Industry Attendance Needed

Press Conference

National Construction Appreciation Week

 

Host:      State Senate Republican Leader Kevin Kelly

Time:     10:00am

Date:      Monday, September 12, 2022

Location:  Burns Construction Company, 300 Sperry Avenue, Stratford, CT.

 

Senator Kelly is hosting this media event to kick off National Construction Appreciation Week that recognizes the dedicated, hardworking men and women in the industry who are instrumental in the development of our infrastructure and facilities.

 

The purpose of National Construction Appreciation Week is to inspire a national conversation about construction and how vital it is to American infrastructure and our economy.

 

I hope that you and others from your organization can join us for this special kick-off conversation!

Darien officials approve overdue affordable housing plan 

Mollie Hersh

DARIEN — Darien’s five-year affordable housing plan is approved and headed to the state three months after the initial deadline.

The final version of the plan, with a few last-minute changes, was unanimously approved by the Planning and Zoning commission at Tuesday night’s meeting.

Under Connecticut law, all 169 municipalities were required to submit affordable housing plans at the beginning of June to address the statewide housing shortage.

Chairman Stephen Olvany attributed part of the delay to July’s public hearing, a measure not every town included when finalizing what he said he considered “a very important document.”

Rather than define Darien as a purely residential community, Vice Chairman George Reilly recommended revising the plan’s values and goals to instead consider the town “a predominantly residential community.”

In making this change, Reilly acknowledged criticism from those “defending our town because of its residential character,” but recommended a more “open-minded” approach that reflected Darien’s growing business and commercial districts.

“I am a lifelong Darienite so I know it is not the residential community it was in the 1950s, and I think we need to come to grips with that,” Reilly said. “There are terrific residential communities, but I think we should note that there is a blend, and that blend is providing opportunities for more affordable housing.”

Rather than define Darien as a purely residential community, Vice Chairman George Reilly recommended revising the plan’s values and goals to instead consider the town “a predominantly residential community.”

In making this change, Reilly acknowledged criticism from those “defending our town because of its residential character,” but recommended a more “open-minded” approach that reflected Darien’s growing business and commercial districts.

Even with business interests reflected, the plan still prioritizes preserving the “predominantly New England style, single-family character” of Darien neighborhoods.

The commission is also considering tracking progress on affordable housing with an annual report, though it would not be a formal requirement.

Former zoning official David Keating, a consultant on the plan, said he deliberately left out any kind of month-to-month timeline from the original draft.

According to Keating, any detailed timeline would likely put the town in violation of the plan within the first month from decisions or factors outside of the commission's control.

Commission member Amy Barsanti called an annual evaluation “logical” given the number of initiatives within the five-year plan, adding “I also don’t think there’s anything wrong with us as a body reexamining in a year how we are doing.”

The commission is waiting on the 2020 census data to confirm the number of affordable housing units Darien must meet to achieve a third moratorium on affordable housing.

The town was previously granted two four-year moratoria, exempting the community from state-mandated affordable housing projects.

Cost of Middletown pool complex project, now a rebuild, increases 200 percent

Cassandra Day

MIDDLETOWN — Costs associated with renovations to the 64-year-old Veterans Memorial Pool aquatic complex have risen significantly over the past two years — from $2.6 million to nearly $8 million — an increase of 200 percent now that the project is considered a rebuild.

Construction on the pool and new splash pad was delayed in part by supply issues and material costs associated with the pandemic, Public Works Chris Holden said Wednesday, when a group of people gathered on mounds of dirt for a ceremonial ground-breaking as excavators worked in the background.

A contingency was factored into expenditures, which now stand at $7.8 million, Public Works Director Chris Holden said. Initial specifications didn’t include a larger pool with two additional lanes, plumbing, the splash pad “exercise” area, utilities relocation and other features, all of which upped the bottom line, he said.

Some road bond money went into the project at the park on Walnut Grove Road, next to the Connecticut Trees of Honor, Common Council Majority Leader Gene Nocera said. Also, demolition work was conducted by public works, along with city trades people. He pointed out that other projects have come in under budget, including Pat Kidney Field, which ended up with an excess of $2 million.

