Construction News 2009 Forecast

The South Central U.S. traditionally feels economic trends as the back side of a wave. Trends that begin on the east and west coasts and in the northeast meet down south many months later, and have defused a bit.

Ken Naquin, CEO of Louisiana AGC Inc., believes that for both “public works and private works in Louisiana, the carryover from 2008 into 2009 is going to hold us in pretty good stead.” He is more concerned about the last quarter of '09 into 2010. “One of the things that could change that in the post-Katrina hurricane area is if funding for all that hurricane work ever hits the streets.”

Along the Mississippi Coast, post-Katrina construction is also the mainstay of construction work. Kevin Nall, president of the AGC of Mississippi, reports that while he has seen a few projects being pulled, overall there has not been a major slowdown in Central Mississippi.

Vertical construction in South Central states not involved with post-hurricane reconstruction has already begun to see flattening toward a downward trend in 2009 due to the bond market. Even hospital, school and church construction, which have been the strongest markets for the past five years, will pull back as bond money and donations wither.

“Right now, for all intents and purposes, the bond market is shut down,” explained Dick Anderson, former executive vice president of the AGC of Oklahoma. “The bond market drives a lot of the tax-funded market sector.”

In Oklahoma, Native Americans are becoming construction powerhouses. Casino revenue is enabling the Indian nations to build and maintain hospitals and roads.

Between wind farms and natural gas, Arkansas and Oklahoma are poised as major players in the clean energy movement. Industry reports predict that as much as $100 billion will be spent on natural gas exploration in Northern Arkansas alone in the next 10 years. Four new wind farms are in the works in Arkansas and as much as 5,000 MW of new wind projects for Oklahoma as well as the need for transmission upgrades to deliver the electricity produced by those projects.. The Haynesville Shale field discovered in northern Louisiana has not yet begun to be tapped.

The Arkansas General Assembly has renewed a $300-million state bond issue for water projects to increase and upgrade capacity. Our aging water infrastructure has begun showing signs of serious deterioration and incapacity to handle the new demands of our growing population.

Although fuel tax revenues have fallen dramatically over the past year as a result of drivers' financial choices, the highway departments in the Construction News reporting region do not expect a negative effect for the remainder of the 2009 fiscal year. Most have calculated their budgets conservatively.

Due to the profitable activity related to the Fayetteville Shale gas field, the Arkansas General Assembly approved an increase in the severance tax tied to natural gas, with that money going directly to roads. The Arkansas Highway Transportation Department has planned massive work associated with I-49 along the Hwy. 71 corridor from Texarkana to Fort Smith.

In Tennessee, TDOT is busy with the I-69 corridor. TDOT will also let a $50-million project for State Route 385 in Memphis in early 2009. Gov. Phil Bredesen of Tennessee and TDOT Commissioner Gerald Nicely support a $350-million bond package for construction to repair or replace about 200 bridges in the statewide TDOT system.

Highway work will be Oklahoma's bright side. With work well under way on the I-40 Crosstown Freeway relocation in Oklahoma City, focus in now turning to Tulsa. A $46-million contract for underground drainage was awarded as the first phase of the $330-million I-44 widening project in Tulsa. The next phase is tentatively scheduled to bid in mid-2009.

“Our eight-year plan is not a wish list,” ODOT Director Gary Ridley said. “It's a schedule and we will deliver.”

Beginning this spring, the U.S. Army Corps of Engineers will begin contracting work to the tune of $15 billion to $17 billion, primarily in the New Orleans area and below, along the Mississippi River, according to Freddie Rush, executive vice president of the Mississippi Valley Branch of AGC.

Major projects associated with this effort will be two large pumping stations, a gated structure in the West Enclosure, and several levee projects along Lake Pontchartrain and the Mississippi River in St. Bernard Parish.

How deep into the recession trough construction in the South Central states will slide depends on economic stimulus decisions that the Barack Obama administration will make early in 2009.