NSSGA president, CEO discusses presidential race, infrastructure

By |  April 6, 2020

During the 2020 Pit & Quarry Roundtable & Conference, Michael Johnson, president and CEO of the National Stone, Sand & Gravel Association, reflected on 2019, looked ahead to the coming production season, and offered insights on the 2020 presidential election. The conversation presented here took place Jan. 15, and it was edited for brevity and clarity.

Michael Johnson, president and CEO of NSSGA, was among the speakers at the 2020 Pit & Quarry Roundtable & Conference. Photo: PamElla Lee Photography

Michael Johnson, president and CEO of NSSGA, was among the speakers at the 2020 Pit & Quarry Roundtable & Conference. Photo: PamElla Lee Photography

By most accounts, aggregate producers once again performed admirably in 2019, with crushed stone, sand and gravel production on the up despite some significant weather challenges in parts of the country. The outlook for 2020 appears to be good for roads and bridges, with the American Road & Transportation Builders Association calling for at least 5 percent growth in transportation infrastructure in 2020 and Dodge Data & Analytics calling for 4 percent growth in public works construction this year. From your seat, how do you expect the industry to perform in 2020, and what were your impressions of the industry’s 2019 performance?

Generally, across the country, what I heard from our members is they were up about 5 percent – give or take – over last year. In the urban areas, maybe a little bit more; in the rural areas, maybe a little bit less. But generally, about 5 percent.

What I’m hearing from them is that while volume hasn’t recovered to record levels, margins are doing really well and profitability is up.

All in all, I think for our members, business is very good. The cranes are everywhere. There’s a lot of construction going on, and that’s a good thing. Because in America, when we’re building, we’re at our best.

Continued funding from the 2015 FAST Act and an infusion of funding from a number of states seems to be instilling confidence in the market as we enter a new year. Still, as you talk to anybody with a stake in infrastructure development, they would like to see significantly more funds dedicated to highways. Considering this, how would you characterize the state of highway funding today? How are we situated right now compared with recent years? And is there any realistic pathway to significantly boost funding with a massive federal bill in the near future?

We can be doing better. You can always do better. The FAST Act was an important step in the right direction and it’s almost five years old. It was a five-year bill that injected $305 billion over five years into the industry.

What it really did, even more importantly than the $305 billion, is it gave certainty to the states. They knew what was coming and how much money they could expect to get as part of their share of the pool from the federal government.

But the fact remains: We’re $1 trillion behind where we need to be in fixing our roads and bridges. The average bridge in this country is now more than 60 years old. One-third of the bridges in this country are old enough to qualify for Medicare.

We’re looking at about a 65 percent increase in heavy trucks on the roads over the next 10 to 15 years. We’re so congested in this country, and it’s just not flowing well. And you cannot expect to stay the No. 1 economy in the world when your infrastructure is falling in rank. We’ve got to do better.

The good news is, while I don’t see a huge infrastructure bill coming out of Congress in 2020, I do believe there’s real opportunity and a strong possibility when you look at a new roads bill.

Congress is going to be faced with an option that really leaves them very little choice. On Sept. 30, the FAST Act expires. All of the funding that the federal government has provided as part of that bill will go away, That would have a disastrous effect on our economy just before a major presidential election. The 2020 election also has every member of the U.S. House and one-third of the U.S. Senate up for reelection.

Congress acts best when they’re left with no less painful alternative, and I think that’s why we’ll see them move on a roads bill.

Senate Majority Leader Mitch McConnell (R-Kentucky) has said it multiple times: if there is any one thing that we really need to do before the election, it’s a roads bill. So I think there’s a really good shot – a high probability – of getting a serious bill for Congress to share. So that is good news, and I think we’re going to see action on that this year.

Certainly, NSSGA (the National Stone, Sand & Gravel Association) and our partners in the infrastructure coalitions that are active in Washington are working very hard on this each and every day. Members of Congress are hearing about it at home.

I look at the numbers, and for each and every one of these congressional races, infrastructure is No. 1 or 2 on the voters’ minds. They’re hearing about it at home, and they’re going to hear about it from us, too. So you’ve got to be part of that voice.

Thirty states have reportedly increased their gas tax since 2013, including five in 2019. We’re seeing this in both red and blue states. It would seem that the states are setting the example for our federal government on how to fund highways. It would also appear that the public at-large understands the dire situation at hand with our crumbling infrastructure. Are the stars finally aligning to allow for an opportunity to get something big done federally on infrastructure?

I think the states are acting because the federal government hasn’t. Congress has simply shirked its responsibility. They have not done that job the way they should, so the states have had to step in and pick up.

Why have the states done it? Because the states, in a lot of cases, have balanced budgeting and they must present a balanced budget. They know their roads and bridges are just too bad to continue on the path that they’re on.

I also think they’ve done it because those state legislators are truly part-time officials. Many of them are at home more than they are at the state capitol, which is a good thing. They hear from their constituents about the problems in that community. They’re much more connected to the people who voted for them than our members of Congress.

