Derek Asrouch’s shovel is ready. A crane he’s been helping to repair is ready, too.
Asrouch, a member of Operating Engineers Local 49 who usually works for Brooklyn Park-based Egan, believes that because of the federal stimulus package, he almost certainly will be working this summer.
Which highway construction companies will be getting work on 14 different “shovel-ready” projects will be announced Friday, when Minnesota Department of Transportation officials award contracts to the lowest bidders.
The projects, which range from resurfacing 21.8 miles of highway between Wadena to Motley to installing chevron (reflectors) along another section of outstate highway, are putting more than $42 million of federal economic recovery funds to work.
$300 million pot of funds coming later this month
Contracts on highway, bridge and other infrastructure projects involving a much larger pot of federal money – more than $300 million – will be let at the end of the month.
In Asrouch’s eyes, these dollars are the fulfillment of campaign promises made by President Barack Obama.
“We (Local 49) wrote to him during the campaign,” said Asrouch. “He said he’d get us back to work and he’s doing that.”
The awarding of the contracts also shows how fast state bureaucracies and huge contractors can move. MnDOT advertising for these projects went online just two weeks ago.
There are a couple of reasons the process has moved so quickly.
One, the feds demanded “shovel-ready projects.” States taking the federal money had to guarantee that bulldozers would be rumbling within 90 days of receiving the money. If the 90-day time frame isn’t achieved, the money must be returned to Washington, which will re-direct it to states that can put the cash to work.
Second, all of the projects receiving federal funds already were far into MnDOT’s planning stage. MnDOT had done preliminary engineering work, environmental assessments and right-of-way purchases. All that was needed was the money to pay for the projects, and the federal check is in the mail.
Stimulus funds prompting hurried pace
The stimulus money has created a frenetic pace among those who bid for highway construction and big, public infrastructure projects.
Not only have major contractors been placing bids to MnDOT for work, but scores of other companies in construction-related fields have been placing bids to the prime contractors for pieces of the work. In this low-bid world, it’s been an exhilarating, exhausting and sometimes frightening time.
“There’s an old joke in this business,”said Brian Drews, the outside division manager for Egan, a company that does electrical and mechanical work on road and bridge projects. “The joke goes that if you get the job, you must have forgot something [in pricing your bid].”
Last year was tough for construction contractors for a number of reasons, Drews said. Not only were the commercial and real estate markets drying up but the prices for “commodities were fluctuating day to day.”
For example, those who had bid on projects assuming they’d be paying $2 a gallon for fuel suddenly were paying $4. Profit margins were destroyed by the fluctuations.
But, because of the stimulus money and the stability in commodities, this summer promises to be brighter for at least those involved in building, and re-building, public infrastructure.
There will be one more delay before thousands of Minnesotans pick up shovels and start the road graders. Because state roads always are in fragile condition during this freeze-thawing season, MnDOT has placed a six-week restriction on roads, meaning the heavy equipment needed for the projects can’t be transported at this time.
But by May 1, work should be in full swing.
There will be so many projects, MnDOT spokesman Kevin Gutknecht said, that the department will have to hire engineering consultants to help staff engineers make sure that projects are meeting specifications. Consultants will be used, Gutknecht said, because the federal money is one-time funding and it would not make economic sense to add full-time state staff.
Work for all construction workers?
The impact of the stimulus dollars?
“I’m hoping we’ll have everyone working,” said Glen Johnson, business manager of Local 49 of the Operating Engineers Union.
That means 13,000 people from one union alone will be collecting paychecks. Non-union operators also will be getting work, especially in Greater Minnesota regions where unions aren’t as strong. And unlike last summer, Johnson said, virtually everyone should be working full time, plus overtime.
“Most of our people were working last summer,”Johnson said, “but we had a lot of guys working four-day weeks so that everyone could have a job.”
Johnson is sensitive to the suggestion that operating engineers are being paid too much.
