Archive for February, 2010

Is High-Speed Rail the Future or an Expensive Version of the Past?

Wednesday, February 24th, 2010

When President Obama announced the winners of $8 billion in high-speed rail grants last month, it revived a debate over the wisdom of investing in this transportation mode. While high-speed rail advocates applauded the move, detractors called it irresponsible and impractical.

High-speed rail supporter America2050.org said the investment is a ”critical step toward implementing the long-term infrastructure vision our nation needs to pull itself out of the Great Recession and position itself for long-term competitive growth.”

But it’s a only a very small step, according to a February 10, 2010, article by Steve Hargreaves of CNNMoney:

“Most of the $8 billion in high-speed rail funds that President Obama awarded last month will not be used for high-speed projects, but rather [for] improvements designed to make existing lines faster,” he wrote.

“Only $3.5 billion is being spent on truly high-speed rail, a sum that’s not remotely close to what’s needed to build a 21st century rail network. The money is going toward two projects — one in California and the other in Florida — that have yet to begin construction.”

Whether the effort to bring a high-speed rail network to the U.S. is too expensive or impractical remains to be seen, but it seems a worthy effort nonetheless. High-speed rail is a travel staple elsewhere in the world and has shown promise in its limited appearance in the Northeast Corridor (i.e., the Acela trains, which are currently as high-speed rail as we get in the U.S.). 

But, as Hargreaves writes, will the price tag be too much — $100 billion just to build out the DOT’s proposed network and possibly five times that if they want the trains to run in excess of 150 mph?

In the Hargreaves article, Howard Learner, executive director of the Environmental Law and Policy Center, is quoted, “Rome wasn’t built in a day. What you’re seeing is a growing program of pieces that fit together.”

But Ronald Utt of the Heritage Foundation, one of the nation’s most outpoken critics of the high-speed rail plan, told Hargreaves, “It’s the most expensive way to move passengers from A to B. Of all the things the government has to do, are they really going to say, ‘Yeah, let’s have high-speed rail.’ ”

Hargreaves reports that Utt is skeptical California or Florida will be able to raise the matching funds to get the projects done.

Supporters want to see $50 billion dedicated to high-speed rail in the next transportation bill, which is slogging its way through Congress.  In these economic times, that’s likely to be a tough sell.

It’ll be interesting to see the outcome of this debate. My guess is that one solid success story — particularly if it’s a high-profile project in Florida or California — will go a long way toward accelerating the push for high-speed rail in the U.S. If most or all of these initiatives falter, high-speed rail will slide back into the shadows of U.S. transportation planning policy. 

Below is an excerpt from the section on high-speed rail in PSMJ’s 2010 AEC Firm U.S. Market Sector Forecast (which, by the way, is PSMJ.com’s book of the month for February):

As part of the ARRA legislation, the Obama administration committed $8 billion to “jump-start the process of developing a comprehensive high-speed intercity passenger rail network.”

On October 6, 2009, Federal Railway Administration Commissioner Joseph Szabo announced that the agency received 45 applications from 24 states totaling approximately $50 billion – more than six times the available amount. California alone requested $4.7 billion.

High-speed rail, a major player in the transportation scene internationally, is hot in the USA – at least in theory. And if these projects take shape, it could mean significant work for firms across the spectrum of the AEC industry.

This newfound U.S. commitment to high-speed rail is not only attracting attention from cities and states across the country; the world is noticing.

Ansgar Brockmeyer, head of public transit business for Siemens (Berlin, Germany) told the New York Times, “[The U.S.] is a developing country in terms of rail. We are seeing it as a huge opportunity.”

Transportation Secretary Ray LaHood said that the U.S. expects significant private investment in high-speed rail in coming years, with firms from Europe and Asia factoring heavily in its development. “Companies involved in (overseas) high-speed rail are in the U.S. right now,” he said in July. “I think you’ll see private investment in high speed rail from Europe and Asia, not just the United States.”

