Material Costs Projected to Rise 8 to 12 Percent

Soaring materials prices could push highway construction costs another 8 to 12 percent higher this year, the American Road & Transportation Builders Association's top economist said recently at a luncheon in Washington, D.C.

In 2004, the cost of materials used in highway construction rose 8.5 percent, due largely to massive increases in prices for steel and diesel fuel, said William Buechner, ARTBA vice president of economics & research.

By comparison, materials costs in the previous 12 years had only increased two percent annually.

This year, steel prices appear to have stabilized, but costs of other core highway materials have taken off, with aggregates rising at a 30 percent rate, ready-mix concrete rising 23 percent and asphalt paving mixtures increasing 11 percent, Buechner said.

The House and Senate are now considering legislation that will determine federal highway and transit investment levels for the rest of the decade as part of the reauthorization of the Transportation Equity Act for the 21st Century.

Under the six-year, $284 billion levels in the House and Senate bills, federal investment for highway construction will grow by just over $1 billion per year through 2009, or about 4 percent annually. But that will just barely cover projected increases in construction costs, with no new funds to address the nation's growing transportation safety and improvement needs, Buechner said.

The ARTBA economist said a proposed amendment offered in the Senate by Charles Grassley (R-Iowa) and Max Baucus (D-Mont.) to increase the guaranteed highway/transit levels in the reauthorization bill by as much as $10 to $15 billion offers the best opportunity to address rising construction costs and provide enough investment to begin tackling the nation's growing transportation challenges.

Survey: Gary Airport Would Mean Business

The expansion of the Gary Chicago International Airport would have the greatest impact on business and would stimulate the economy the most, survey respondents from Northwest Indiana and Illinois said.

More than 900 construction companies in Northwest Indiana and the Chicago responded to the ninth annual construction survey the Portage, Ind.-based Construction Advancement Foundation cosponsored with the Tinley Park, Ill.-based Condon Group Ltd., an accounting and business advisory group.

"The confidential survey allowed participants to answer honestly about regional issues, changes in the market, employee relations and annual revenue," said William Hanley, president of Condon.

CAF said 56 percent of the respondents were from Northwest Indiana and 44 percent were from Illinois.

When asked what potential projects would have the greatest impact on their business and which would have the most impact on the economy, respondents ranked the Gary airport as No. 1 followed by the extension of commuter rail service.

"We were able to statistically substantiate our position on the projects that impact our area," said Dewey Pearman, executive director of the CAF.

For complete survey results visit www.cafnwin.org.

Record Year Predicted For Cement Consumption

Index of Illinois Economy Marching Steadily Higher

The University of Illinois Flash Economic Index added another month to its recent string of strong performances, climbing to 105.9 in May from its April reading of 105.2.

A reading above 100 indicates economic growth, and a reading below 100 indicates economic contraction.

The current reading is the highest level registered for the Illinois economy since June 1998. The Flash Index has increased nearly three points since the beginning of the year and is 5.6 points above its reading a year ago in May.

For May 2005, all three components of the Index were up in "real" (inflation-adjusted) terms from the same month last year. Both individual and corporate tax receipts were up significantly, while sales-tax receipts registered more moderate gains.

The U. of I. Index is a weighted average of Illinois growth rates in corporate earnings, consumer spending and personal income. Tax receipts from corporate income, personal income and retail sales are adjusted for inflation before growth rates are calculated. The growth rate for each component is then calculated for the 12-month period using data through May 31.