“Now we’re seeing far fewer projects being awarded by either state DOTs (Departments of Transportation) or private owners willing to go ahead,” Simonson says. “I think it’s going to be a cold winter for many firms.”
Producers are largely seeing the same reality of fewer projects on the immediate horizon.
“Usually this time of year (third quarter), you’re starting to get some work for next year on some of this commercial and residential stuff, and it’s been pretty quiet on the quoting front here in the last month,” says Travis Wise, general manager and vice president at Wingra Stone in Madison, Wisconsin. “I just know with the city and county projects that they do, there’s not as much tax revenue coming in.”
The drying up of state and local tax revenues is the direct effect of the pandemic, which forced temporary stay-at-home measures across the country, leading to lessened travel and a slump in gas taxes and other sources of state and local revenue.
“For state and local governments, they have a balanced budget requirement each year, and with the revenue losses they’ve had, they have to find ways of cutting spending,” Simonson says. “It’s always easier to defer or cancel a construction project that hasn’t started than lay off their own workers or to end a social safety net program.”
However, Simonson notes the federal government can alleviate some of the financial stress state and local officials are feeling.
“I think the federal government has a major role to play here in either getting money for infrastructure out quickly, or backfilling the revenue loss that state and local governments are experiencing,” Simonson says.
While lessened travel depleted both state and local tax revenues, one silver lining is how much work contractors were able to accomplish in the absence of traffic.
“The pace [of work] was a little quicker because there wasn’t a lot of traffic on the roads,” Wise says. “One of [our] projects was supposed to do most of the work at night, and they actually allowed them to do it during the day. You always get more production during the day than at night.”
John Scepaniak, project manager at Minnesota-based Wm. D. Scepaniak, says his company also made the best of an undoubtedly challenging year.
“A lot of records have been broken for us in terms of revenue [and] projects completed,” Scepaniak says. “The caveat to that is our total materials volumes might be down a little bit. We’re doing some different products for some different clients that produce at a slower speed. But at the end of the day, nobody gives you a trophy for being the biggest or highest volume producer – it’s really about the revenue you’re able to produce.”