Some of the 24 states that have submitted applications for federal high-speed rail funds are aggressively making a case for why they deserve the funds. Florida, for example, launched a marketing campaign dubbed “Life at 128 mph.” Officials say they could complete construction of a high-speed rail line by 2014.

Utah formed an alliance with three other western states to support its proposal. The group says projected population growth justifies high-speed rail service that would run between Salt Lake City and Denver.

The Government Accountability Office (GAO) issued a report in mid-October entitled “Developing Viable High Speed Rail Projects under the Recovery Act and Beyond.” It offers guidance on effective use of the funds, potential challenges, and the government’s ongoing work on the issue.

“Several principles could guide the effective use of the Recovery Act funds and any future federal investments in high speed and other intercity passenger rail. These principles include establishing clear federal objectives and stakeholder roles, clearly identifying expected outcomes, basing decisions on reliable ridership and other forecasts, and reexamining how intercity passenger rail service fits in with other federal surface transportation programs,” the report states.

“In addition, determining which, if any, high speed rail projects may eventually be economically viable will depend on an accurate determination of such factors as ridership potential, costs, and public benefits. These projects also face many challenges, such as securing the significant up-front investment for construction costs, sustaining public, political, and financial support; and resolving outstanding liability issues.”

The GAO says its role is to ensure that states meet the guidelines established for successful implementation and to oversee the Federal Railroad Administration (FRA) as it doles out and manages funds.

Not everyone is on board the bullet train bandwagon.

Ronald Utt, writing for The Heritage Foundation (Washington, DC), says that high-speed rail is a “fantasy.” Writing on the web site of the oft-called “conservative think tank,” Utt says the costs being floated in various high-speed rail proposals are understated and the need to upgrade infrastructure to accommodate the systems is financially untenable. He also complains that stimulus money designed for high-speed rail would likely be diverted to freight rail infrastructure and, indirectly, to Amtrak.

“Sooner or later voters catch on to the misrepresentations HSR proponents use to advance their cause: In 2000, Florida voters approved a ballot initiative (absent any cost estimates) to build an HSR, but in 2004 they reversed that vote once the excessive costs became apparent,” Utt wrote.

 This type of opposition doesn’t appear to be slowing the momentum of high-speed rail.

International Examples of High-Speed Rail
Source: U.S. Department of Transportation, High-Speed Rail Strategic Plan

 

Japan

France

Germany

UK

China

U.S.

Date of Initiation

1964

1981

1988

2003

2007

1969/2000

System length (route miles)

1,360

1,180

798

70

588

457

Top operating speed (mph)

188

199

186

186

186

125/150

HSR ridership (millions)

300

100

67

8

No data

11

Construction Unemployment Keeps Building

Wednesday, February 17th, 2010

It looks like the general media is noticing unemployment in the construction industry. Today’s news item from Yahoo! Finance:

The construction industry has been slammed with record-high job losses in recent months. The industry shed 75,000 jobs in January alone. Most of those cuts came out of non-residential specialty trade contractor positions, which plummeted by 48,000 jobs.

Of course, these massive job losses are nothing new for the construction industry. In December 2009, 53,000 construction jobs vanished. Since the dawn of the Great Recession in December 2007, the construction industry has lost a grand total of 1.9 million jobs.

Construction Workers Should Hold on to Their Hard Hats

Experts say construction job losses probably won’t come to an end anytime soon. That’s because the industry’s unemployment problems have created somewhat of a domino effect. In this tough economy, building owners can’t get financing from banks, which means they can’t afford to hire developers. Consequently, developers aren’t hiring construction companies to work on building projects. As a result, many construction companies aren’t earning enough to pay their workers, which leads to — you guessed it — countless job cuts. That means the construction industry likely won’t see employment increases until the economy finally bounces back.

Senate bill would extend SAFETEA-LU through 2010

Friday, February 12th, 2010
It looks like it may be 2011 before any new federal highway transportation funding legislation passes. According to the Journal of Commerce Online, the Senate is proposing to extend the current SAFETEA-LU legislation through the end of this year.

