That bill never had a chance, however, because it required an increase in the federal fuel tax and in these anti-government, small-government times, no tax increase for any reason, no matter what, can be tolerated.

Welcome to the limitations of government by slogan.

By following the Bush Administration’s “small government” initiative, the next U.S. transportation bill will make our highways a liability for economic growth, not an asset. Lest we forget, we had reached the limits of our road system at the peak of the last economic expansion in the U.S. Our highway capacity will not increase, even if we pass the Senate bill, and that guarantees that our next economic miracle will also be a curse. By saving a couple cents per gallon on fuel, we will curtail the efficient movement of commercial freight and commuter traffic with congestion and gridlock.

One plum in the under-funding scheme is that we can progressively invest less in safety considerations because there will be progressively fewer stretches of road where motorists can achieve enough speed to kill themselves.

So here we are at the pinnacle achievement for small government advocates. By refusing to tax ourselves, we are putting limits on our own economic growth. The bad news is, we’ll all have to work harder to improve our standard of living, and for most of us who live in metropolitan areas, the quality of life is going to suffer during periods of economic improvement.

Fortunately, those periods of economic improvement will probably be a little shorter than they used to be, as we choke on our own success. And, of course, we’ll be able to contain the size of our government by the simple expedient of limiting the size of our economy.

False Positives

You’re driving to a social outing on a nice Sunday afternoon. You’re on a suburban freeway and traffic is moving along easily.

You see a construction sign. It says the right lane is closed ahead and warns drivers to merge into the left lanes. You, and those in front of you, begin to comply.

In your rear view mirror you see a car approaching in the right lane. It’s traveling a lot faster than traffic in the second lane. You wonder how far the car will get before the right lane disappears. You look forward. The lane continues for as far as the eye can see.

Miles later, you know it was another spurious sign. Left over from weekday work, maybe. Or even left over from a completed project.

As for the weekend speeder, maybe he had passed that way before and knew the sign was bogus. Or maybe he had seen enough bogus signs in his life to disregard them unless or until he saw the actual construction.

Which, of course, improves the odds that the driver will one day encounter a real construction zone, but see it too late, hurtling into it like a ground-hugging missile.

Unfortunately, false construction zone warnings are still fairly common on our highways. Not as bad as a decade ago, to be sure, but common enough that most of us experience the problem several times a year. That’s enough to reinforce bad driving habits and make real construction zones more dangerous than they need to be.

Of all the things we can and should do to prevent construction zone accidents, the simplest and least expensive item on the list is to make sure there is truth in construction zone signage. This is also the one item on the fix list that doesn’t require big bucks from an elected body or the blessing of a high-ranking government official.

The primary contractor has to put someone in charge of checking the signage every morning and every night, and having a supervisor periodically check too, especially on transition days when lanes will open or close.

Someone from the road managing agency should also be responsible for checking work-zone signage at the beginning and end of each work day — with periodic checks by a supervisor, too.

When you catch a human error, fix it, then yell, scream, lecture, or whatever to the offending party so it won’t happen again. There’s so much more you can do before someone gets killed, before it’s all written into the fine print of the law, before the victims’ families try to find justice in civil court.

Despite all that’s been done institutionally, work-zone accidents are still far too dangerous. A recent study of federal data by The American Road and Transportation Builders Association found that roadway construction workers are killed at a rate nearly three times higher than other construction workers and eight times higher than general industry workers.

Truth in work-zone signage won’t eliminate worker deaths by itself, but combined with the recent crackdown on work-zone speeders by law enforcement, it will help a lot to reduce the frequency of fatal accidents. And in an industry where contractor and agency personnel alike believe passionately in “small government,” here, for sure, is a problem that can be solved without an act of Congress or the formation of a new bureaucracy.

Dealing with Steel in 2004

There are three things you need to know about steel this year: prices are rising faster than the national debt, it’s going to be awhile before anything can be done about it, and contractors and agencies are going to have to incorporate steel price adjustment clauses on current and future projects involving steel or we will lose some very good contractors this year.

What started out as a logical side affect of a recovering economy has ballooned into a serious problem created by several circumstances merging together at a single time. Here are some symptoms of the problem:

• In early March, hot-rolled coiled steel was up 66% from its June 2003 low, according to sources cited by the American Road and Transportation Builders Association.

