Construction Digest's '09 Outlook

Area states grappling with bleak economic news

January 12, 2009 |

After several years of steady growth in key segments of the marketplace such as the highway/bridge and commercial building markets, construction activity in Digest-area states is expected to slow dramatically in 2009. Times are tough throughout the U.S., with the nation struggling to deal with the largest economic crisis in decades.

Anirban Basu, chief economist for Associated Builders & Contractors, states, “Without question, the Midwest has been impacted by the same forces that have weakened the overall national economy, including slumping consumer confidence and spending, layoffs, and ongoing retrenchment in key residential real estate markets.”

According to economists across the country, nonresidential spending is expected to drop by 3 to 9 percent in 2009, and labor costs will rise 3 to 4.5percent.

The U.S. highway and bridge construction market is expected to flatten in 2009, says the American Road & Transportation Builders Association (ARTBA). Dr. William Buechner, ARTBA vice president of economics and research, projects the value of construction work put in place on highway and bridges will be $80.2 billion in 2009, just a 1.5-percent increase over 2008's $79 billion. If construction material costs level off in '09, ARTBA says the real volume of construction work should stabilize, and possibly even improve, after declining about 6 percent in 2008.

Construction machinery manufacturers foresee flat growth in 2009, accordingto the annual “outlook” survey of the Association of Equipment Manufacturers. AEM cited the state of the general economy as a key factor affecting future industry growth, and noted that the level of housing starts and highway funding will be major influences on construction equipment business volume.

Major Regional Projects

In spite of the bleak economy, many major construction projects are proceeding in the region, including the 82-story Aqua high-rise project in Chicago; the $425-million JW Marriott Indianapolis Complex in downtown Indy; expansion of Chicago's O'Hare International Airport; the new downtown Louisville, KY, arena; a new 90,000-square-foot computing facility for the University of Illinois at Urbana-Champaign and the National Center for Super Computing Applications; installation of a concrete barrier wall at Wolf Creek Dam in Russell County, KY; Olmsted Locks & Dam Construction in Olmsted, IL; the University of Notre Dame's new Stinson-Remick Hall, the new engineering and nanotechnology facility for the university's College of Engineering; Carmel, IN's performing arts center; the new Rush University Medical Center in Chicago; a new ethanol production facility in Madison, IL; a new federal courthouse in Rockford, IL; Duke Energy's plant in Edwardsport, IN; Lucas County Arena in Toledo, OH; and the Ann and Robert H. Lurie Children's Hospital of Chicago.

In addition, the Port of GreaterCincinnati Development Authorityrecently approved a financing package for the Great American Tower at Queen City Square. This 41-story, 800,000-square-foot tower is being developed along the east side of Sycamore inCincinnati.

Transportation Sewer/Water Mic. Civil Total Highway & Heavy Buildings* Total
Calendar Year 2007
5,867,201,537 2,205,127,918 1,183,284,411 9,255,613,856 26,853,215,655 36,108,829,511
Calendar Year 2008
6,040,000,000 2,250,000,000 1,140,000,000 9,430,000,000 23,100,000,000 32,530,000,000
Calendar Year 2009
3,690,000,000 2,260,000,000 1,030,000,000 6,980,000,000 26,300,000,000 33,280,000,000
* Excludes SF housing

On the highway/bridge front, key projects include the $535-million new I-64 project – the reconstruction of Interstate 64/U.S. 40 in St. Louis; reconstruction of Interstate 465 on Indianapolis' east and west sides; the new I-64 Kanawha River Bridge between Dunbar and South Charleston, WV; the U.S. 24 Fort to Port project between Indiana and Ohio; Lloyd Expressway construction in Evansville, IN; modernization of I-75 through downtown Dayton, OH; I-55 construction in Will County, IL; reconstruction of I-75 in Warren County, OH; continued work on I-294 (Tri-State Tollway) in Chicago; interchange modification at I-65 and I-80/94 in northern Indiana; the Page Avenue (Route 364) extension in St. Louis; Keystone Avenue in Carmel, IN; initial work on the new $450-million Hoosier Heartland Corridor, a 31-mile, four-lane divided highway from Lafayette to Logansport, IN; Illinois 59 reconstruction in Plainfield and Joliet; the I-69 design project inGibson County, IN; work on I-77 in Cuyahoga County, OH; and the KokomoCorridor in Indiana.

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