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Drought Reigns Supreme Over Georgia Contractors

Thu January 17, 2008 - Southeast Edition
Matthew Willett

In Georgia, watching the sky has become an exercise in industrial intelligence gathering. For contractors, every day without rain is another day closer to a drought of the financial kind.

The drought in Georgia that began in 2006 has been a blessing and a curse for the construction industry; a challenge and in some cases a boon. But if it continues, industry experts say, it could siphon more than water from the state’s booming northern half.

“The truth is, the drought provided us with a summer where construction went on virtually unstopped for months at a time, and that should allow a lot of projects to be completed on time or ahead of schedule,” Georgia Highway Contractors Association (GHCA) Executive Director Steve Parks said.

But it was a blessing with a catch.

“The DOT’s letting tapered off in Georgia during the latter part of the year,” he said, “so we’ve had very light letting for two or three months, and there could come a time that we see an interruption in cash flow. Because of this, we’re expecting next year that we won’t have the amount of cash let out by the DOT that we did this year.”

In a protracted drought, as Parks points out, lower rainfall totals eventually equal lowered revenues. Senior Hydrologist Kent Frantz said the current drought, declared in June 2006, is nearing the end of its projected life span.

“We’ve been in an 18-month drought so far, and it’s easily going to be two years,” Frantz said. “Usually, the average drought is two years. We had a three-year drought not too long ago, in 2000 to 2003, so you can have a longer period, but on average the length of most droughts is two years.”

Experts at the National Weather Service (NWS) office in Peachtree City say indicators are mixed after a wetter-than-normal December in some areas bucked a trend calling for lowered rainfall amounts.

“Winter is traditionally the wettest season here, and that’s one thing that hurt last year — that we didn’t receive much rain in winter,” NWS Meteorologist Robert Beasley said.

“The pattern we’re in right now is conducive to bringing more rain than we saw last year, but we’re officially in a La Niña pattern, and traditionally with La Niña there is a below-average rainfall in the winter. So our outlook is for below-normal or near-normal rainfall during the winter months, but things are going on in the weather pattern that are not consistent with La Niña.”

But the situation is starting to change.

“We’ve had above normal rainfall now from a couple of rain events here,” Frantz said.

Everyone agrees it’s about time.

“We actually started heading in this direction because we had such a dry spring in 2006,” Frantz said. “Normally we get about 11 inches in March and April, and we didn’t get that. By June it was officially declared a moderate drought, and some areas became severe in 2006 during the summer months.”

During the winter months in 2006 and 2007, Frantz explained, conditions eased slightly, but a lack of spring rainfall last year sealed severe drought status in many parts of the state, most notably in the northwest region including metro Atlanta. Lake Lanier, Atlanta’s primary water source, hovers near 20 ft. (6 m) below full pool. Adequate rainfall in these winter months, Frantz cautioned, doesn’t break a drought.

And until it abates, he said, waiting and coping is the order of the day. For contractors, coping with drought conditions has been, at times, a bear.

“Water trucks are pretty hard to find and have been for the last several months. If you’ve got water trucks to rent or sell it’s like selling umbrellas when it’s pouring rain,” Yancey Bros. Caterpillar Service Support Manager Darrin Moxley said. Conditions have affected Yancey’s business, he said, though, he added, the mixed bag of consequences has largely balanced itself out.

“There are a lot of rental mixes that change, and a lot of jobs that are shut down when you’ve got a drought. There’s an extremely slow residential construction market in Atlanta, so it’s hard to tell which is which and what’s caused the overall construction business to show signs of slowing in the last months,” he said.

The Drought dealt business in water trucks a one-two punch.

“We rent water trucks, and when the drought hit in winter we did have several come back when local authorities wouldn’t let people use hydrants anymore to fill the trucks at job sites. They didn’t have a use for water trucks when they couldn’t fill them,” Atlanta-based Cowin Equipment Company Vice President and General Manager Russ Huber said. “We went from having every one we had rented — and people begging for more — to a lot of them showing back up on the yard out there.”

Greg Carroll, service manager at Tractor and Equipment Co. in Forest Park confirmed that contractors are “working themselves out of work,” and that filter sales have gone up considerably during the dry months.

He said the equipment distributor is preparing for a long haul.

“We’re not looking for it to turn back around until 2009 or 2010,” Carroll said. “So far, our business has gone on. Road construction is still up, and the DOT projects are still going. The water treatment plants are still going on and those are all big projects.”

Moxley agreed that what began as sunny days may have outstayed its welcome.