• ARTBA also reported in early March that Nucor Corporation, the largest U.S. steel producer, expected to increase its sheet steel prices by 20% in the month of April.

• Scrap steel was selling for $100-$120 a ton at the end of 2003, then spiked to $210 per ton in January, and was expected to rise another $50 to $60 by the end of February, according to a steel-industry source cited by the Associated General Contractors.

• Steel producers are adding price surcharges after construction jobs have been bid and won, leaving bid winners vulnerable to serious financial losses.

These increases are far more dramatic than the kind caused by economic growth alone. Other contributing factors include aggressive buying of U.S. scrap steel by China, a reduced number of domestic steel producers due to consolidations, the increased price of coke for steel manufacturing, and increased demand for steel from U.S. military suppliers.

Contractor members of ARTBA and AGC have raised the alarm about the impact skyrocketing steel prices are having on existing contracts that involve substantial amounts of steel. In the road industry, this takes in projects such as bridges, overpasses, bridge decks, reinforced concrete roads, and guard rails; beyond roads, it includes all manner of buildings and rail transportation. The stakes are enormous.

ARTBA has held a series of meetings with Federal Highway Administration executives, asking the FHWA to encourage state departments of transportation to employ price escalation clauses on both existing and future contracts for federally aided transportation projects. The association has had similar meetings with the American Association of State Highway and Transportation Officials.

It is too early to say how long the run-up in steel prices will last, and it is not apparent what, if anything, the government can do about it. The House Small Business Committee began hearings in March to investigate the price surge and its affect on small businesses and job creation. AGC submitted testimony pointing out the impact being felt by construction contractors with fixed-price contracts, and the difficulty that the uncertainty of future prices and availability will have on the bidding process.

And that’s the ultimate reason road agencies should be willing and eager to incorporate escalation clauses for steel in current and future contracts: without such protection, the contractors you most want to do business with — the ones who bring the most competition to the bidding process  — are going to bid less and pad more until this crisis passes.

Selling Highway Values

As the U.S. Senate prepared to vote on its $318-billion reauthorization package last month, the Bush Administration dialed up pressure on Republican lawmakers to vote the measure down as a budget buster. On one television interview, Bush referred to the federal transportation program as an “entitlement program,” an expression traditionally reserved for programs like Social Security and Medicare.

Shortly before the Senate vote, the on-line edition of the Wall Street Journal chimed in on the subject with an editorial excoriating the Senate bill as a Big Government assault on the American economy.

According to the Journal, fuel taxes take money from the economy to nurture the growth of the government bureaucracy, and the projects funded by the program are pure pork-barrel waste.

Fortunately, a large majority of the Senate passed the measure and the battleground now shifts to the House of Representatives, where industry activists will need to address several of the misconceptions that have emerged about the transportation program.

First, it is not an entitlement program. It is one of the most perfect “small government’ programs that we have. Federal transportation spending is entirely funded by a user fee, the fuel tax, and it remains an unquestionably popular tax among Americans of all political persuasions...as long as it is spent on transportation.

Second, contrary to the suppositions of the Wall Street Journal, an increase in the federal transportation program does not cause an increase in the size of the federal transportation bureaucracy, nor are those funds removed from the general economy for any significant period of time.

Program funds move quickly through federal and state bureaucracies to contractors and engineers at the project level. The number of government employees involved in the process did not increase during the TEA-21 years, even though that program represented a quantum leap in funding. In fact, federal and state levels almost certainly decreased during the TEA-21 years as agencies scaled back headcounts and outsourced more work to reduce the size and cost of government.

Third, at a time when we are having difficulty as a nation converting rising corporate profits into good middle class jobs within our own economy, the transportation investment stream is especially attractive. Transportation funds flow to domestic companies that operate at much shorter margins than firms in glamour industries; this means the money goes directly to jobs and equipment and materials. It also means that the profits stay in the country, just like the jobs.

