Wednesday, November 30, 2016

Trump Names Elaine Chao As Transportation Secretary Appointee

President Elect Trump has named Elaine Chao, former Deputy Secretary of Transportation and Secretary of Labor under earlier Republican administrations, and wife of Senate Majority Leader Mitch McConnell, as his choice to head the Trump administration USDOT. Senator McConnell’s immediate reaction to the appointment and forthcoming Senate confirmation vote was “No, I’m not going to recuse myself.”

Associated General Contractors of America and American Road and Transportation Builders Association both applauded the selection. House Transportation Chairman Bill Schuster and USDOT Secretary Anthony Foxx also joined the chorus of praise for Trump’s choice. Trump’s announcement charged Chao with carrying out “our mission to rebuild our infrastructure in a fiscally responsible manner.” No explanation was forthcoming regarding the discrepancy between Trump’s campaign promise of $1 trillion for infrastructure investment over the next ten years, and his current transition website posting slashing that figure to a mere $550 billion.

Pence, Trump and United Technologies Keep Carrier Jobs In Indiana

Without releasing the details of the arrangement, the Trump transition team has announced, and Carrier has confirmed, an agreement that would preserve in Indiana 1,000 of the jobs Carrier earlier proposed moving to Mexico. Reports indicate that the State of Indiana has offered new incentives to Carrier to keep 1,000 jobs in the state, and that Trump pressured Carrier’s parent United Technologies with threats of losing a significant portion of its $5.6 billion in annual defense contracting revenue if Carrier’s proposed move to Mexico was put into effect.

Missouri Infrastructure Budget Faces Deep Pothole In Motor Fuel Tax Shortfall

Illinois is not the only state where increasing vehicle fuel economy and tax averse state legislators are combining to leave secondary roads and bridges in deplorable condition. Missouri road fund revenue has plummeted from $1.3 billion in 2009 to only $800 million anticipated in 2017, leaving 30% of the state’s less traveled roads in poor condition, and 22% of the state’s bridges in poor repair or weight restricted.

A particular sore spot is the need to rebuild 200 miles of interstate between St. Louis and Kansas City, at an estimated cost of $2 billion to $4 billion. Missouri’s motor fuel tax rate of $0.17/gallon has not gone up in 20 years, and voters are opposed to any increase at present. Combined with more miles per gallon from modern cars and trucks, the revenue decline for road and bridge maintenance has been dramatic. Last year the Missouri House failed to even take up a bill to increase the motor fuel tax rate.

Declining revenues have already forced MDOT to cut the highway maintenance workforce by 20%, close repair shops and sell off highway maintenance equipment, shifting $100 million to bandage the highway repair budget. Legislators have even suggested transferring many miles of back roads from state to county responsibility, but such a move would undoubtedly increase maintenance costs per mile of road by denying county and local governments the advantages of statewide quantity purchases of paving materials.

No one has yet figured out how to build and repair more miles of road with fewer dollars.

Monday, November 28, 2016

Texas Federal Court Blocks Mandatory Overtime for High Salaried Workers

The U. S. District Court for the Eastern District of Texas has issued a nationwide injunction against enforcement of the Obama administration’s rule, set to go into effect December 1, that would mandated overtime pay for salaried employees earning less than $47,426.00 annually, as opposed to the current overtime standard of $23,660.00. The court ruled that the Department of Labor regulation was unauthorized by the Fair Labor Standards Act because it substituted salary level alone for consideration of employment duties in determining whether salaried employees are or are not hourly workers.

The court also held the Department of Labor lacks authority to insert automatic upward salary adjustments in the new rule, because the automatic adjustment provision eliminates the notice and comment period required by the Act before implementing new regulations.

Twenty state governments and fifty business organizations brought the lawsuit challenging the rule. It seems highly unlikely that the Trump administration Department of Labor will pursue efforts to enforce or revise the rule after inauguration of the new President in January.

