Chattanooga-based Astec sounds alarm on stalled highway bill

Chattanooga-based Astec sounds alarm on stalled highway bill

July 10th, 2014 by Ellis Smith in Business Around the Region

Workers do a burn test on a piece of equipment Wednesday during an "I Make America" event celebrating American manufacturers at the Astec manufacturing facility in Chattanooga.

Photo by John Rawlston /Times Free Press.

Malcolm Swanson, center, president of Astec Inc., leads elected officials on a tour of the manufacturing facility Wednesday during an "I Make America" event celebrating American manufacturers.

Malcolm Swanson, center, president of Astec Inc., leads...

Photo by John Rawlston /Times Free Press.

In the final days before the total depletion of the U.S. Highway Trust Fund, construction companies are warning that its insolvency could spawn more than just potholes and blown tires.

Widening cracks in the fund that pays for maintenance on the federal highway system could lead to accelerating unemployment and an economy that runs off the road. Meanwhile, deferred road maintenance could end up costing taxpayers more in the long run, officials warned.

Tennessee taxpayers face a 50 percent reduction in the state's transportation budget in 2015 and a $160 billion hole in state budgets nationwide as a result of the hole in the trust fund, congressional officials said.

J. Don Brock, founder of Chattanooga-based Astec Industries and holder of more than 90 patents, praised an 11th-hour proposal by Sen. Bob Corker, R-Tenn., which would raise the gas tax by 12 cents per gallon to replenish the funds that pay for federal roads. But that proposal comes as Congress prepares for an August recess, and so far has been met with little enthusiasm in political circles.

"It works out to about one cup of coffee per week for the average family, but it would raise $24 billion to help rebuild our roads," said Brock, who heads the leading U.S. manufacturer of road building and other heavy equipment.

Good roads are about more than keeping construction and factory workers busy, Brock said. Rough roads increase wear and tear on vehicles, while smooth roads increase gas mileage by as much as 7 percent, the Georgia Tech's Ph.D graduate calculated.

"If you consider that, the 12 cent tax pays for itself," Brock said. "But nobody sits down and does the math."

This isn't the first time Congress has failed to pass a full extension of the federal highway bill, and the results are similar each time:

Construction projects shut down. Companies curtail or halt purchases of new equipment. Hundreds of thousands of people lose their jobs. And when a short-term stopgap measure is finally passed, it's typically a short-term bill that does nothing to restore long-term stability to the road construction market.

Though there is pent-up demand for new equipment, road builders are reluctant to spend large amounts of money on big pieces of equipment unless there's some stability on the horizon.

"Already the economy is basically bottlenecked because of the physical limits of our infrastructure," said Malcolm Swanson, president of Astec Inc., an Astec Industries subsidiary.

Astec Industries, a member of the Association of Equipment Manufacturers, had plenty of support at a rally on Wednesday to raise awareness about the price of Congressional inaction.

That included Tennessee Sen. Todd Gardenhire, R-Chattanooga, and state Rep. Vince Dean, R-East Ridge. Though the state legislators don't have control over the U.S. Congress, they said the state can support businesses like Astec with more technical training for welders and machinists, without whom the company can't operate.

"Right now, they have to do their own training," Gardenhire said. "They need skilled labor."

In addition to making asphalt road-building equipment, drilling equipment, and materials processing equipment, Astec's workforce is also skilled at writing letters to Congress, Swanson said Wednesday.

The company's workers sent more than 2,000 letters to Congress two weeks ago when it became apparent that there would be no action on a highway appropriation bill. But with the clock ticking, it might be time for another round of grassroots communications, Swanson said.

"We need to be burying Congress in letters, emails and phone calls" he said. "Let's keep Congress in good supply of letters to read about highways."

On Tuesday, the House Ways and Means Committee announced that it would transfer $10 billion from the general fund to the highway trust fund, but that will be spent in just a few months, a Congressional staffer said. Another proposal to extend the highway bill for just six months was withdrawn, and a second proposal from the Senate Finance Committee is expected this week.

Astec, founded in 1972, earned $9.5 million in the first quarter of 2014 from sales of $238.7 million. The Chattanooga-based company has diversified into a variety of industries through acquisitions and new product offerings.

Contact Ellis Smith at 423-757-6315 or with tips and documents.