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Patricia Hall

Peter Stang




Utah Business Staff

January 1, 2012

Let’s shift gears and talk about the heavy civil side.

PARSON: Tuesdays are brutal, right? Everybody in our industry that does work for UDOT, it’s either a day of highs or lows. The future that we are all concerned about really is the wrap-up of the I-15 Corridor and some of the big design-build projects that are also going to wrap up. Future work is very uncertain, mainly because of funding. There has been no solution to the state’s challenge with ongoing funding and the huge reductions in forecast future spending until Utah’s bonding capacity gets a little breathing room left in it. So the outlook for transportation, at least from my perspective, is pretty dire.

Is that mainly public works, the UDOT-type work?

PARSON: Yes. And in a lot of cases—cities, counties—they are feeling the same stress. Their maintenance funding that flows through UDOT is also being significantly reduced. A point we need to keep in mind—for everybody in Utah—is more than 50 percent of state highway miles have no funding source to maintain them. When you think of the impact of that and the investment we’ve made, no mechanism to maintain over half of our lane miles is a huge impact. As an industry, we are going to continue to develop and support new funding sources.

Abby, you are chairing the chamber’s transportation committee. What do you think is happening?

ALBRECHT: You had it right in front of you when you saw that cliff of UDOT projects; that is scary. That is unnerving, really. We had this huge push with the I-15 Corridor and the Mountain Corridor of influx into the marketplace—companies coming into Utah to do that work. Now there’s nowhere for them to go after these projects are done. So it is a little frightening to think that that cliff is here and it’s upon us.

There are things that we’re working on, but it’s really about educating our legislators. We are kind of taking the bull by the horns and starting to run with it because we’re in a very conservative state. UDOT is very conservative and they aren’t pushing the envelope. So we are out there advocating for ourselves. Hopefully it will work.

KILGORE: I’m extremely concerned about UDOT. When I-15 and the Mountain View Corridor dry up, where do these contractors go? A handful have come into the state. Hopefully they leave; that’s just my opinion.

From the commercial side, we are feeling a little bit of traction as well, but I’m wondering if it’s just that we’re starting to accept what the market has become. So now as a job comes online, it’s “Great, we have an opportunity to bid a job.” Rather than realizing we did half the volume that we did two years ago or a year ago. I don’t know if that is a false sense of security for us, but that’s kind of what we are feeling.

CLYDE: The last few years, there’s probably been more roadwork done in our state than at any time in history. A lot of that capacity was filled by larger companies—national and internationally funded companies—so they have been able to expand their capacity in our particular area. My guess is that will go down some, but some of them will want to stay in some capacity.

But the prices are extremely tight, and one of the fears is that we are all wearing our equipment out and some day we are going to have to replace the equipment. So it’s going to be a challenge to go forward, but I guess the strong will survive somehow and we’ll figure out how to keep it going.

As a state, we’ve had a reputation of having a highly educated population and a good workforce, and so we’ve been able to attract outside companies to locate major operations here. But if you look at the trend, we’ve dropped considerably as a state in college graduates. There is an initiative out there right now, Prosperity 2020, which is setting a goal that we need to have two-thirds of young people that graduate from high school end up with some type of a post-high school certificate or a degree. That is a big challenge to meet.

As a construction industry, we need to make sure that we support education because we want companies to continue to locate here. Because if they locate here, that will provide work for us. So we need to look at ways to help our community grow and be successful. And as our community grows and is successful, then we as contractors will have opportunities to grow with it and do the work that is out there.

As far as trying to get back to the levels of 2006, 2007, I think it will be a long time before that. So we need to adjust our companies and readjust our thinking and be able to compete at what the demand is. Paul, can you cover the equipment perspective on two or three sectors: the underground side, the heavy civil and commercial work?

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