Editor's Note: Last week we offered our completely subjective Top 10 news stories of 2023 that impacted the asphalt industry in California. You can read the story HERE. This week we’re back with our fearless prognostications for 2024. If you would like to see how we did with our predictions a year ago, you can read that story HERE. For more detailed information and economic analysis, CalAPA members should refer to the “2024 Asphalt Market Forecast for California” report that was sent to members on Dec. 1. Another source of insight, the annual forecast issue of CalAPA’s official magazine, “California Asphalt,” will hit mailboxes later this month.



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1. State enters period of austerity in wake of massive budget deficits

The state’s non-partisan Legislative Analyst’s Office ended 2023 with a one-two punch on the state of the state's finances. First, the LAO reported that because of less-than-expected tax revenues the state's General Fund was facing a multi-year $68 billion budget deficit. The second punch came with a report that electric vehicle mandates and other climate-related steps will result in declines in transportation funding by as much as 25% unless immediate action is taken. The Department of Finance capped things off with a memo directing General Funded agencies to curtail non-discretionary spending, and encouraged special-funded agencies (including Caltrans) to do the same. That Dec. 12 memo is HERE. The governor will release his proposed 2024-25 fiscal-year budget on Jan. 10 with much of these recommendations codified in the gloomiest budget in many years. This will set the stage for a battle in the Legislature over the cuts and a dour fiscal outlook that will hover over the entire year.

2. Environmentalists pull back in wake of overreach

In 2023 environmentalists were more aggressive than ever in the legislative and regulatory front, including sharpening rhetoric aimed at anyone with the temerity to offer a different opinion. This reached new lows with the characterization of Caltrans as a "rogue agency." The net result was a mixed bag of legislative wins and losses, albeit with a scorched earth strategy that ultimately backfired. In 2024 environmentalists will put the knives away and attempt to repair the damaged relationships they have left in their 2023 rampage. Elected officials, meanwhile, will be loathe to make any enemies in an election year. For the asphalt pavement industry, which at times felt under siege in 2023, 2024 will provide a brief respite from the many asymmetric threats as it refines its own net-zero strategies.

3. Court rulings block CA clean air mandates

The wheels of justice ground rather slowly in 2023 with regard to litigation, supported by CalAPA, challenging various state and federal clean-air mandates absent Congressional action. However, courts in 2024 will rule that agencies have overstepped their authority, creating chaos and confusion. The likelihood that Congress will grant bureaucrats sweeping clean-air authority in an election year ensures that various targets and milestones may be postponed.

4. Continued dysfunction in Washington

Partisan wrangling in Congress, which seemingly reached new lows in 2023, will continue well into 2024 as an evenly divided House of Representatives continues to e buffeted by its most extreme elements, grinding to a halt meaningful progress on any substantive issues. The specter of one or more government shutdowns over funding will loom large in early 2024. Restive House Republicans, who ousted their own speaker in 2023 in California's Kevin McCarthy, ultimately driving him from Congress, will similarly turn on new Speaker Mike Mike Johnson from Louisiana and he will no longer be in the job by the summer of 2024.

5. Caltrans management changes accelerate

A wave of retirements at Caltrans that began to crest in 2023 will reach its apex in 2024 with many new faces in key leadership positions, including district directors and key jobs that interact with the asphalt pavement industry. The changes will pose challenges to continue the progress that has been made in recent years with regard to partnering and a collaborative approach to specification and construction standards revisions and interpretations. A hiring freeze for some positions will further complicate matters.

6. Economic activity picks up

The much-feared recession that seemed to loom over 2023 finally dissipates in 2024, replaced by the "soft landing" of robust job growth, slowing inflation and a return to stability not seen since before the COVID-19 pandemic. The Dow Jones Industrial Average will roar past 40,000, and the Federal Reserve will start slowly reducing interest rates in 2024.

7. No resolution of the road-funding elephant in the room

When SB1, the $50 billion road repair bill passed the Legislature in 2017, there was a recognition then that fuel taxes to pay for road repairs were entering their twilight years. That recognition was brought into sharp relief by a report by the Legislative Analyst's Office in 2023 that road-repair funds faced a 25% drop if action is not taken soon. Despite the alarm bells, 2024 being an election year will guarantee that no meaningful action on this front will be taken by the Legislature. Only when the problem begins to resemble a crisis will the Legislature take the issue seriously, but not until 2025, with meaningful action not taking place until 2027.

8. Fuel prices, and asphalt, remarkably stable in wake of foreign wars

Defying logic and economic convention, fuel prices and asphalt prices will remain fairly stable in 2024 despite a widening war in the Middle East and continuing conflict in Ukraine. This is largely due to the United States producing a record amount of oil, more than it consumes, creating an element of stability at home and abroad. The United States was projected to average a record 12.9 million barrels per day of crude oil production for 2023, which is 1 million barrels more than 2022, according to federal estimates, and that robust production is expected to continue through 2024.

9. Industry consolidation continues

At least two major acquisitions will be announced in 2024, coming on the heels of a number of major changes in 2022 and 2023 that saw longtime family-owned companies get folded into national companies.

10. Control of the House of Representatives will come down to some key CA races

There will be little rest for the weary on Election Night in November as the fate of which party controls the U.S. House of Representatives will come down to the final outcome of a few contested races in California. Recounts and allegations of election mischief will cast a pall over the final results well into 2025.