The feasibility study conducted in 2015 called for a remodeling of the facility, but a rebuild was necessary, causing the price to quickly rise, Nocera explained. “It was well beyond its years,” he said of the complex.

There will be six pool lanes for swim competitions as well as a resistance area, Holden said, which will allow people to swim against the current.

The pool has been closed to the public since summer 2020. The new state-of-the-art complex is expected to be ready by summer 2023.

Project plans were first unveiled in October 2020.

That August, city officials took part in a “smash party.” Mayor Ben Florsheim was among those who had fun using mallets to break down the concrete to “retire” the pool.

Demolition of the site began last September.

Work on the aging structure is being paid for with a portion of the $33.5 million parks bond voters passed in 2015, of which $9.3 million remains, Holden said.

The pool is part of several large projects underway in Middletown, including riverfront development, where city leaders incorporate community input into the designs. “We’re not top down, we’re bottom up,” Nocera said. “Inductively, the themes are emerging that it’s important to rebuild our community post-pandemic.”

“It’s a very different thing as it is to realize it and to see it come to fruition,” Florsheim said. “What has been especially challenging over the last couple of years is not knowing how to get from Point A to Point B.

“We used to know the order of the alphabet before, and now it’s been scrambled,” something that the city has encountered similarly downtown, at the riverfront and new recreation center, the mayor explained.

“I don’t need to articulate all the reasons for the challenges and delays that we’ve had,” Florsheim said. “The important thing is we’re working through all of those.”

The building that housed dressing rooms and lockers has been entirely gutted, but the bones of the facility are good, so a complete knockdown was unnecessary, Holden said.

Recreation and Senior Services Director Cathy Lechowicz said her boys children learned to swim at the facility. For the past two years, summer camps have been using Crystal Lake across town.

“We’ve always just made it work. That’s what we do in recreation,” said Lechowicz. Over the last five years, the director said, the city has invested more resources, and “it has paid dividends.”

“We’re rebuilding the heart of the city,” Florsheim said. “This is what the people of Middletown demanded happen.”

The pool was built in 1958 after city veterans wanted the community to have a summer recreation area at Veterans Park for the next generation, Nocera said.

Council Minority Leader and Public Works and Facilities Commission Chairman Phil Pessina talked about growing up in the inner city area as a “little guy,” and enjoying the facility with friends nearly every day.

There were very few places to enjoy the water nearby at the time, Pessina added. “If our parents had cars, they took us to Hammonasset (in Madison). We had Crystal Lake,” and not much more, he said.

1 million-square-foot Cromwell warehouse decision delayed until October

Austin Mirmina

CROMWELL — The Inland Wetlands and Watercourses Agency on Wednesday tabled until October its decision on a proposal to construct a 1.04-million-square-foot warehouse on 250 acres in the Mattabesset River watershed.

Town Planner Stuart Popper said that several agency members had requested more time to review materials associated with the application, prompting a 30-day extension. The agency will vote on the proposal at its next meeting Oct. 5, according to Popper. It must act on that date, he added.

Details of the application were not discussed by agency members on Wednesday.

These are the latest development in the saga to consider the controversial application from Scannell Properties, the same developer who constructed the 403,000-square-foot facility on County Line Road now occupied by Amazon.

The application has been stuck in the agency’s review process since it was first presented in November 2021. Public hearings have been extended multiple times, and last month, the agency voted to table its discussion on the issue until Wednesday.

Many residents who live near the site of the proposed facility have strongly opposed its construction, arguing that the warehouse would negatively impact the environment and harm the species that live there.

But representatives for the developer have argued that the warehouse’s construction wouldn’t adversely affect the surrounding wetlands.

Thomas Cody, an attorney representing Scannell Properties, has also said that the application shouldn’t be rejected because it satisfies the agency’s regulations.

According to the regulations, the agency can’t deny or place conditions on an application for reasons relating to effects on aquatic, plant, or animal life unless the activity will likely affect the physical characteristics of the wetlands, Cody said at last month’s meeting.

“If you reject us, you’re basically saying that no development can ever occur here,” he said. “We think we’ve satisfied every single criteria.”

