December 2015 Vol. 70 No. 12
Editor's Log
2015: Could Have Been Worse, Could Have Been Better
by Robert Carpenter, Editor-in-Chief
As we wrap up 2015, one can’t help but reflect on a year that was, that could have been and that wasn’t.
It was a year of international and national terror, though amazingly those horrific acts have seemed to have little lasting impacts upon the markets and thus, the underground infrastructure industry. It was a year of cultural upheaval, in some ways reminiscent of 1968, but again there was little direct effect on the underground markets.
What did impact the underground infrastructure?
Simply put: politics and dollars. So what else is new?
There are certain staples in the North American infrastructure right now that continue to drive our industry. Telecommunications work is charging ahead around much of the country. In fact, some providers have complained that they don’t have enough contractor resources to effectively launch all the installations necessary to growth. Of course, continuing to squeeze profit margins has definitely dampened the enthusiasm from many telecom contractors, especially those subbing for primes.
Regardless, in 2016 international telecom manufacturing giant Ericsson is entering the fiber optic construction business, citing a world-wide lack of contractors, particularly in North America, as the justification for such a move. They developed an alliance with Ditch Witch and Vermeer to supply a variety of resources as the company develops their strategic plan to work with existing small to medium contractors and develop and train their own teams. The benefit, Ericsson postulates, will be that many of those fiber-to-the-home projects simmering on the back burner will now be available to proceed as lack of construction services will no longer be an inhibitor to growth. Essentially, Ericsson says, the fiber construction market will grow and in the long term, all contractors will prosper. Other major contractors don’t necessarily agree with that assertion, but time will tell.
The renovation and expansion of the national electric grid has also brought much work to the construction market. For electrical distribution, underground has played a key role; for transmission, not so much. However, electric transmission is under tremendous pressure to accelerate the undergrounding movement. There are many complications and cost considerations (some erroneous) that have to be solved, but we saw great movement in that direction in 2015.
Gas distribution remains a paradox. Most contractors are very busy though new construction remains stalled in much of the country and increases in manufacturing is moving in starts and stops. But there is enough replacement and upgrade work combined with certain hot regions to keep the market healthy. When new construction and manufacturing does finally launch across the country, will too few and too busy contractors be an inhibiting factor? Or will existing distribution contractors be able to finally accumulate enough workers to keep up with demand?
Energy pipeline work started dropping in 2014 and has continued to fall as the world prices for oil and gas cratered and have remained low throughout the year. All this because of a 2.2 percent oversupply of oil. For gas, as North American reserves went from 30 years to 150 years and abundant shale production boomed, oversupply has hurt that market as well. The silver lining there is that gas consumption remains a growth market.
Despite our lackluster economy, sewer and water markets did rebound in 2015, as we predicted. It was not necessarily a major boost in most areas of the country, but after the disaster of the “Great
Recession,” any increase in sewer/water funding was welcome. Projects were removed from the shelf, dusted off, reexamined, reengineered and finally put out to bid.
But for all of these markets, the one constant that has stood in the way of growth is the lack of labor – both skilled and basic, trainable personnel. The modern employment dynamic that has developed with the onset of the digital age has steadily drained the usual available labor force. No one wants to dig ditches or even operate equipment in the cold and heat. Rather, they want a white collar job in an air-conditioned/heated office. Hopes of changing that situation in the near term are fleeting.
This retrospective begs the question: What lies ahead for 2016? Will it be the year it could be or will circumstances conspire to flatten out such enthusiasm? My New Year’s toast will be for optimism to propel the underground infrastructure into the Golden Age that, while distant, still appears obtainable.
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