Road Warriors: A Look at Safety, Service and SpendingBy Loretta Hall
Article Date: 09-01-2008
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.
Contractors and dealers share glimpses into the challenges road construction companies face everyday - and more frequently at night - and the important role dealers play for them.
For the highway construction industry, the peak summer construction season is a blur of activity and a stack of statistics: 385,000 workers, 3,000 work zones with an average length of 6.8 miles, and project durations averaging four months. Major roads comprising the National Highway System (NHS) carry more than 40 percent of all highway traffic, including 75 percent of heavy trucks and 90 percent of tourists, and the federal government’s 80 to 90 percent share of the cost of NHS projects amounts to $41.2 billion this year. AED estimates that nearly 7 percent of that amount—some $2.8 billion—makes its way into the hands of equipment distributors.What challenges face these road warriors, who strive to build and repair roads to make travel safe, comfortable, and efficient?Staying Safe
Highway work zones are inherently hazardous. Motorists face constricted roadway widths, sudden alignment changes, and the distraction of construction activity. Construction workers, operating in or near massive equipment, also face restricted space. With 40,000 injuries in 2006, someone was hurt in a work zone accident every nine minutes. Just over 1,000 people died in work zone accidents that year—almost one every eight-hour shift, around the clock. Even more alarming than the sheer magnitude of these numbers is the fact that over the past decade, the number of annual work zone fatalities has increased 45 percent.Contractors are battling this trend on two fronts: training and equipment. “We’re constantly sending our people to the ATSSA (American Traffic Safety Services Association) seminars and safety programs, and training them in-house,” said Mark Odom, executive vice president of Brentwood, Tenn.-based Highways, Inc. “We’ve gone to a lot of night work, with lighting and all the employees wearing bright greens and oranges.”“Every time we look at new equipment, there are more and more safety measures involved,” said Jeff Dancy, sales manager of W.W. Webber LLC of Houston; “lockout devices where you can’t put it in gear until you’ve gone through certain procedures, more warning lights and buzzers, safety switches on seats to prevent you from moving equipment unless you’re sitting down, and equipment harnesses for the people who are operating it.”In many cases, contractors are joining together to improve their industry’s safety. One example is the AGC-affiliated Associated Contractors of New Mexico (ACNM), which recently established a partnership with New Mexico OSHA that will take effect in January 2009. “Basically, we want to make sure that the people who are running the equipment know what they’re doing, and the people that are maintaining it are doing a job and keeping good written service reports on all the equipment, as well as making sure that everything’s working, like backup alarms, seatbelts, lights, slow-moving vehicle placards,” said Jay Myers, ACNM safety committee chair and safety director for A.S. Horner Inc., of Albuquerque. “We’re going to be looking for more equipment operator training from dealers,” Myers added.Doing the Work
Road warriors depend on having the specialized equipment they need. “Obviously, the technology is changing all the time,” said Phillip McCoy, president of RoadBuilders Machinery & Supply Co. in Kansas City, Kan. For example, he says, “hydraulic crushers and breakers are getting much more powerful, and the technology has sped that process up and probably doubled the productivity.”Contractors not only need the right equipment, but they need it in operating condition around the clock. “In the summer, any major concrete work [in New Mexico] is done at night because it’s just too hot during the day,” Myers said. “Anything that impacts heavy traffic in the urban areas is being steered toward night work right now,” he added.Nighttime work is a nationwide trend. A study conducted during the summer of 2001 found 42 percent of work zones were active at night, and two-thirds of paving operations took place at night. The figures are probably higher now, as more jurisdictions are specifying nighttime work to reduce traffic congestion, which annually costs $78 billion in wasted fuel and wasted time, not to mention the unquantifiable cost of frustration.“All customers demand great service, but the highway people literally can’t afford not to have the service when something goes down,” said Dennis Romanson, president of Road Machinery in Phoenix. “If a paver or an asphalt plant goes down, they literally will shut down a job and have highways closed if we can’t service the machine and get it running. We have to have 24-hour-a-day service and 24-hour-a-day parts delivery to the site.”“Not a lot of equipment distributors are open at 4 o’clock in the morning,” said Scott Collins, vice president of sales and marketing for Tracey Road Equipment of East Syracuse, N.Y. “They may have a guy with a pager, but we’re focused on aftermarket support and long-term relationships with the contractors. We’re open 24 hours a day, 7 days a week.”Dealing with Dealers