If approved by the agency, the matter would advance to the Planning and Zoning Commission, where it would require at least one more public hearing. The project will also require special permits from the state Department of Energy and Environmental Protection and Department of Transportation, according to Cody.

“There’s still a long review process to go after you are done with your review,” he said in August.

State and city to share millions in utility costs for proposed Route 82 roundabouts

Claire Bessette

Norwich ― If the proposed reconstruction of Route 82 goes forward, the question of who would pay the millions of dollars needed to relocate and upgrade utility lines depends on several factors, state project officials told the City Council this week.

Among the many concerns voiced by Norwich Mayor Peter Nystrom, a staunch opponent of the project, was the potential cost of upgrading underground Norwich Public Utilities water, sewer and natural gas lines. The reconstruction project runs 1.3 miles from an area west of the New London Turnpike intersection to Fairmount Street, with six proposed roundabouts, a median divider and single lanes of traffic in each direction.

Scott Bushee, project manager for the state Department of Transportation, told the City Council Tuesday that the cost of the work would vary, depending on the specific utility. While the DOT would be responsible for the entire cost of relocating all current Norwich utility infrastructure that are impacted by the work, the city would pay for additional work such as placing electrical lines underground or replacing old water and sewer lines that could be damaged by the project.

For electricity, Bushee said the DOT would pay the entire cost of relocating NPU power lines and poles along the 1.3-mile length of the project. For privately owned lines and poles, such as telephone, cable TV or private electric companies, DOT typically pays half the cost of relocation, per agreements that allow the utilities free use of state property for their infrastructure, Bushee said.

If the city wishes to place the electric lines underground the length of the project, Norwich Public Utilities would pay for the difference between the cost of relocating above-ground lines and the cost to bury the lines.

According to a financial report compiled by city Comptroller Josh Pothier, moving the lines underground would cost an estimated $10.6 million, while relocating lines above ground was estimated at $2.8 million, putting the city utility’s cost at $7.8 million if the city chooses that option.

Pothier reported that the Route 82 project would escalate NPU’s schedule of planned upgrades to water, sewer and gas lines in the area. Vibrations from heavy construction and possible regrading of the road in spots is expected to impact the underground lines.

Water lines in the area are more than 100 years old and are “highly brittle,” according to Pothier’s report. NPU had planned to replace the lines in five to 10 years but would need to escalate that work if the DOT project starts construction in spring of 2025. NPU has estimated the cost of replacing the water line at $8 million.

Days after Nystrom expressed concern about the aging water lines during a public informational meeting on the project, a nearly 100-year-old water main broke on June 27 at the Route 82-Osgood Street intersection, where one roundabout is proposed. Repair work closed Route 82 for several hours.

“We all saw it. We all know it. We know how old it is. We know how sensitive it is,” Bushee told the City Council Tuesday.

Bushee said the DOT would do a drainage study along the length of the project to determine how much of the project would impact water lines and would discuss with NPU officials how close the project would come to the lines along with their concerns about vibrations and potential breaks.

“Hopefully some kind of a partnership is discussed at that point,” Bushee said. “The state doesn’t want to rebuild a road and have it torn up two years later or piecemealed later to have little pieces of water main replaced. That’s certainly not in anyone’s best interest.”

He said there is no cost sharing estimates for the water line at this point, because final design and state construction plans with those calculations won’t be done until next winter or spring. The drainage study would reveal how much of the water line should be replaced by DOT with the project and how much money the city would have to contribute and whether the two parties can reach a cost-sharing partnership.

Any situations where the DOT project would directly require relocation or replacement of a utility main, the DOT would pay 100% of the cost, Bushee said.

The city’s sewer lines along Route 82 are 30 to 50 years old, and without the project, NPU had planned to re-line or replace the mains in 10 to 20 years at an estimated cost of $3.5 million. Natural gas lines also could wait 10 to 20 years without the proposed Route 82 construction. The “very preliminary” cost estimate to replace the gas lines is $500,000 to $1 million, Pothier reported.

NPU General Manager Chris LaRose told the City Council any local share of the cost to replace utility lines associated with the project would be borne by utility ratepayers. In some cases, state and federal grants and low-cost loans are possible. In response to Mayor Nystrom’s questions, LaRose said it would not be prudent to ask for rate increases to pay for the Route 82 work. Instead he said NPU might need to reshuffle other capital projects so it can complete the Route 82 work first.