As an industry, we need to maintain a consultive, educational dialogue with the Bush Administration as well as our Congressmen in the coming weeks to achieve a good transportation program. Our goals should be to correct the misconceptions addressed above, and to convince President Bush to moderate his opposition to increasing the fuel tax. The main weakness in the Senate package is its redirection of gasohol fuel tax revenues from the general fund to the transportation trust fund. Yes, it is logical and fair to do so, but pulling money from the general fund at a time when the country is operating hundreds of billions of dollars in the red isn’t something any of us would like to do. It is just a belabored way of trying to obey the President’s mandate to not raise any tax by any amount.

Far better for the economy and the country to raise the fuel tax a nickel and get on with the important work of fixing our roads and keeping our economic recovery going strong.

Or Forever Hold Your Peace

If ever there was a time for a group of people to speak now, or forever hold their peace, this is the time. The five-month extension of TEA-21, the last federal transportation act, expires at the end of February, and the nation's roads and transit systems desperately need a new act to be in place at that time.

With many other pressing issues competing for the attention of Congress and the Bush Administration, it will take a tremendous grass roots effort to get our elected representatives focused on this vital legislation. "Grass roots" is lobbyist talk for lots of phone calls, e-mails and letters from regular voters to their senators, congressmen, and President Bush.

"Grass roots" starts with the readers of this magazine, the people who build, manage and maintain our roads and bridges and know more about the need for a strong federal transportation program than anyone else in the United States. Your representatives, senators and president need to hear from you this month, even if you have registered an opinion with them before.

Our industry needs to make sure every congressman and senator, along with the White House, gets at least 20,000 letters, e-mails and phone calls this month urging them to take action on the transportation act. That's a lot of correspondence, even in the capitol, but it's only half the subscribers of this magazine.

Many industry associations have created website services that make it incredibly easy for you to do this, and in just a few minutes.

If your association doesn't have such a service, two web sites that provide it even for non-members are the American Road & Transportation Builders Association (www.tmaw.org) and the Associated General Contractors (www.agc.org). Both sites have you enter your name and address information, then automatically link you to the correct senators and representative. You can send all three a pre-written letter or postcard just by clicking your mouse. The entire process takes less than five minutes.

If you want to take an even more active role in the democratic process, follow up with a personal written letter to the same people and to President Bush expressing your views in your own words. And even after you write to your elected officials, remember to call their local offices to log your opinions with the home district staff.

Our message is a powerful one, in two parts: America's roads and bridges are in marginal condition and choked with traffic because our infrastructure investment has not kept pace with population growth; and Americans are overwhelmingly in favor of fixing the problem, even if it requires increases in highway user fees. Best of all, the jobs this work creates cannot be exported and will help strengthen the one lingering area of weakness in our recovering economy.

Do yourself and your country a favor. Invest the next five minutes of your life in going to an association website and registering your opinions with our elected officials.  

Click here for PDF version of this editorial.

January 2004

Getting Roads in the News

In a recent Better Roads survey of subscribers, only 16% of government agency respondents said they thought their local news media did a good job of reporting on road issues. The other segments of our audience were even less enthusiastic: just 8% of contractors and 11% of consultants and consulting engineers give their local news media good grades for coverage of road issues.

While the numbers are a little startling, the sentiment really isn’t. For most news staffs, roads and bridges rate only occasional coverage and stories are usually handled by less experienced reporters. Construction, maintenance, and repairs of highways make the news mainly when budget numbers are announced or when a proposed project becomes controversial for social or environmental reasons.

Thus, when the average citizen hears about roads in the news, it’s frequently in the context of pork barreling charges or an endangered species debate or some other negative context. Rarely, if ever, is there a story about a state or city using new materials to achieve longer lasting roads, or installing new lighting technology to reduce accidents. Local coverage of road widening and other improvements often are focused on the affects the construction will have on traffic.

Roads do alright with the public anyway, mainly because nearly everyone uses them every day. But this is clearly not the kind of news coverage any industry or institution would like to have.

No group of people could do more to improve the depth and frequency of road stories in the local news media than the very professionals completing our survey, because the missing ingredient is education. News editors and reporters are as well-intentioned as anyone else about doing their jobs well, but the range of topics that they cover is impossibly broad, even in large organizations where beat assignments provide some degree of specialization.

