2008 Likely To Be Less Than Great For Underground Work

By Richard W. Wanta, Executive Director, Wisconsin Underground Contractors Association | September 28, 2010

Due to the lagging economy, the Wisconsin Underground Contractors Association (WUCA) is not expecting a great year in 2008 — but that will not stop our effort to improve our industry marketplace.

We will continue to help fund a professional lobbyist in Washington, D.C., to bring more federal dollars to Wisconsin municipalities under the federal Clean Water Fund for collector and interceptor sewers.

We will continue to encourage the city of Milwaukee to partially separate combined sewers in the central city as a way to create jobs for area residents.

We will encourage private developers to pay for water and sewer improvements in order to expedite construction of projects, instead of waiting for municipal government to act.

We will work with unions to make signatory contractors more competitive.

And we will encourage owners to expedite projects, as they will save money due to expected inflation, material and labor wage increases.

Last year, WUCA contributed financially with 20 other contractor associations to establish the Clean Water Construction Coalition, which hired lobbyist Sante Esposito to push for more federal money for the wastewater state revolving loan program.

The program allows municipal utilities to borrow money for 20 years at approximately 2.37 percent to fund collector and interceptor sewers. They were successful to date with passage of H.R. 720 that, after approval in the U.S. Senate, may eventually provide $1.35 billion in fiscal year 2008 for the state revolving loan program.

We are expecting good things from the coalition.

WUCA met with the Milwaukee mayor in August 2007 to once again encourage the city to fund partial combined sewer separation in the central city as a way to hire residents at family-supporting wages.

A similar project over 10 years in St. Paul, Minnesota, provided hundreds of jobs for area residents and proved to be a great benefit to economic development in their community.

With manufacturing down in Milwaukee, only the construction industry can provide well-paying jobs and training opportunities, plus health and pension benefits for residents.

And construction jobs cannot be exported! We need people, as the average age of our existing workforce is about 42 years. But we cannot hire additional employees if we do not have a sustained jobs program to train them.

Regarding private developers paying for sewer and water improvements instead of waiting for municipal government to act: It happened recently in Honolulu, Hawaii.

The developer joined with other private landowners to pay for the sewer improvements to build a 2,000-foot relief sewer to divert 8 million gallons of sewage each day from a sewer main.

The city had plans to build the relief sewer, but the developer could not wait years for the municipality to fund the project.

Similar projects could be funded in the cities of Franklin, Waukesha and in more western Wisconsin communities that need additional improvements due to expected new growth.

WUCA five-year labor agreements with three area unions expire June 1, 2008. With the current down market for underground construction expected to continue into 2008, the unions must be reasonable in their demands for a new labor agreement. Some signatory contractors recently indicated that they wanted a change in contract language to make them more competitive.

Area municipalities and public/private utilities must recognize that the cost of construction will not go down by waiting a year or two. Due to inflation and the cost of materials, fuel and wages, projects will just cost more, later. With all the available bidders, this is a great time to bid water, sewer and utility work. More-favorable state funding may never come. Interest rates are still low. And contractors have sharpened their pencils.

The Milwaukee Metropolitan Sewerage District (MMSD) is under court order to finish additional underground work before December 31, 2010. It must move quickly to bid projects or suffer state citations. Actually, the MMSD kept our construction man-hours at 1.4 million in 2007, thanks to two- and three-shift operations for harbor siphons and other major projects.

We thank MMSD for that, as those workers contribute to self-funded health, pension and skill-improvement programs. We also thank We Energies for its 2007 construction of a $2.5-billion coal-burning power plant in Oak Creek, Wis., and the multimillion-dollar water-intake pipe into Lake Michigan to feed the new plant. That provided a lot of construction jobs for Wisconsin residents this year.

WUCA is optimistic, as consumers need basic services of water, sewers, gas, and electric. But as indicated above, we will increase our odds for a better year by convincing buyers of our services to bid now, versus waiting for a better economy. Spring 2008 may be the best time to bid underground utility work.