LaRose said replacing the water line likely would be funded by a small grant and a large loans.

Bushee said a partnership would be worked out with NPU to determine how much of the cost the state would cover in utility replacement costs.

$57.5 Million Proposal Heads to Lyme-Old Lyme Voters, as Packed Room Debates Board Oversight

Emilia Otte

LYME/OLD LYME — After almost two hours of debate,  the Board of Education voted to send a request to borrow $57.5 million for school renovations to voters on November 8.

If approved, the borrowing will pay for planning the project and then installing new boilers, updated electrical systems and HVAC systems in Mile Creek Elementary, Lyme Consolidated School, Center School and Lyme-Old Lyme Middle School. The money will also be used to bring the buildings up to code where necessary, to install sprinklers in two of the buildings and make sure that all buildings are compliant with the American Disabilities Act. 

In addition, the plans include a build-out of additional classrooms at Mile Creek Elementary School — a decision prompted by enrollment projections estimating that elementary school enrollment will exceed the capacity of Mile Creek and Lyme Consolidated School in 2024-25.

The district expects to receive $9.7 million back in reimbursement from the state, reducing the total cost to about $48 million.

Questioning the process

Members of the public at Wednesday’s hearing questioned the planning process stretching back to 2019, when the board first began considering repairs and upgrades, which at the time were estimated to cost about $10 to $15 million.

In comments to the board, David Kelsey, a local resident who also chairs the town’s Board of Finance, and co-founded a large real estate private-equity investment company that owns and manages multifamily apartment properties, urged Board of Education members to start the process over –  which he said would not set the project back very far. 

“This process has been flawed from the very beginning,” said Kelsey. 

Kelsey told board members the process should have begun with a disinterested third party conducting an  evaluation of what was needed, and that the Board of Education’s facilities committee should have determined the “scope” of the project. 

Instead, Kelsey said, the board had engaged an architectural firm that could bid on the project and potentially benefit from more costly renovations.

Jennifer Miller, who is current chair of the facilities committee, said the committee hired QA+M, the architectural firm that presented the board with an evaluation of the facilities and cost estimates, after putting the work out to bid.

But Board Chair Steven Wilson told CT Examiner in hindsight that he felt that the facilities committee could have been more involved in the planning process. 

The current proposal would also add 11 classrooms to the Mile Creek school, five more than Neviaser said were needed, at an additional cost of about $4 million to $6 million.

A local resident, Mona Colwell, questioned that decision, pointing out that the added cost amounted to ten percent of the total cost of the project — not an insignificant sum. 

“We’re not against new HVACs — we want them. We want new heating systems. We want our kids to be safe. But some people in our town can’t afford a $58 million project. We have people that are scrambling to buy groceries,” she said. 

Several community members questioned why it wouldn’t be possible to move kindergarteners and Pre-K students to the Center School. Board members and Neviaser said they had considered a similar option in earlier discussions but that certain concerns, such as the need to bus kindergarteners to the school, the possibility of not having enough classrooms in Center School and the need to move some of the alternative education programs to other spaces. Preliminary estimates showed that the cost would be about $59.9 million, or $45.5 million including state reimbursement. 

Other community members objected to the total cost of the project and said they believed that some of the items included in the $42 million “base project” — the lowest-cost option that QA+M presented to the Board — were not necessary, or could be done for less. 

A few also questioned the idea that interest rates would continue to go up, making the project cost more, and hypothesized that interest rates might actually lower over time. 

Steve Cinami, who previously chaired the facilities committee and works in the construction industry, questioned spending “$57 million on an HVAC system that no one has shown is needed will increase property values.”

He said that low taxes were one of the reasons people live in Old Lyme.
“What it will do is keep taxes artificially high, instead of reducing the tax burden to residents. A low mill rate is also another reason people seek to live in Old Lyme and Lyme,” said Cinami.

Others have come out in support of the project. 

In a meeting last week, supporters referred to the school system in Old Lyme as the “crown jewel” of the town and said it was an attraction for residents looking to move to the town.