Members of Congress have that separation. When they come to Washington, I think they get a bit disconnected to what’s going on at home and to that voter. State legislators don’t have that opportunity. So for them, it’s more crucial to deliver.

I’ll make this point: 98 percent of the state legislators who cast a vote to increase revenue to fund roads and bridges have been reelected. The 2 percent who were defeated didn’t lose because of an infrastructure vote. With taxes spent on infrastructure that better people’s lives, that grow communities, that create jobs, voters will reward you for taking that vote – and they have.

To the politics of Washington: It’s never been worse. It’s a mess. We’ve got to get back to the business of the country, because too much is at stake. That’s the other reason I think a roads bill really happens in 2020. All of these members of Congress need to show their constituents that they’re about something more than just fighting over impeachment.

Says NSSGA’s Michael Johnson: “The average bridge in this country is now more than 60 years old. One-third of the bridges in this country are old enough to qualify for Medicare.” Photo: Markus Thoenen/iStock / Getty Images/Getty Images

Says NSSGA’s Michael Johnson: “The average bridge in this country is now more than 60 years old. One-third of the bridges in this country are old enough to qualify for Medicare.” Photo: Markus Thoenen/iStock/Getty Images/Getty Images

The presidential election is less than 10 months away, and the outcome of this election will likely take the nation in two totally different political directions. Consider the potential outcomes and their potential effects on the aggregate industry: 1) President Trump is reelected; 2) a moderate Democrat wins the presidency; and 3) a far-left candidate (i.e., Bernie Sanders) wins. I think we all have a sense of what we could expect, but perhaps you can paint your picture for us.

Absolutely, I can’t pass up a chance to do that.

If I was a betting man – and I am – I will tell you right now that odds are that when you wake up the day after the election in 2020, that Donald Trump will still be president of the United States. Every single indicator in the polling says that he should not be reelected. He has numbers that are historically bad. Nobody’s ever been reelected with the numbers that Donald Trump has right now in the public polling. But a couple of things are working in his favor.

First, we’ve got a very strong economy, and no president has ever been defeated for reelection with an economy as strong as the one that he’s enjoying right now. We could debate all day about who gets credit for that, but timing is everything in politics.

The fact of the matter is most states will not matter in this election. If you live in Wisconsin, Michigan, Pennsylvania, Ohio, Arizona, to a lesser extent,  and Florida, to a big extent, your vote actually matters in the upcoming election.

The majority of the [country] does not live in one of those states. I have bad news for you: Your results are already preordained. You could vote what you want to vote – your state is either blue or red – and it’s not going to change. The election will be decided by a very small number of people, just like it was in 2016.

I think it’s absolutely conceivable, and probably most likely, that Donald Trump will lose the popular vote by more than 5 million votes but win the electoral college by 10 or 15 – maybe more.

Again, if I was a betting man, I think he gets reelected. I think the House stays in Democratic hands. I think the Senate margin narrows and even potentially goes to the Democrats, but that would be a longshot. After Election Day 2020, I think we largely have status quo.

There’s so much attention on the presidential election at this stage, but there are big ramifications in the Senate and the House that are being overlooked. Politico, for one, expects Republicans to retain control of the Senate and for Democrats to retain control of the House. Is that your expectation? What might these outcomes mean for the industry if Trump were to be reelected? What might they mean if a Democrat is elected?

I look at this from a pure political point of view: [I was] hired to represent our industry. Our No. 1 public policy, from a growing volume of the industry standpoint, is infrastructure investment.

From that viewpoint, the best possible lineup we could have in Washington is a Democrat in the White House, Democrats in control of the House, and a Senate in which no party has 60 votes – so they have to cut a deal. If we had that, I would virtually guarantee you an infrastructure bill like you’ve heard folks talk about – and maybe as much as $2 trillion in the first 100 days. Because the Democrats are willing to do the spending, they’re willing to find the revenue to make a major infrastructure investment happen.

Republicans get hung up on finding the money. They can’t find it in the federal budget. [Congress] can’t find $2 trillion, which is what we really need to catch up on infrastructure in the federal budget today. You’ve got to find the revenue. Republicans get paralyzed on that because it means raising taxes. Democrats have absolutely no problem raising taxes, so infrastructure would be easy with Democrats.

On the flip side, any and every regulatory issue you could possibly imagine would be a nightmare. So we would have any increase in need for our product. We’d have huge volume demand out there to build the infrastructure they would fund. But the regulatory challenges from every facet of the federal government would be a fiasco. We’d have a tough time meeting the demand and, if we could meet demand, I’m not sure we can do it profitably or efficiently.

That is, in my opinion, the best lineup for big infrastructure investment. The worst lineup for infrastructure would be the reverse of that. So what we’re going to have instead is something in the middle, and that’s what we’ve got to navigate

Comments are closed