November 2012, Vol. 67, No. 11
Editor's Log
Editor's Log: Rise Of Rehab
By the time this magazine is read, the national elections will be over and our course cast for the next four years for president, two years for House and Senate.
The last four years have seen the overall construction industry take a massive hit in employment and critical project cancellations. Let’s hope the next few years bode much better.
Of course, one has to remember that there are many complicated layers of construction and the underground market certainly exemplifies that point as some sectors have remained healthy while other areas have struggled mightily.
Well-documented is the massive funding crisis of municipalities. With record unemployment, cities must deal with the resulting drop in tax revenue ranging from decreased spending to falling property values. Add to that inflated spending habits from the national to local levels and the bottom line is quite simple: until the economy rebounds and revisits spending priorities, public entities are going to find themselves in a financial malaise.
As we all know, this situation means necessary, often critical, projects are delayed or even canceled as the funding to proceed is siphoned off to another struggling area within the budget or often funds simply can’t be found. Ironically, there appears to be a lot of available municipal funding sitting on the sidelines but cities don’t have the current tax base necessary to pay back the loans – essential, they are experiencing a severe lack of cash flow.
For many in the sewer and water industry, it has been a painful period of struggling through each month and hoping conditions improve quickly rather than slowly. However, there is a bit of a silver lining – enter the rehabilitation market.
Rehab has experienced dramatic and substantial growth for 30 years. It is an industry that has gone from a few, primary technologies to a plethora of affordable options. During the Great Recession, those options have proved their weight in gold for many municipalities and utilities challenged to address major problems but without the budget for a system approach.
Many rehab contractors, on the other hand, have seen a dramatic increase over the last four years in their volume of work, especially for proven technologies such as cured-in-place lining, pipe bursting and various manhole/lateral repair systems. I’ve also seen the term “renewal” being bandied about again in lieu of the term “rehabilitation,” – a marketing concept that some in the industry push for from time to time. I’m sure it makes cities feel better to tell constituents that they have “renewed” their system rather than just “rehabbed” battered pipes. Whatever you want to call it, rehab or renewal, it has been a life-saver for cities and utilities on tight budgets.
But there is a down side. Prices still tend to be too low. Contractors, desperate for work and pressured by cities’ financial constrictions, often leave money on the table.
And while rehab has flourished to some degree, it is still a band-aid approach to repairing infrastructure problems. Rehabilitation often is simply a short-term approach to fix the worst aspects of a problem (i.e. buying time to keep the EPA or state agencies from closing in), but fall far short of what actions should actually be taken to address the failing infrastructure. The rehabilitation industry has a critical role to play and improved technologies continue to enable rehab options for cities. The market also is expanding and improving to play a more critical role in keeping our infrastructure operating at maximum efficiency.
But will those cities, whose systems continue to fail, remember to invest in system-wide repairs, replacements and upgrades when money is available? Unfortunately, our infrastructure history says no.
Regardless of the election outcome, it unfortunately will be some time before tax flow allows cities to secure funding to accomplish more than emergency room visits for their infrastructure problems.
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