“When the drought first started everyone was like ’This is great — with this dry weather we can work,’” Moxley said. “That, combined with the slowing economy made the industry kind of work itself out, so we’ve seen a lot of contractors who had a backlog blow through it until it’s like “What are we going to do now?’”

On the job, he said, it’s a mixed blessing as well.

“It’s great when you don’t have rain to move dirt, to do that kind of job, but an extended dry period like we’ve had has made a lot of projects finish ahead of schedule, and contractors have worked themselves out of work,” he said.

In sections of the state suffering from extreme drought, Moxley said, dusty conditions have had a slowing, even halting effect.

“I’ve heard about cases where a contractor had a strictly dirt job, whether it’s a strip mall or a subdivision — though there’s not a lot of subdivision construction going on right now — cases where there have been requirements by local authorities, local ordinances, to keep the dust down. You’ve got to have water, but in some cases there are water restrictions, and contractors were not allowed to operate, so it can get kind of tough to get water in to keep pavers and those kinds of things running,” he said.

Keeping equipment running, he added, can be a challenge in itself.

“In some cases, we’ve seen machines’ air filters plugging up a lot quicker, and air conditioners are requiring a lot more maintenance calls,” Moxley said. “We’ve had a lot of calls for power complaints and found that the air filter’s been plugged. Machines that work in exceptionally debris-laden environments, take-up machines that have a mulching head that are used for clearing land or mulching — and generating tremendous amounts of airborne debris — have, for some customers, because of the dryness if it’s been several weeks and it’s not rained, required cleaning air filters every few hours, or keeping air conditioner screens cleaned out on a daily basis rather than treating those things as a ’never-touch-it’ kind of thing.”

Moxley said Yancey’s bottom line has weathered the drought despite taking a hit as agriculture industry customers struggle with dry weather. He said the company looks at the drought’s bright side.

“Our backlog of work is shrinking, and all of the equipment dealers you talk to tell you that they don’t have the backlog they had a couple of years ago, but from the responsiveness standpoint we’ve improved,” he said. “We’ve been able to be a lot more responsive than we would’ve been a couple of years ago for maintenance calls. Then, it would’ve been a couple of days, and, generally, now we have someone down there on site that day. It’s much quicker.”

Hydrologist Frantz said he anticipates the drought will run its course in 2008. Conditions in December, he said, were promising.

“One of our biggest problems is that we’ve had a lot of fronts but they haven’t had time to set up moisture. There’s just enough moisture to form clouds, and we get a little precipitation out of the event but then it moves through so fast it doesn’t have time to set up.”

December’s rains, he said, were caused when frontal systems moved slowly enough to draw moisture from the Gulf of Mexico. If the current La Niña pattern runs out in spring the region could, he said, move into a transitional cycle and out of the drought.

“We’re thinking it will run its course through spring and end, and we should return to a more normal cycle. In the long range, over the next six months, things are in our favor that we’ll work our way into a transition. We’d prefer to not have another dry spring. If we go into March and April and we don’t get normal or above-normal rainfall then it’s going to be tough again this summer.”

Parks shares Frantz’ guarded optimism, but the GHCA director warned against jumping to conclusions.

“Come springtime we may definitely see a position of letting being curtailed and work being turned back or put on hold,” Parks said. “I’m just saying that it’s possible; it’s a thing we’ve got to be aware of. This thing’s not over yet just because we had a few days of good rain.”

He said watching and waiting, as has been the practice for 18 months, remains a high priority.

“I will say I think it makes the industry nervous. There’s definitely an uncertainty to it and there hasn’t been a lot of policy established at this juncture at the state or national level to give clear guidance as to what will happen if this continues to go this way,” Parks said. “It causes a certain uneasiness on the part of the business community and particularly the construction industry that right now, I’ve never seen before.”

Moxley prefers to remain hopeful. He believes the current drought has raised awareness in the state about water management, and that this drought, in the future, may prove to be a transitional force for the building industry.

For now, he’s still watching the sky.

“Lakes Lanier and Allatoona … cannot sustain the population and the growth that metro Atlanta has seen in the last 20 years, and it’s finally got everyone’s attention now,” Moxley said. “It’s just that now the consequences are coming home to roost, and it’s my hope that it spurs construction activity in the building of reservoirs and dams. The demands that activity require would be good for the entire industry — there’s a lot of dirt that will have to be moved, and a lot of land that will have to be cleared, and that will provide work for our customers, and keep us pretty busy too.” CEG

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