5 Issues Facing The Asphalt Industry
Four asphalt industry experts discussed the drivers and limitations that are facing our industry at the National Asphalt Pavement Association annual meeting in San Diego, February 12th.
The discussion focused on the five key areas where the industry is facing challenges and opportunities.
There is a shortage of skilled workers in the industry and estimates are predicting a shortage of 31 million skilled tradespeople by the year 2020.
This is due to the workforce aging out and that the construction industry just isn’t appealing enough for the younger generation. Construction only employs 6% of the millennial workforce in the U.S.
“Were going to have to create a different wage system if we want to attract people and that’s healthy for the industry,” Kevin Kelly, President & CEO of Walsh & Kelly Inc. says. “We’ve depressed the wage rates and until we’re willing to pay a lot more in the industry, which we should do, we’re going to have a skilled labor challenge.”
The White House officially released a proposal for President Trump’s $1.5 trillion infrastructure plan. The plan includes $200 billion from the federal government with half of the seed money is going toward an incentive program to match financing from state and local governments investing in rebuilding projects. One quarter of the money is set to be used for rural projects in the form of block grant to states.
- $20 billion is set for “transformative programs” for new projects
- $20 billion is to expand the use of loans and private activity bonds
- $10 billion is set to go into a “capital financing fund”
The plan is structured around four main goals:
- Generating $1.5 trillion for an infrastructure proposal
- Streamlining the permitting process down to two years
- Investing in rural infrastructure projects
- Advancing workforce training
In 2018, the FAST act authorizes a $900 million increase for the construction season. In addition, highways and bridges will receive a portion of the $20 billion over two years (2018-2019) for infrastructure as part of the McConnell-Schumer-Ryan Budget deal.
In 10 years the construction industry will be almost entirely digitized, with an overall possible savings of $1.2 trillion globally.
“Technology is racing into the construction industry,” John Pullen, chief growth officer at Luck Companies says. “Drones, cloud-based aggregators, remote sensing technology, augmented reality and the Internet of Things are all disrupting our industry but also bringing opportunities to it.”
Asphalt industry paving tons were up 2% in 2017 to about 378 million tons produced. The growth in the market will be determined by how much of the $10 billion in the new 2-year budget deal will be allocated to highways and bridges.
“There are 135 refineries in the U.S. and less than 50 provide significant value to the asphalt industry,” Don Wessel GM-Crude & Refined Products Consulting at Poten & Partners says.
This means the industry is having to get materials from fewer sources and finding the ones that are specific to our industry.
“The biggest issue in our company today is getting our product to the market,” Robert says. “We make the material at 56 asphalt plants across the country but then we rely on another company to get the materials out to customers. Running a trucking business is a big deal but having control over the logistics of moving material is important. If it becomes too big of an issue, maybe it’s time to take a closer look at the investment and if it will work for your business.”
However, just like skilled construction workers, truck drivers are hard to find. Gaining a CDL is not an easy task.
For full article and credit: https://www.forconstructionpros.com/
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