Countervailing Duties May Push Up Prices for Softwood Construction Lumber

A November 25 petition by U. S. softwood lumber producers Weyerhaeuser and Potlatch, together with the Carpenters Industrial Council, seeks imposition of countervailing duties on Canadian softwood imported into the U. S. following expiration of the one year standstill agreement between Canadian and U. S. trade officials. The U. S. companies and the carpenter’s union assert that Canadian softwoods are being sold in the U. S. below cost. Canada’s BC Lumber Trade Council opposes the petition. Council President Susan Yukovich says, “The claims levelled by the U. S. lumber lobby are based on unsubstantiated arguments.”

Negotiations between the Obama administration and Canada’s Trudeau government have failed to produce a new bilateral trade agreement after a year of discussion. It seems unlikely that an incoming Trump administration, with its protectionist sentiments, would take any action to prevent softwood lumber price increases which will follow imposition of the countervailing duties proposed by U. S. lumber interests. Look for American housing and smaller commercial construction prices to go up as a result, in the near future.

Will “Buy American” Infrastructure Legislation Launch US/Canada Trade War?

President Elect Trump’s sentiment favoring the preservation and repatriation of U. S. manufacturing jobs at all costs, coupled with growing protectionist sentiment among Democratic leaders in Congress, could result in U. S. motorists and taxpayers getting far less infrastructure actually built under any 10 year federal infrastructure legislation likely to be introduced during a Trump administration’s first term. Ohio Congressman and minority leader candidate Tim Ryan is already a chief cheerleader for the expected “Buy American” riders Congress is likely to add to any Trump administration infrastructure proposals. “Let’s have Buy American provisions in there, so it’s American-made steel and American-made concrete,” Ryan has announced.

Former George W. Bush administration trade representative Susan Schwab says the addition of buy American riders to an infrastructure bill will end up with the federal government spending an extra $900,000.00 for every U. S. steel industry job saved, instead of leaving motor fuel tax revenues in the Highway Trust Fund to build more roads and bridges using American construction workers. Buy American steel provisions hurt U. S. trade relations with Canada under the Obama administration, and the addition of concrete to such legislation would further increase material prices by limiting imports of Portland cement from Mexican and South American suppliers who are major exporters to the U. S. construction market.

Toronto based IPEX Management Inc., a steel product maker with plants in both Canada and the U. S., cites difficulties arising at U. S. military and other construction sites under the Obama buy American restrictions. IPEX’s Veso Sobot says multiple projects have suffered schedule delays and increased costs as a result, hurting workers on both sides of the U. S./Canadian border. “Canada is joined at the hip with America. We get 95% of our raw materials from the U. S. We have a lot of American suppliers. We have a lot of American customers. We share so many things,” Sobot said.

It remains to be seen what specific materials may be included in buy American riders to a Trump administration infrastructure bill, and what the impact on material costs for private construction projects in this country might be.

Wednesday, November 23, 2016

Federal Court Blocks Enforcement of Labor Advice Disclosure Rule

November 16 U. S. District Judge Sam R. Cummings of the Northern District of Texas in Lubbock issued a permanent injunction blocking the U. S. Department of Labor from enforcing its new rule promulgated March 24, which would have required lawyers and other consultants providing advice to employers regarding opposition to union representation of their employees to publicly disclose their involvement. Judge Cummings ruled that the regulation was an unconstitutional infringement of the employers’ first amendment right to hire and consult with lawyers about labor law matters.

The American Bar Association and the National Federation of Independent Businesses had opposed enforcement of the rule. The ABA specifically objected that the Labor Department rule was interfering with attorney-client privilege. Judge Cummings rulings were issued in the case of National Federation of Independent Businesses v. Perez,  5:16–CV-066-C.