Kim Thompson, a parent with a second-grader and a toddler, who graduated from Lyme-Old Lyme Schools in 2005, said she was part of the class just ahead of the previous building renovation project, and remembers walking on floors “stripped to concrete and carpet glue.” 

“While school is much more than just a building, our faculty and staff certainly deserve all the credit for the exceptional education that our children receive, those students, teachers and staff also deserve to learn and work in buildings that are well designed and properly maintained,” said Thompson. 

Teachers voice support for renovations

Multiple members of the Region Eighteen Teachers Association asked the board to approve the project. Heather Fried, a co-president of the association and a science teacher at the high school, said last week that it was distracting for teachers and students to have to take off and put on layers of clothing because of temperature changes, and that the limited space in the buildings was creating conditions that made it difficult to teach.  

“Many educators are providing critical support services to students in hallways — hallways — and shared classrooms,” said Freid. 

At the Wednesday meeting, ten teachers echoed concerns raised by Fried and asked the board to send the proposals to a town vote.  

“In the music room, the radiator blows out hot air while the window unit, the AC unit, blows out cold air. They’re in constant battle. And even with the AC on the lowest temperature and the highest speed setting, the room is still hot and humid, which is wasting a lot of electricity,” said Julia Hackett, music teacher at Mile Creek. 

Teachers spoke about having to teach in hallways and cafeterias and borrow other teachers’ classrooms because of a lack of space. 

“Some of the students I service for the Gifted and Talented program have IEPs of their own.

And by teaching them in the hallway, it is compromising their confidentiality and privacy,” said Nila Kaczor, who teaches Gifted and Talented and 4th and 5th grade science at Mile Creek and Lyme Consolidated. 

“Every single classroom at Mile Creek is currently being used. If an additional classroom is needed to help maintain the district’s posted guidelines for class sizes, it is likely that the SRBI classroom will no longer be available, which would cause even more students to have to receive services in inadequate spaces,” said Francesca Fusaro, a fifth-grade teacher at Mile Creek. 

Other teachers talked about the noise from the window units, which one likened to a 1970s-era dishwasher and another compared to the sound of an airplane if the listener was sitting out on the wing. 

“I have a hearing impairment myself and have to wear a hearing aid. And I know several students who do the same or have auditory processing needs. It is nearly impossible to hear students speak above the HVAC systems,” said Kaczor. “I find myself straining all the time just to have a conversation with students.”

Union co-president Mercedes Alger, a fourth-grade teacher at Lyme Consolidated said that the “experts” who attended a meeting last week — including representatives of the firm Colliers International, a former building committee member on several earlier Lyme-Old Lyme school projects, and a former construction manager who also worked on the Lyme-Old Lyme High School project — had said the project was “fiscally responsible” and “in the community’s best interest.” 

Rebecca Tate, a fourth grade teacher at Mile Creek, said she understood the concerns about process that were being raised. But she also urged the board to send the referendum to the voters so that teachers and students wouldn’t have to wait any longer to have the conditions in the schools addressed. 

“What do I tell my students right now? Do I tell them, ‘Well, we want to ask a fourth person. We want to ask a fifth one. We want to ask a sixth one — when it’s 95 degrees?” said Tate “What I’m asking is, let’s please just take it to referendum and let the people vote on it because we are living this every day.” 

A third-party review?

Wilson told CT Examiner that according to the various experts the board had consulted, the $42 million project initially proposed as the “base scope” was the minimal cost of renovations at the four schools. He said that part of this cost came from the need to meet state requirements, and he said that the boilers and the air conditioning window units needed to be replaced. 

Earlier this month, when the board expressed concern about the $58 million estimate, Wilson asked that a third party evaluate the work by QA + M. 

Neviaser said that the district contracted with Colliers International for the third-party review. Neviaser called Colliers “completely disinterested.”

Chuck Warrington, director of project management at Colliers International, told the board that QA+M’s estimates were consistent with what they would expect for a school project in Connecticut, and described the board’s budget as “lean.” 

“The big chunk is the HVAC,” said Warrington. “You have unit ventilators that are totally outdated. We don’t even install those. They’re probably 20 years out of service. You’re going to get to the point where Ron Turner can’t even service those pretty soon.” 

