Prairie Business Magazine - Construction 2017

Road Work Ahead

Rob Swenson 2017-06-06 13:07:30

But not as much as needed, as workforce shortages and tight funding limit the work the region’s highway contractors can do Kevin Gutknecht compares the nation’s sprawling interstate highway system to Baby Boomers. Like Americans born between 1946 and 1964, the oldest stretches of the interstate highway system are entering senior status. Building interstate highways began in 1956, and like an increasing number of Boomers, the system has parts that need to be repaired or replaced. “Quite frankly, all of the infrastructure is aging,” said Gutknecht, communications director for the Minnesota Department of Transportation. Plus, a lot of other highways and roadways in the Northern Plains are older than the interstates and also in growing need of repair. But North Dakota and South Dakota, like Minnesota, are confronted by road-building challenges such as budget limits and worker shortages as the states try to keep up with construction needs. Minnesota’s most recent 20-year transportation plan indicates that if revenues aren’t increased, an $18 billion funding gap could develop over that time, Gutknecht said. Budget slowdown The next two years will be especially challenging in North Dakota because state and federal funding allocated for roadway construction has been reduced from a total of nearly $1.2 billion to about $755 million. Downturns in state revenue from the slumping oil and agricultural industries are significant factors in the budget reductions for road construction, said Russ Hanson, executive vice president of Associated General Contractors of North Dakota, a trade group. During the past few years, North Dakota had benefited from one-time infusions of extra money, Hanson said. But “the next two years will be significantly different, with less funding.” Hanson expects most roadwork in the next couple of years will be maintenance and repairs rather than reconstruction. The 8,600 miles of roadway maintained by the state of North Dakota are in good condition now but will deteriorate over time, said Wayde Swenson, director of the office of operations in the North Dakota Department of Transportation. Hundreds of millions of dollars in added funding will be needed in the future to catch up with projected construction needs. If there’s an upside to the soft economic conditions, it’s that bidding for road-construction contracts is highly competitive, Swenson and Hanson said. North Dakota has been averaging about five bidders per project, up from past levels of three or four, Swenson said. Darin Bergquist, secretary of the South Dakota Department of Transportation, said construction bids have been coming in favorably for about the past 18 months. That ended an extended period of rising prices. “We’ve been getting very good prices,” Bergquist said. “That frees up money so we can do some additional work.” The stabilization of energy prices has been a big factor helping hold down construction costs, he said. Help wanted But finding enough workers is a big challenge for road builders, Bergquist said: “I know our contractors are struggling.” The Transportation Department has trouble keeping its road crews fully staffed, too. Toby Crow said that attracting workers and keeping them are the biggest challenges facing the construction industry in South Dakota. He is the executive vice president of the South Dakota Associated General Contractors’ highway and utility chapter. “That is the biggest difficulty companies are having right now: finding workers of all types,” Crow said. “It’s very, very difficult. The unemployment rate is so low.” South Dakota’s unemployment rate in March was 2.8 percent. Coincidentally, a report by the Associated General Contractors of America indicates that the state is employing more people in all forms of construction than ever before. About 20,900 people were working in construction in March, according to the South Dakota Department of Labor and Regulation. Capacity and congestion aren’t big issues on highways in South Dakota, Bergquist said. “Our focus and the vast majority of work we do is to try to maintain the condition of our existing system,” he said. Maintenance and repair will be the major, near-term objectives of road crews throughout the region this construction season. “I think starting next year, you’ll see more overlays rather than new construction,” said Greg McCormick, estimator and project manager for Northern Improvement Co., which has offices in Fargo, Bismarck, Dickinson and Williston, N.D. “I think it’s slower for most paving companies, and next year looks to be even slower.” Northern has about 730 employees now, but the total is likely to drop to under 200 in the winter months. Winter drop-offs in employment are typical for road-construction companies. McCormick is optimistic about the long-term prospects, however. Northern Improvement has been riding the ups and downs of the regional economy for 83 years, he said. “We’re still positive about North Dakota’s economy as a whole,” McCormick said. “We expect to be doing this a long time.” PB

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