GO WEST, YOUNG CONTRACTOR

A trip to Las Vegas—whatever the intended purpose—can also be used as a construction industry field trip. Western U.S. cities such as Las Vegas and San Jose, Calif., are attracting visitors and residents at an impressive rate. Consequently, they are also posting impressive construction industry numbers.

At a presentation at this year’s Construction Materials Recycling Association (CMRA) annual meeting, economist William Toal noted that portland cement consumption has been following the U.S. population on a decidedly westward journey. Toal, chief economist for the Portland Cement Association, Skokie, Ill., notes that the state of Nevada posted impressive gains in its consumption of portland cement in the final decades of the twentieth century, with consumption growing from 500,000 tons in the late 1970s to two million tons in 1999.

The massive increase is indicative of several types of construction, says Toal, including “the casinos, obviously, but along with that a lot of infrastructure projects such as highways and sewer systems, and now residential development.” Toal notes that in Nevada, concrete housing is more common than in many other parts of the U.S., and many homes in Nevada have concrete driveways. While people are visiting Las Vegas, they are working in San Jose, where the nation’s lowest office vacancy rate of 4.5% means that more office building construction is likely. Three of the four lowest office vacancy rates can be found on the Pacific Coast (in San Jose, San Francisco and Seattle), with Manhattan joining the West Coast clique.

In contrast to Nevada’s infrastructure growth, portland cement figures for New York City show how that metropolis’ consumption of the building material peaked in 1927 at four million tons. Current figures still show a strong use of 1.2 million tons per year, but as Toal remarks, “office and infrastructure construction peaked some time ago.”

Although the construction rates are different, all parts of the country should benefit from the nation’s unprecedented decade-long economic growth spurt, Toal says. He notes that the fiscal discipline at the federal government level and the surpluses being built up in many states is added good news for the construction segment. “This is positive for the construction industry, with governments having more to spend on public works,” says Toal.

Toal is optimistic that the growth pattern can continue, saying “there are basic structural balances to this economy.”

Demographically, there could be a drop-off in new household formations soon, but the apartment and “planned community” segment for seniors will provide a construction opportunity at that time.

Further good news is that construction materials recyclers in all parts of the country should have opportunities in their midst. For East Coast contractors and C&D recyclers, Manhattan’s low office vacancy rate means that new buildings will still be made, often after older ones are taken down. Concrete recyclers east and west can expect jobs to be bid on as building and infrastructure replacement projects come due. It’s just that the Nevada recyclers may have to wait a few decades longer.