At the Wednesday meeting, Wilson asked whether it would be possible to hire a disinterested third-party not to simply review the work done by QA+M, as Colliers had done, but to present their own evaluation of the needs. 

“My thought is that it would make the referendum go more smoothly,” said Wilson, saying he felt that it would satisfy both the people who wanted the project to move forward quickly and those who wanted an additional opinion. 

Miller responded that the board had already received estimates from three firms, all of which were very similar, and Neviaser warned that, depending on the cost of an additional estimate, the board might need to put the work out to bid, delaying the process.

Both Miller and board member Suzanne Thompson said that they didn’t believe that an additional estimate would significantly change the numbers they had been given. 

“Mile Creek is falling apart. My daughter did not enjoy Gifted and Talented at all because she was out in a noisy hallway. She wasn’t engaged and I’m really frustrated with that. And I know it’s going to cost a lot, but for Pete’s sake — I can’t believe that we can’t figure out a way to say, ‘Cripes, the buildings are falling apart and need to be upgraded,’” said Thompson. 

Thompson said the building committee, which the board will appoint if the referendum passes, will be responsible for finding cost savings as the project goes forward. 

Wilson told CT Examiner that when it came time to choose the building committee, he planned to appoint people who would make responsible decisions about how the funds were being spent. 

“It’s my expectation and plan that the people in the building committee will be watching every penny and constantly be thinking about whether we’re doing it with value in mind,” he told CT Examiner. 

A question of time

For the Mile Creek project to be eligible this year for state reimbursement, the referendum would need to be held no later than November 15, meaning that the district needed to approve the bond amount by September 15 – but Wilson told CT Examiner the district could apply again next year.

On Wednesday, Board member Laura Dean-Frazier made a motion to put the hiring of a third party evaluation on the agenda. The motion died without a second from another member. 

Board member Christopher Staab said he wanted the referendum held on November 8 –  election day –  a target raised earlier by Kelsey, who said the referendum should be held when the largest number of people would turn out to vote on the project. 

Board member Martha Shoemaker expressed concern that a Nov. 8 referendum would overburden the Registrar of Voters, given the general election. But Wilson said that he had spoken to the Registrar, who indicated that holding votes on the same day would not be a problem. 

The board voted 7-1 in favor of holding a referendum for $57.5 million on November 8, with Staab voting against and Dean-Frazier abstaining. 

Staab told CT Examiner that he felt the $58 million project included “a lot of wants” rather than necessities, and that there wasn’t enough information about the details of what the project would bring to the schools. 

“With the cost of everything so high, with people struggling with inflation … there’s too much other needs from the community to go spend $58 million on wants, not needs,” said Staab. 

But he said the board didn’t know any details about the cost or the timeframe of bringing in a third party to review the proposal, and that they needed to meet the deadline for state reimbursement. He also said he feared that a failed referendum would set them back an additional year. 

“We’re frankly out of time,” he said.

Road safety improvements slated for Old Wethersfield

Hanna Snyder Gambini

The town of Wethersfield has hired Clover Construction Company of Bristol to complete road safety improvements for drivers, pedestrians and cyclists in Old Wethersfield. 

The project, funded through a Community Connectivity Grant Program grant from the state Department of Transportation, focuses on the area of Hartford Avenue and Main, State, Garden and Nott streets.

Planned work includes installing new brick paver and concrete sidewalks, concrete ramps, curb bump outs, parking spaces, crosswalks, pavement markings and signage, and limited permanent pavement repair and drainage improvements. 

The winning bid came in at just over $708,000, which will be funded through $393,300 from the state DOT Connectivity Grant, and a second Urban Act grant, according to town inspector Dan Rebelo.

The town also retained Hartford-based BETA Group Inc. to provide full-time construction inspection, engineering oversight and materials testing services for this project, town officials said.

Site preparation work is expected to start as soon as this week at the north end of Garden Street, with work moving toward the intersection of Main and State, then to areas near Main Street and Hartford Avenue.

Town officials estimate the work will be done in about three months, with minor improvements and lawn restoration work finished in the spring.

