Jan 1, 2009 12:00 PM
Nationwide, the impact is showing up in new contracts awarded for highway and bridge construction projects, which were down $1.7 billion, or 3.7% so far in 2008.
Reauthorization of the federal highway and transit programs before September 30, 2009, also has market implications since lack of clarity on future federal funding beyond that date could cause some state and local highway agencies to go slow in committing federal funds for new projects.
In addition to steady federal funding and a possible stimulus boost, another bright spot, is that highway construction costs appear to be easing after rising 11% in 2008. The recent decline in the price of oil in late 2008 sharply lowered prices for asphalt and diesel fuel. Other materials prices, responding to the weak economy and downturn in housing construction, also appear to be easing.
If the lull in prices continues into 2009, as many expect, flat nominal construction spending may actually support more highway and bridge construction activity next year than in 2008.
The value of construction work on subway and light rail projects was predicted to hit $4.3 billion in 2008, up 20% from $3.6 billion the previous year.
The growth should continue into 2009 and beyond, driven in part by $1.5 billion of contracts awarded so far in 2008 for New York's 2nd Avenue subway line, according to Buechner. Big contract awards in 2007 and 2008 for projects in Colorado, Oregon, Nevada, and Utah also should help boost this market for the next few years.
By contrast, the airport runway, taxiway, and related construction market was in the doldrums in 2008, Buechner said. An estimated $5 billion of construction work was performed on airport projects in 2008, down about 9% from $5.5 billion in 2007. Airport construction funds were being spent on airport terminals, up 29% to $7.1 billion from $5.5 billion in 2007. New contract awards for airport projects were down about 21% to date, from $1.9 billion in 2007 to $1.5 billion in 2008, offering little hope for a rebound in airport construction during 2009.
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