Highway contractors turning to concrete

Through an alternative bidding process that’s been in place for several years, the Missouri Department of Transportation allows contractors to decide which pavement material they include in their bids based on current market conditions, said Andy Mueller, assistant engineer for the department’s District 8 office in Springfield.

“Some years ago, when oil was a lot cheaper than it is now, we did see some jobs go concrete but most of them went asphalt,” Mueller said. “And now we’re seeing the opposite. Because of oil prices, we’re seeing most of the jobs going out as concrete. And in some cases, we’re not even getting asphalt bids.”

Liquid asphalt prices in July had more than doubled to $615 a ton from $297 a ton in January, according to a price index maintained by MoDOT.

Back-to-back monthly price increases of more than $100 per ton of liquid asphalt in June and July reflected the summer spike in oil prices that also sent gas prices soaring toward $4 a gallon.

The average price of standard-mix concrete was about $82 per cubic yard, based on three bids submitted by contractors to the city of Springfield’s purchasing division in late June.

Second look

As the price gap between asphalt and concrete has narrowed, concrete’s selling points are receiving more attention, said Aaron Harless, general manager of Springfield Ready Mix Co., a subsidiary of Kansas-based Monarch Cement Co. (OTC: MCEM).

“Concrete is a more durable material, but it comes down to cost and how owners need to structure their cost,” said Harless, who also sits on the board of directors for the Concrete Promotion Council of the Ozarks. “More and more people are looking at the life-cycle cost of whatever they’re working on. … Typically, the life cycle for concrete’s anywhere from 50 (percent) to 100 percent greater than that of asphalt.”

David Roling, branch manager for Kennedy ESS Contractors, said asphalt’s shorter life cycle and associated maintenance expenses are making concrete’s higher front-end cost more palatable to customers who have prioritized sustainability.

“That may be more important for a municipal or county agency to consider, because every year that goes by, there’s more and more pressure on budgets,” he said, noting that Kennedy ESS strictly uses concrete.

While David Anderson, vice president of asphalt-reliant contractor APAC-Missouri Inc., conceded that the spike in pricing has given concrete-based competitors a larger platform, he maintained that asphalt – if properly installed and maintained – would last just as long or longer than concrete. And despite the high cost of oil, he noted that asphalt is rarely more expensive than concrete for commercial applications.

“Asphalt has been the preferred surface over the years,” Anderson said.

Greene County Highway Administrator Dan Smith said county road projects have historically been awarded to contractors using asphalt, which has long been a relatively low-cost material suitable for rural roads carrying less traffic. But Smith said the rising cost of asphalt warrants alternate concrete bids on projects with a price tag of $2 million or more, such as planned improvements to Blackman Road near Battlefield Road.

In short supply

In addition to pricing pressures, asphalt suppliers are facing an apparent shortage of raw materials, MoDOT’s Mueller said.

Asphalt is made by combining gravel and liquid asphalt, the tar-based petroleum byproduct that binds the two components, but Mueller said liquid asphalt isn’t as widely available as it once was.

“The oil refineries are figuring out ways to extract more diesel and jet fuel from a barrel of crude oil, and the byproduct that is left that we use to make asphalt is just not there anymore,” he said.

MoDOT’s major highway projects also require higher-grade asphalt modified with polymers that are in great demand in developing markets overseas, Mueller said.

“There’s nothing right now telling us that it’s going to get any different,” he added.

“I know the asphalt producers (are) getting kind of nervous, and they’re looking into all kinds of alternates to get around this issue.”

APAC-Missouri has purchased and stockpiled oil to guard against availability problems, Anderson said, noting that his company has had little difficulty obtaining asphalt so far this year.

“I’m not saying we won’t have trouble down the road; I don’t know,” he said. “We have had one supplier that hadn’t been able to meet that need, but were able to make adjustments.”

Anderson is less concerned about the debate of asphalt vs. concrete and more anxious about funding drying up for public transportation projects in coming years.

“I don’t think it’s a matter of asphalt or concrete,” he said.

“We have plenty of work to do for this year, but I think future work is going to depend on funding. ... The funding is a crisis.”

Anderson noted that suppliers are quoting prices for construction projects slated to begin in 2009 and 2010 – when MoDOT begins repaying $2 billion in Amendment 3 bonds and expects a funding shortfall of possibly 50 percent of its current budget.[[In-content Ad]]