High Demand for New, Used Construction Equipment Continues Despite Challenges

LUCY PERRY

Emerging from a market coma worsened by the pandemic, the new and used equipment sectors are in the midst of a high-demand cycle. If the heavy machinery market can navigate its way through supply-chain and labor issues, it should experience smooth sailing through 2023 and beyond.

At its second-quarter earnings conference in early August, Alta Equipment Group outlined a corporate optimism expressed by other construction companies across the United States.

"Demand for both new and used equipment continues to be at high levels and sales backlogs remain at record levels," said Ryan Greenawalt, chairman and CEO. "Our organic physical rental fleet utilization and rates on rental equipment continue to improve and tightness of supply continues to buy inventory values across all asset classes."

He attributed the rosy picture to "industry tailwinds" from the passing of the Bipartisan Infrastructure Bill, saying it is driving further demand for construction machinery.

"In our material handling segment, labor tightness and inflation are driving the adoption of more advanced and automated solutions while also driving the market to record levels," said Greenawalt.

Multiple Factors at Play

The U.S. construction equipment market specifically is experiencing a high compound annual growth rate (CAGR) because of increased building activities for infrastructure development.

That is the conclusion of a study conducted by India-based market research firm BlueWeave Consulting.

"The U.S. construction market is estimated to grow at a CAGR of 6 percent during the forecast period of 2022-2028," researchers reported. "The growing demand for construction equipment in this region is fueled by increased construction activities for infrastructural development as a result of government and private investment."

Because of this considerable investment, the infrastructure segment of the construction equipment market holds the biggest market share, said BlueWeave.

In fact, "explosive" is how one industry legal expert terms the global growth in demand for heavy machinery.

He attributes the explosion to economic and geopolitical developments.

Chief among industries seeing a significant uptick in machinery demand is the mining sector, said attorney James. R. Waite.

The uptick is driven by demand for lithium, graphene, cobalt, nickel and other components for batteries, electric vehicles and clean technologies, he said.

"Further bolstering the mining industry is increased demand for precious metals and traditional commodities, especially in Latin America, Asia and Africa," Waite said in an article in Engineering News Record. "In construction, demand for equipment and parts continues to skyrocket as countries around the world begin a new push to update roads, bridges and other infrastructure."

But, he said, upgrades are especially pressing in the United States, where roads, bridges, rail and other infrastructure projects are finally starting to receive significant government funding.

"That will directly benefit the heavy equipment industry, but it also will see logistical issues mount and supply shortages become more acute," said Waite.

He predicts the war in Ukraine and sanctions against Russia will drive up energy costs in the United States and elsewhere.

What the Future Holds

Waite also predicts regional consolidation specifically in the southeastern United States, where the state of Georgia is gaining a reputation as global hub for innovation in construction equipment.

"Six of the world's top 10 equipment manufacturers have identified the state as the new Silicon Valley of equipment manufacturing," said the heavy equipment industry attorney. "Georgia's business-friendly climate and a host of strong structural advantages have provided a strong boost to manufacturing and the heavy equipment industry in particular."

Georgia provides significant tax breaks for manufacturers and job creators, augmented by a generous state R&D tax credit.

The state also offers a skilled labor force, low rates of unionization, a top-tier university and technical college system, a superb manufacturing infrastructure and a world-class transportation system, he said.

Despite global issues including inflation, rising interest rates and the war in Ukraine, the heavy equipment sector is among industries continuing to make headway.

Waite said the industry has successfully leveraged global economic, infrastructure and geopolitical conditions to considerable advantage.

"As a result," he believes, "the industry is poised to continue thriving for the foreseeable future, driven by demand in multiple, only partly overlapping, industries, including mining, construction, energy and agriculture. States that seek to attract more heavy industry should follow Georgia's business-friendly example."

Market's Cautious Optimism

Early this year, the Association of Equipment Manufacturers (AEM) weighed in on the construction equipment market's expansion, saying that a number of challenges could present obstacles.

Short-term factors such as the lingering pandemic, ongoing supply-chain issues and persistent labor shortages were chief among AEM's list of challenges.

Secondary to those issues that have emerged to dampen enthusiasm were deglobalization and inflation.