While it’s disappointing that we probably won’t see a new funding program for another year, this would at least provide some assurance that projects in the pipeline this year will not be halted due to a lack of a designated funding source. 

 According to the Journal‘s report, the government has apparently noticed the 24.7% unemployment rate for the construction industry (as of January 2010), as investment in transportation infrastructure will be a major component of a pending jobs bill, according to AASHTO’s John Horsley. 

Senators are expected within the next two weeks to introduce legislation to sustain surface transportation spending, John Horsley, executive director of the American Association of State Highways and Transportation Officials, said Tuesday.

Senators Barbara Boxer, D-Calif., and James Inhofe, R-Okla., chairman and ranking member of the Senate Environment and Public Works Committee, told industry representatives that they will offer two measures, Horsley said. One will extend the existing transportation program known as SAFETEA-LU through the end of calendar 2010. The second will transfer $20 billion from general revenue to the Highway Trust Fund to keep it solvent.

Horsley said the two measures will likely appear as part of a larger tax package that the Senate will consider. The Senate is also working on a jobs program “in which transportation investment is expected to be a major component.”

Horsley said he didn’t know how much of the jobs package would go to surface transportation, but he hoped that it would be close to the $27.5 billion for highway and $8.4 billion for transit that the House approved in December.

AASHTO released a report on the first anniversary of the American Recovery and Reinvestment Act. Horsley said that $23.8 billion of the $26 billion for highway projects had been obligated by states for construction projects. States also obligated $7.2 billion of the $8.4 billion that the recovery act dedicated to transit. All told, states launched 11,000 projects employing 280,000 people. Thirty percent of the projects came in under engineers’ estimates.

“We’re delivering value,” Horsley said. “Thousands of projects have been delivered. The states’ success in delivering on the Recovery Act highway and transit dollars is quite remarkable.”

PSB&J says report on Zumwalt’s departure “inaccurate”

Wednesday, February 3rd, 2010

Florida Trend reports today:

A spokesperson for PBSJ Corp. has responded to a story that was included among the links in Tuesday’s Daily Pulse summary of Florida business news. C.L. Conroy, president of the Conroy Martinez Group, says the story, reported by Dan Christensen in the Broward Bulldog, an online site, inaccurately reflected the circumstances of CEO John Zumwalt’s resignation. Conroy says Zumwalt’s decision to resign was part of a succession plan established a year ago, and not the result of pressure from “a group of unhappy employee-shareholders,” as Christensen reported based on an anonymous source. “Zumwalt’s transition will happen when the company, which has an executive search under way, identifies an appropriate replacement, with the target date being no later than the end of the company’s fiscal year, Sept. 30, 2010. The timing of the announcement is a result of the company’s pending annual shareholders meeting next week. John is currently on the company’s proxy as a candidate for the board of directors, for which he continues to serve as chairman,” Conroy says. “To say Mr. Zumwalt is leaving ‘amid scandals’ is solely the opinion of the writer and not at all a fact,” says Conroy. “The PBSJ Corporation is self -investigating an overseas matter involving its international operations. The executive team has already been cleared of any involvement by the investigation, as reported in the company’s recent 10K filing with the SEC.”

PBS&J’s Zumwalt Stepping Down

Tuesday, February 2nd, 2010

According to Florida Trend, John Zumwalt of PBS&J is stepping down.

The boss of one of Florida’s biggest government contractors has announced he’s stepping down. The news comes weeks after embarrassing disclosures about his personal involvement in a corporate pay to play scandal, and disclosures about possible corrupt payoffs overseas by company officials. “After a decade of my executive leadership through the best of times and through difficult times it is now time to plan an orderly transition to a new CEO,” said PBS&J chief executive John Zumwalt. Zumwalt will continue as chairman of PBS&J’s board of directors. A company source told Broward Bulldog that Zumwalt was forced out by a group of unhappy employee-shareholders. PBS&J spokeswoman Kathe Riley Jackson denied it.