Infrastructure Construction in a Trump Administration

Rosy predictions of doubled federal support for infrastructure construction across our nation under President Elect Donald Trump are fading quickly, according to a recent post on Trump’s transition website. Despite predictions of Trump supporters Wilbur Ross and Peter Navarro that his public private partnership based infrastructure funding and tax plan “could help finance up to a trillion dollars’ worth of projects over a ten year period,” the most recent transportation and infrastructure post on the official Trump administration transition website, proposes federal investment of only $550 billion over the ten year period.

Rebar Prices Headed Up After USITC Ruling

The prices of reinforcing steel for highway and other concrete construction projects will likely head up in the new year, following the U. S. International Trade Commission’s November 3 ruling that imports from Japan, Taiwan and Turkey are being dumped in the U. S. by these foreign steel producers. According to the ruling, the $854.1 million in foreign rebar imports represent almost 20% of U. S. reinforcing steel consumption.

Expect countervailing import duties on foreign rebar to be imposed early next year, leading to increasing prices on both foreign and domestic reinforcing steel products in February or March 2017.

PNC Bank Lends $51.3 Million for South Loop Apartment Tower

PNC Bank is providing the $51.3 million construction loan for construction of a $70 million, 26 story, 320 unit apartment building at 1136 Douth Wabash in the South Loop neighborhood. PNC says it is comfortable making the loan after the developer paid off a $70 million construction loan earlier this year on the 351 unit Arkadia Tower apartment complex in Greektown. The Wabash project is being built by Lendlease.

Federal Court Injunction Blocks Enforcement of “Fair Pay and Safe Workplace” Regulation

Texas federal judge Marcia Crone has issued a preliminary injunction blocking enforcement of the Obama administration’s labor regulation which would have required contractors, and eventually subcontractors, to publicly disclose alleged violations of 14 federal labor, safety, health and employment rules, and related state laws, before seeking federal contracts worth more than $500,000.00 after April 25, 2017. According to Judge Crone’s opinion “The public disclosure and disqualification requirements being imposed on federal contractors and subcontractors are nowhere found in or authorized by the statute on which [the rule and Labor Department guidance] relies.”

The lawsuit challenging the rule was brought by the Associated Builders and Contractors and the National Association of Security Companies, while the rule was supported by the Laborers International Union of North America.

Merchandise Mart Lands Caterpillar “Dirt & Digital” Lab Facility

Peoria based Caterpillar, Inc. has announced a 5,000 square foot, 45 employee facility in the Merchandise Mart to expand its Chicago area presence working with local universities and technology companies to develop digital applications for use in Caterpillar construction equipment, such as real time updates on equipment operator fatigue through equipment cap facial recognition systems, according to Caterpillar Director of Guest and Community Relations Henry Vicary.

“Our ‘Dirt & Digital’ labs are the perfect way for us t showcase that Caterpillar shares Chicago Idea’s overall vision, keenly focused on technology, innovation and a future that will transform the world,” Vicary said.

Chicago Public Schools Announce $1 Billion in Borrowing, Despite Junk Bond Status

Despite Moody’s Investor Service September downgrading of CPS bond issues to junk status, the Chicago Board of Education has announced it intends to market an additional $1 Billion in bonds to finance new school construction, renovation projects, and equipment purchases. The Chicago City council has approved setting aside a pool of property tax revenues to finance repayment of these bonds.

Major Fine for Omega Demolition in Worker Death

OSHA has issued a fine of $152,433.00 against Elgin based Omega Demolition for safety violations leading to the death of Vincente Santoyo, an Omega employee, when a beam collapsed on him while he was cutting bracing during demolition of a bridge over the Jane Addams Tollway to complete widening of the roadway. Omega has had nine other OSHA safety citations since 2006, and has been placed in OSHA’s Severe Violator Enforcement Program. Laborer’s local 225 said that Santoyo had worked for over 20 years in the Chicago area construction industry.

As a result of the deadly incident, Tollway officials removed Omega from the project, and barred the demolition contractor from any further Tollway work. Judlau Contracting, the general contractor, also had its project manager and an engineering supervisor removed from the project and barred from future Tollway work.