"The last recession we experienced ended the longest period of economic expansion in the United States, and that recession lasted from February 2020 to April 2020," said Benjamin Duyck, AEM director of market intelligence.

"Two months, in traditional economic terms, can't even be accurately described as a recession," he said. "However, this economic disruption has impacted us all greatly, and we are still dealing with the aftereffects today — labor shortages, supply chain problems and higher interest rates."

The responses to AEM quarterly member surveys for the past two years have been positive in regard to how quickly they expect to recover to pre-COVID-19 levels.

"But the data for this last quarter is moving again in the other direction, largely due to the headwinds we're facing with inflation, workforce issues and supply chain disruptions," said Duyck.

Though inflation is a little lower, it has risen gradually, with a 9.7 percent increase in the last quarter of 2021.

Talent acquisition also is a troublesome factor for both ag and construction equipment manufacturers.

AEM's most recent quarterly member survey found that hiring remains a major issue.

In fact, 84 percent of all respondents have experienced issues in this area, while 90 percent of all ag members surveyed are affected.

Members are strategic in addressing hiring challenges, incorporating internships, educational partnerships, higher wages, bonuses, marketing and recruitment efforts, flexible hours and outsourcing.

But the association believes workforce will remain a prevalent issue for equipment manufacturers for the foreseeable future.

Supply-chain problems plaguing ag and construction equipment manufacturers also remain a major issue.

"COVID-19, followed by growing numbers of employees leaving the workforce, have led to both shutdowns and scarcity of products," he added.

In response, the supply chain has adjusted production downward to meet expected lower demand.

Plus, there's the fact that shipping companies cut schedules, expecting a drop in demand for shipments.

And though demand in some aspects of the economy dropped, the decrease was not evenly spread over all industries and all workers, AEM noted.

"While people still continued to spend money on homes and consumer purchases, interest rates remained low, and the U.S. experienced an expansion in monetary supply," said the association. "Furthermore, workers and businesses were supported by the government. All of this, combined with the scarcity of products and higher demand results in inflation, adversely impacting supply chains.

An eventual scarcity of products coupled with higher demand resulted in inflation making its way up the supply chain.

At the same time, factories could not expand easily due to bottlenecks in the chain caused by both low production and the global nature of production, according to AEM.

Now, overdemand makes it difficult for suppliers to understand the true demand for their products.

"We can see this in our industries, not only from the OEMs and from the component manufacturers, but also from the end users of the OEMS," said Duyck. "That, in short, is why we have supply-chain issues. Workforce, supply chain and all of it ties together and the results of policies and actions decades in the works set off by COVID-19."

Supply Chain Is a Choker

In AEM's most-recent quarterly survey, more than 95 percent of responding ag and construction equipment manufacturers said they are experiencing supply-chain issues.

However, last winter it appeared either demand was beginning to normalize, or supply chain signaling was improving, because 44 percent of respondents noted the issues are beginning to turn around, according to the association.

"For the vast majority of these people, issues are both domestic and global," said Duyck. "The issues are also widespread, but consensus opinion among members is that the issues lie particularly with prices, shipping and quantities of raw materials and, subsequently, inputs and components."

Further, the issues do not necessarily lie at the endpoint or receiving shipping, but rather at the supplier source — and especially international shipping, he added.

Supply-chain issues have caused many AEM members to fall behind, despite ongoing growth.

This situation could eventually lead to changes in inventory management, the survey found.

Duyck reported that the third quarter of 2021 saw inventory levels increase between 15 and 20 percent in both the ag and construction segments.

However, the ag side saw an additional 15 percent jump in the fourth quarter of last year.

"Whether changes in inventory management will actually take place has yet to be seen, but it's quite possible that higher inventory levels will become more prevalent for some time," said Duyck.

The bottom line, according to AEM, is that despite all the challenges, growth is still expected in the ag and construction equipment sectors, even at a slower rate than in recent months.

"Ultimately, the imbalance between supply and demand and COVID-19 restrictions eliminated all the inventory and the grease that allows the global supply clock to operate," said Duyck. "Another metaphor that maybe hits closer to our industries is this: We're running a machine that's low on oil, and almost out of it. The machine will continue to run, and maybe even run for a while — until it doesn't." CEG