The results are in. The 12th annual CalAPA "Better or Worse" survey shows respondents slightly more optimistic than last year when the COVID-19 pandemic cast a pall over work and personal lives, but still worried about the economy, inflation, finding enough workers and the expected waning of the pandemic.
The brief, non-scientific poll of more than 2,600 "Asphalt Insider" newsletter subscribers, conducted over the past month, found optimism ticked up slightly from last year’s glum numbers, which were nevertheless higher than were registered during the depths of the last economic recession in 2011. The number of respondents who said next year would be better than 2021 stood at 43%, up from 33% last year.
That is in stark contrast to 2011, when the “better” number was just 20 percent. The comments seemed to indicate, however, a belief that it would be hard to top the depressing news of a year dominated by the corornavirus global pandemic that has claimed the lives of more than 776,000 Americans, including more than 73,000 in California.
“Hope Covid will be behind us,” one state agency respondent wrote. Added a paving contractor, “I think we’re through the worst of Covid.” Another state agency representative added, “more people vaccinated and I am an optimist.” One local agency respondent predicted brighter times ahead but noted that it was “dealing with low morale due to Covid.”
Indeed, many survey respondents looked ahead to a time, hopefully soon, when the pandemic restrictions will be curtailed and life can return to something more resembling normal.
As with last year’s survey, a positive event was that road construction continued to be designated as an “essential” activity by state and local authorities, and projects funded by SB1, the $50 billion Road Repair & Accountability Act of 2017, coupled with local funds, continued to funnel dollars to state and local road-repair programs. The survey was conducted before Congress passed a $1.2 trillion infrastructure bill that is expected to boost federal highway funding to California by 49% over five years.
“Voters passed a measure to increase sales tax, allowing for more transportation project funding in the city,” one city public works official wrote. A paving contractor observed that “more public money (is) being invested in roads,” while another added, “Ending 2021 on a very high note with one of the largest backlog of work to be carried into 2022.” Yet another wrote, “Great backlog and a lot of work bidding.”
On the negative side, 16.5% of respondents said next year would be worse than 2021, slightly more than half of the 31% of respondents who felt that way a year ago, which was a record high for the question. The “worse” number was still higher than the previous high of 25% recorded in 2010. Much of the pessimism was pegged to lack of work, particularly in rural areas, work force shortages, logistic disruptions, inflation and government regulations.
“The backlog is lighter and the amount of forecasted work seems lighter in our areas,” wrote one asphalt producer, who predicted 2022 would be worse than 2021. “The rising costs of oil, parts, and other items seems to have no end right now.” The top challenge, the producer wrote, will be “staying ahead of the inflationary costs that are very volatile at this time.”
Of the overall survey respondents, about a quarter were public agency representatives, with the rest comprising asphalt producers, refiners, paving contractors and other companies that are part of the industry, plus a smattering of others – a similar proportion of respondents as in previous years.
For the sixth year in a row, the survey added an optional question, “What is the No. 1 challenge where you work?” That question elicited 118 written responses. As it has in recent years, work force issues continued to dominate the comments. Next were supply chain issues, logistics, trucking, price inflation and competition. One city public works official observed: “Business seems to be coming back, and with it, more sales tax funds for projects. However, the inflation in project costs is substantial and makes forecasting project budgets uncertain.”
As the workforce ages and enters retirement or moves to other fields, the survey suggests, the churn in personnel continues to create conflicts between industry and agency personnel. One survey respondent described the top challenge this way: “Labor. It used to be ‘qualified’ labor -- now it’s finding any labor at all -- despite significant increases in wages offered.”
Several other respondents, both industry and agency, cited the increasingly complex regulatory environment as a top challenge heading into 2022, and a few mentioned the additional public health and worker safety restrictions brought about by the Covid-19 pandemic. The California Department of Public Health reported that, as of Nov. 28, there have been 4.7 million confirmed cases of COVID-19 in California, resulting in 73,365 deaths. The national figure, according to the latest figures reported by the U.S. Centers for Disease Control and Prevention, is 776,070. The past year has seen cases surge and recede and surge again, confounding public health officials and employers trying to stay abreast of constantly shifting public health guidance.
“Covid preparedness with constant moving goal posts or purported regulations,” wrote one frustrated paving contractor. Another contractor described California’s overall regulatory climate this way, “Overzealous regulations coming from every level of government burdening every element of running a construction materials and paving company.”
One state respondent acknowledged the increasing environmental regulations, writing“I see there being more challenges arising from the requirements for Climate Action, GHG emission restrictions and the implementation for the recycled materials California is currently using.”
The main CalAPA survey question is purposefully vague: "For your company or organization, how do you think 2022 will compare to 2021?" However, most of the voluntary comments offered up by survey respondents to justify their opinion centered around how much work is expected in the coming year. The answer varied by company, agency and region, reflecting the size and diversity of California's massive economy and the economic micro-climates that are spread across the state.
As in previous surveys, the weather largely depends upon where you are standing. Some respondents commented that work was brisk, while others were disappointed, particularly in rural areas of California. The delay in passage of the federal infrastructure bill also was cited as potentially contributing to a delay in pavement projects in the pipeline.
“The delayed passing of an infrastructure bill will continue to create uncertainty and the municipal governments are waiting to confirm funding for their projects,” one asphalt producer wrote. “This, coupled with the impacts due to Covid-19, will continue to impact 2022.”
A total of 176 people took part in the voluntary on-line survey, which was conducted from Oct. 18 to Nov. 8. To read the story about last year's survey results, click
HERE. In December, CalAPA members will be sent an exclusive comprehensive analysis, “California Asphalt Market Forecast 2022” filled with data and insight available nowhere else. Additional forward-looking information will be featured in the 2022 Forecast Issue of CalAPA's official magazine,
California Asphalt, which will hit mailboxes in January.
