January 2013, Vol. 68, No. 1
Editor's Log
Editor's Log: Best Guesses & Fingers Crossed
The November elections are over and the nation has survived. But the question remains: when will the much ballyhooed economic recovery begin in earnest? It looks like 2013 is going to be another interesting and challenging year in which the underground infrastructure market must endeavor to persevere. And we will.
When it comes to oil and gas pipeline construction, we’ve gotten spoiled. We want another boom year, every year. But don’t expect that to happen in 2013 or probably 2014 for that matter. Barring the unexpected, pipeline construction will most likely remain flat in the short-term.
But let’s put that in perspective: if you are in the energy pipeline market, compare your overall bottom line to 10 years ago. The energy business was struggling to emerge from yet another of the typical up/down cycles. Since 2003, I’ll wager most companies have experienced a great 10-year run. Flat at a high level is still far superior to depressed at a low level of business.
And quite frankly, after the rush-to-profit mode we’ve all been in for the past several years, a year or two of treading water is needed to take a deep breath, tighten our belts just a bit, make sure companies are not out of control and position ourselves for a potential mad dash to complete a heavy workload in the near future.
Of course, for 2013, there’s always Keystone XL. The last major piece of that elusive, mega-billion dollar pipeline project always gets people excited about its prospect of finally getting approved. Unfortunately, Keystone’s fate is forever directly connected to political posturing and pay-offs.
For the past two years, the added boost of stimulus dollars has kept the telecom world very busy. But as the stimulus largely plays out, just how sustainable is that market? I believe the answer is that telecom will remain healthy, albeit at a somewhat more moderate pace for 2013. Modern telecommunications (i.e. mobile broadband and fast internet) are now considered an essential utility for our daily lives. That growing “need for speed” will keep fiber-to-the-premises momentum strong for several years.
Gas distribution contractors have found themselves busy dealing with integrity management, replacement and rehabilitation work throughout this recession cycle. While there has been limited new installation work, it has not impacted these contractors. The good news is that the maintenance work will continue. The concern, coming mainly from owners, is that when new installation finally becomes significant again, contractors will be stretched to find enough skilled labor to handle both maintenance and new installations. Add to the mix the potential years of work needed to repair the devastation to the gas and electric grid in the Northeast from Hurricane Sandy, and the workload looks imposing indeed. Things could get very interesting for the gas distribution market in the near future.
What can you say about a market largely void of the necessary revenue required to meet its critical needs and its best hope for relief lies in hoping an essentially broke Federal government will come to the rescue? But that’s where we find the sewer, water and storm water market going into 2013.
On the bright side, the rehabilitation market should experience even stronger years ahead as cities turn to band-aids to fix immediate, dangerous or EPA-mandated problems. Not only is that good news for those currently in the rehab market, but it also forces cities and consulting engineers to become more familiar and comfortable with rehabilitation technology and its effectiveness, even when the overall sewer and water market does recover. The future of rehab continues to be very positive.
But for now, larger projects and systems that need to be replaced, updated or expanded are simply being ignored. We were already dangerously behind that work curve before the recession and each year since 2008 has seen our country’s infrastructure plight only grow worse.
The best guess for sewer/water in 2013 is another flat year. However, we are getting indications that municipalities are feeling a little more comfortable about releasing (rather than hoarding) available monies in 2013.
In 2013, we’ll see a mixed bag of economic success for the underground construction industry. I can finally see a light – it’s just still far down the tunnel.
Comments