Road contractors rely on equipment dealers for a variety of services and products. They offer both compliments and suggestions for improvement.“We need dealers to be able to handle the things that we can’t,” said Jim Pilewski, vice president and equipment manager of E.S. Wagner Company in Oregon, Ohio. “Dealers excel because of the training they have for their technicians that’s not available for the contractors. I’d like to see them make more training available for the customers’ servicemen. It puts us at a distinct disadvantage when we can’t work on it and they don’t have enough people to keep up with it either.”“Dealers do a good job of being responsive to our needs and requests in a timely fashion,” Odom said. On the other hand, he would like for them to have a greater variety of models, sizes, and prices available. Like many road contractors, Highways Inc. purchases most of its equipment, and rents only to meet short-term needs. About a dozen firms compete for their rental business, and Odom says they make each decision on the basis of “a three-fold comparative: (1.) what do they have available, (2.) what are the price and the terms, and (3.) will it perform the job.”The choice between renting and purchasing equipment depends on several factors, including business size and anticipated workload. “Even when the economic outlook is a little uncertain, larger customers with a big backlog tend to do things as they normally would, which would be a combination of renting and buying,” Romanson said. “As times tighten up, the smaller guys with less backlog tend to rent a little more.” Even regional characteristics can play a part in the decision. “We’re in the Northeast rust belt, upstate New York,” Collins said, “and we have a relatively short construction season, six to seven months from April or May to November. Our road building customers will typically rent equipment starting in April and based on work loads, keep it out all summer. Then our job is to convince them to apply the rental and buy it in October before they send it back and it sits all winter. Eighty percent of our sales are through the rental fleet.”Business Economics
The outlook for road construction activity varies around the country. “Governmental statistics show that highway construction has gone down in terms of the number of projects,” Romanson said. “Yet our activity level, based on numbers of calls and machines going out and interest in equipment, is actually still pretty high.” In Arizona, federal funding remains strong, state funding is stable, but municipal funding is being delayed.“What’s happening in the Southwest is that 2008 is going to be our bottoming-out year,” said David Weston, Road Machinery’s construction sales manager. “In ’09 we’re going to see about a 40 to 50 percent recovery, and 2010 should bring us back to about 80 percent of the 2006 level.”The economic climate is not as robust in Tennessee. “We haven’t called everybody back to work yet, because our workload is down,” Odom said. “We’re exploring working four days a week to cut time and to cut fuel consumption. And we’re looking at installing some fuel recording devices and GPS to make ourselves operate more efficiently.”Collins reports that the level of New York’s state funding is staying fairly constant, but with the sharply increased cost of materials, the appropriation isn’t buying as much asphalt as it used to. “They haven’t increased the amount of lettings; they are just paving less,” he said. W.W. Webber, which does road work all across Texas, usually paves with concrete rather than asphalt, but that is being impacted by materials cost increases, too. “Everything that we do is steel reinforced, and steel prices are changing every day,” Dancy said. “It’s kind of challenging to keep our jobs on schedule and within the budgets with the rising cost of raw materials and fuel.”“Diesel fuel is over $5 a gallon, and some of these big machines consume 15 gallons an hour,” Collins said. “Preventive maintenance services have gone up dramatically. The customers want to keep their equipment in very good shape to try and increase fuel economy.” Despite these economic challenges, road construction remains healthier than other sectors of the construction industry. The American Road and Transportation Builders Association (ARTBA) reports that “the transportation share of total construction spending rose from 7.9 percent in 2005 to more than 9 percent in 2007.” ARTBA predicts “decent growth in transportation construction will likely continue to push the transportation share of total construction spending higher.”Future Funding
The vitality of highway construction activity depends heavily on the federal government, which supplies most of the funding. Revenue from highway-user fees such as taxes on motor fuel and tires is deposited in the Highway Trust Fund and is then used for transportation construction projects. But annual revenues now flowing into the Trust Fund are substantially less than what is needed to maintain – much less improve – the nation’s highway infrastructure. ARTBA calculates an average annual funding shortfall of $19 billion between projected needs and anticipated revenues. Federal funding of transportation projects is due to face reauthorization in Congress in 2009. “Next year’s reauthorization is going to be the most difficult reauthorization of the federal highway program we have ever had,” said Christian Klein, AED’s vice president of government affairs. “There are greater risks for the industry than we’ve ever had before, and also, we think, greater opportunities than ever before.” The risk, Klein says, is that Congress will refuse to create new revenue sources or increase highway-user fees like gas taxes, and highway funding will drop significantly. The opportunity, however, lies in the widespread and growing recognition of the enormity of the needs.“Recognizing these enormous challenges and opportunities, AED initiated our Highway Infrastructure Task Force (HIT) Initiative to make AED more visible in this highway reauthorization than we’ve ever been before,” Klein said. Through individual projects and joint endeavors with a spectrum of partners ranging from ARTBA to the U.S. Chamber of Commerce, HIT is collecting and disseminating information to businesses, individual voters, and prospective members of next year’s Congress.
“I tell members of Congress that when they have to cast that vote in late 2009 or 2010, it will seem like a natural extension of this greater national public debate on infrastructure,” Klein said. “It’s not going to be as difficult as it would be today to vote for a 5- or 10-cent gas tax increase.”
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