President's Note

On August 19, 2008 testimony was provided by Associated Pennsylvania Constructors (APC) at the House Transportation Committee Hearing. APC invited PAPA to participate in the testimony which focused on rapid increases of highway construction materials costs, especially liquid asphalt, and the resultant impact on the highway program and company businesses.

APC opened the testimony with a brief discussion of rising costs of construction materials from an ARTBA listing that was provided to the House Transportation Committee. From June 2007 to June 2008 highway construction costs increased by 18.9%. Large contributions to this increase were steel prices (up 96.9%) and liquid asphalt prices (14.2%). These are national averages.

APC’s opening comments were followed by member companies (also PAPA member companies) who presented their viewpoints on the rising material costs. Higher costs have caused a “domino effect” on everyone’s business. Projects being deferred or cancelled have caused early plant closures. Early layoffs are being experienced. More layoffs can be anticipated over the winter months and expectations are for a very slow start in the spring due to low work volume. Both member company presenters urged the legislators to work on a funding solution immediately. The Department of Transportation needs the funding to do their projects correctly both from a reconstruction and maintenance standpoint.

PAPA presented the House Transportation Committee with two handouts. One contained the liquid asphalt prices from November 2005 to August 2008. From these prices, a second handout discussed the change in costs of liquid asphalt per ton of HMA, and the increase in cost per lane mile considering HMA materials only. PAPA discussed the impact of these price changes on project deferrals and cancellations. Also discussed was the potential of plant closures. PAPA briefly discussed the potential of higher RAP mixes being used by PennDOT to help alleviate the asphalt price issue.

Please encourage your state legislators to work toward an early fix for this very serious problem.

J. Joseph Zimmerman
President, Pennsylvania Asphalt Pavement Association