To help them recognize a good story that doesn’t involve scandal or tragedy, industry professionals can provide some educational background in key highway disciplines. When an agency opts for a premium asphalt friction course, or a life-extending concrete admixture, or an advanced deicing system, or higher-visibility signage, or any other significant upgrade, have a team of highway professionals and a communications pro visit local editors and transportation-beat reporters with an informational presentation about what’s being done, why, and what the benefits to motorists and/or taxpayers are.

Another natural opportunity to get exposure for the benefit side of the public investment in roads is an annual “state of the roads” press conference. Agencies are becoming increasingly sophisticated in maintaining and interpreting data on the road systems they manage, and this opens the door for educating the press and the public on a macro level as to what condition area roads and bridges are in (and why), what has been accomplished over the past year (and why), and what will be the areas of emphasis in the year to come (and why).

Making contact with the news media is not as hard as you might think, and working with reporters is not as adversarial as movies and politicians might lead you to believe. Will you get misquoted now and then? Perhaps, though you can avoid most of that by leaving behind a press release that contains the most salient data and quotes for the reporters’ reference. Will every press contact result in a story? No. In fact, your hit rate might be very small. Still, there are unforeseen benefits from such efforts, especially if they are sustained over an extended period of time. The most important of these is giving reporters an authoritative source on roads to contact when a transportation story comes up from other sources.

Getting the story out about roads is important, and the better the road industry does it, the more enthusiastic the public will be about supporting the industry’s work.

December 2003

Of Bikes and Buses

On a recent press tour in Asia, a group of construction editors had the opportunity to spend a few days in Beijing, China, a city of 14 million that, like the country itself, seems to be entering a period of explosive economic growth and prosperity.

To many of us, the single most striking contrast between Beijing and western cities is the city’s unique reliance on bicycles and public transportation. Hundreds of thousands, perhaps millions, of commuters go to and fro each day via bicycles, while thousands or millions more pack cheek to jowl in a sea of buses. Still others use the city’s subway system, while just a small — but growing — fraction of the population uses the automobile to get around.

On the surface, it seems like a transportation planner’s dream come true. Yet Beijing’s traffic gridlock on an average day seems to be as bad as the worst day in North America’s most congested metropolitan areas...and it will certainly get worse as affluence spreads in the years to come.

Beijing’s traffic planners face the same challenges we face on this continent. Despite the high population density, the city covers a huge landmass; 14-million people take up a lot of space even when most of them live in high-rise communities. And commuting patterns are subject to change as new businesses form and take root and old businesses move to better locations.

Bicycle transportation sounds idyllic, but in real life, weather makes it the mode of last resort. During our stay, it snowed in the area and the ambient air temperatures dropped well below the freezing mark. Foul weather affected bicycle commuting the same way it affected vehicle travel — it caused longer trip times, reduced traction, and increased the risk of accident. And it had to make travel uncomfortable, if not miserable, for even the hardiest commuter.

Bus transport was better only in that it provided shelter from the weather and delegated responsibility for steering and braking to a third party.

So Beijing can look forward to a rapid conversion of bicycle and public transportation commuters to the private automobile as more and more locals find middle-class incomes in the country’s burgeoning economy.

And that, for Beijing, may be the biggest nightmare of all. Its surface transportation system is based on vast, wide avenues rather than limited-access freeways. Left turns can consume 20 minutes or more of time cueing up for the opportunity to flash across a half-dozen lanes of traffic, and opportunistic drivers take their chances without much regard for traffic signals — ultimately creating gridlock in every direction.

How Beijing will cope with its growing wealth — and with the huge influx of tourists expected for the 2008 Olympic Games — is a fair question. The city seems to have the physical potential for an expanded subway system, and a monorail system is part of the city plan for the Olympics. But rail systems are expensive to build and to operate, and it’s not likely the city will be able to create enough rail capacity to solve its congestion problems.

Which will bring Beijing back to its road capacity, and the dire need to expand it, even if the grand plan is to continue making public transportation and bicycles the primary commuter conveyances.

And that’s the lesson Beijing reinforces for transportation planners everywhere. The complex transportation needs of the modern city can only be met by a multi-modal approach and a willingness among the taxpayers to invest seriously in transportation solutions.