“I saw one report saying our guys make $50 an hour,” he said. “What they didn’t say is that most of our guys have nine months to work. They didn’t say that that $50 an hour includes all benefits. They didn’t say our guys get paid only if they work. If it’s raining and they can’t work, they don’t get paid.”
Johnson is a huge believer in the ripple effect of construction work.
“It’s said that every dollar spent on construction touches 10 hands,” he said. “… When our guys are working, the pavers are working. When we’re working, the people who make tires are working. And most of the money being spent is spent locally.”
Asrouch was one of the fortunate last year. He was working constantly. He spent his summer on the I-35W bridge project. His schedule was so frenetic that for 17½ weeks, he said, he was working 95 hours a week.
“Didn’t even take the cover off my boat,” he said.
But, when that project was completed and before Obama was elected, he was so concerned about the future of his industry that he was considering a career change for the second time in four years.
Before becoming an operating engineer, Asrouch had been a cabinet maker. “But then the housing market started to disappear,” he said, “so I had to make a move.”
He was fearful of being forced to find another career until the stimulus money became reality.
“All guys like me want is a chance to have a job,” he said. “Without this (the stimulus money), I might not have one. This is putting people back to work.”
For this summer, at least, Minnesota will have more infrastructure projects going than ever before.
Typically, of course, those highway and bridge and sewer projects are the one great aggravation of a Minnesota summer.
But given the difficult times, MnDOT officials are hoping that people view these projects a little differently this summer. They’re hopeful that when Minnesotans are inconvenienced by a construction project, they’ll take a deep breath and celebrate the fact that people are working.
Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.
“The projects, which range from resurfacing 218 miles of highway between Wadena to Motley…”
LOL. Since when was it 218 miles between Motley and Wadena? Yahoo maps says 25 miles, so maybe it should be 21.8?
Doug Grow has rechecked with MnDOT, which had listed the 218-mile figure. We’ve been told now that a decimal point was missed and the distance should be 21.8 miles. We’ve corrected the story. We should have caught that glaringly big number, but MnDOT statistics get a little more tricky: The roads will be four-lane, and MnDOT tells us they often measure in “lane miles,” so technically a mile of four-lane road is actually counted as four lane-miles.
Couple of points —
“But, when that project was completed and before Obama was elected, he was so concerned about the future of his industry that he was considering a career change for the second time in four years.
“Before becoming an operating engineer, Asrouch had been a cabinet maker. “But then the housing market started to disappear,” he said, “so I had to make a move.”
This is an example of a market principle at work. Labor follows capital to its most productive use. The problem is the capital in this case is government money creating instability. Because there is no price mechanism controlling the flow of government money – no profit and loss involved, no creation of new wealth to back the money – Asrouch is getting unnecessarily jerked around. If there were real world demand driving the flow of capital, labor adjustments’ would occur gradually and could be anticipated.
“All guys like me want is a chance to have a job,” he said. “Without this (the stimulus money), I might not have one. This is putting people back to work.”
Where did the stimulus money come from? It came from taxpayers, who, had they had control of the money, might have made other purchases that would have provided other guys “who just want a chance to have a job” a chance to work. What is seen is money flowing into the construction industry. What is not seen is the jobs lost industries where the capital would have flowed based on market pricing mechanisms. To the extent that these construction projects provide a positive cost/benefit to the community, they have value. Those being undertaken or sped up simply by virtue of being “shovel ready” or for the sake of providing a job to stimulate the economy are a net loss to the economy.
“But given the difficult times, MnDOT officials are hoping that people view these projects a little differently this summer. They’re hopeful that when Minnesotans are inconvenienced by a construction project, they’ll take a deep breath and celebrate the fact that people are working.”
As the logic goes, if providing jobs is the objective, take away the heavy equipment and give every man a shovel. If we’re really after full employment, take away the shovels and hand them spoons. In the whole stimulus scenario, no one ever talks about the cost/benefit of these projects because they don’t have to when the money is “free” and the only measure of accountability is putting people to work. Lousy economics is nothing to celebrate.