Honorable mention: CalAPA announces the establishment of a charitable foundation in 2024 to support various workforce recruitment and workforce development initiatives, including supporting the work of the Women of Asphalt California Branch.

And finally: Do you think there’s something important missing from this list? Feel free to drop us a line HERE with your 2024 prediction (be sure to state “2024 Prediction” in the subject line or text of your message.) The best prediction that actually comes to pass in 2024 will be eligible for a prize and recognition in this newsletter.

In the Dec. 11 issue of Asphalt Insider, we reported on the retirement of Tom Ostrom, chief of the Caltrans Division of Engineering Services (DES), and his announced replacement, Tom Foley. That article is HERE.

Ostrom's last day on the job was Dec. 29, and Foley officially begins his new duties this week. But we gave Ostrom one final opportunity to offer up some parting words before he turned in his I.D. badge and drove off into the sunset. Here's his message in its entirety:

"For the first 28 years of my career I had very little awareness of the pavement and materials world other than structural concrete and structural steel. One of the successes I am most proud of in my tenure is working with the Pavement & Materials Partnering Committee at various levels and forging a renewed spirit of commitment and collaboration between the paving industry and Caltrans. This partnership is vital if Caltrans is going to succeed in achieving our climate action goals. From my perspective innovations in construction materials are going to drive civil engineering and the transportation sector over the next generation.

"I also have a deep appreciation for our construction industry partners that build our roads and bridges. What makes Caltrans unique is we are one of the few remaining State Departments of Transportation that starts with a blank sheet of paper and designs, constructs and maintains a State Highway System with predominantly state staff. But at the end of the day, without our contractors, it would remain on a piece of paper and not materialize into the lifeline of California.

"I give you full editorial license to us all or none of the verbiage above or recraft it as you see fit. I have truly enjoyed working with you and CalAPA and have appreciated your ability to navigate the delicate balance between the needs of your association members and the needs/constraints of Caltrans."

Fittingly, one of Ostrom's last prominent acts in support of industry-agency collaboration was his participation in helping conduct a tour last August of the Joint Training & Certification Program classes at Cal State Long Beach for Assemblyman Tri Ta, R-Westminster. A story about that event is HERE.

Have you made a New Year's resolution to get smarter about asphalt in 2024? Have you hired new personnel who need to get up to speed quickly? CalAPA can help.

The association will hold two of its most popular asphalt paving classes in January in Ontario. "Asphalt Pavement 101," taught by former Caltrans materials engineer and asphalt association executive Roger Smith, will be held on Thursday, Jan. 11 from 8 a.m. to noon at the DoubleTree Hotel, 222 N. Vineyard Ave. in Ontario. The class is a good overall review of all things asphalt, touching on how asphalt pavements are designed, constructed and maintained. It is an excellent class for those new to the industry as well as experienced personnel needing a refresher on recent developments. On-line registration for the class is HERE.

CalAPA will also hold its popular "Quality Asphalt Paving" class at the same location in Ontario on Thursday, Jan. 11 from 1 p.m. to 5 p.m. This class is more focused on field personnel and is taught by Pete Lambert, a longtime paving superintendent and one-time pavement company co-owner. The class is a "boots on the ground" view of what makes for a quality paving job, and is good for paving crews, inspectors and anyone else interested in how proper construction practices will result in asphalt pavements that last for many years. On-line registration for the Jan. 11 "Quality Asphalt Paving" class is HERE.

Both classes help meet the professional education requirements for achieving the CalAPA "Quality Paving Certificate," which is the gold standard for paving excellence in the asphalt paving industry in California. You can learn more about the Quality Paving Certificate HERE.

For more information on CalAPA's technical training offerings, click HERE. Contact Sophie You at (916) 791-5044 if you would like to host a class at your facility.

Vince Mammano, the regional administrator for the Federal Highway Administration, recently announced his departure from the agency. A replacement has not yet been named. Mammano recently resurfaced as director of strategic solutions for Mark Thomas & Co in San Jose. The company's website is HERE.

Another familiar name to the asphalt pavement industry also announced last week he is leaving the agency: Chu Wei, who held the title of Asset Management/Pavement Engineer. He told Asphalt Insider that he is taking a position with the U.S. Bureau of Indian Affairs as their supervisory highway engineer for the Pacific Region.

"I wanted to take this opportunity to let you know that I have truly valued your collaboration and professionalism over the past five years," Wei said in his farewell note sent Dec. 28.

His boss, Chris Long, said "We will miss Chu" and expects to begin the process of filling his position sometime in January. Long said he appreciated the high regard the asphalt industry held Wei, as well as his predecessor, Steve Healow, who was installed in the CalAPA "Hall of Fame" as an "Honorary Member." Long called the recognition a "testament to our partnership."

Wei is pictured speaking at a recent CalAPA educational event earlier this year in Sacramento. He also was instrumental in helping coordinate a tour by a FHWA delegation of a DeSilva Gates asphalt plant in Sunol on Jan. 27. A story about that event is HERE.

CalAPA offices will be closed on Monday, Jan. 1, in observance of the New Year's Day holiday. CalAPA's e-newsletter, the California Asphalt Insider, will remain on its usual publication schedule and be sent to subscribers Monday morning. CalAPA offices will reopen during normal business hours on Tuesday, Jan. 2.

Each week we highlight a word, acronym or other term commonly used in the asphalt pavement industry in California.

GYRATORY COMPACTOR: A piece of equipment that compacts specimens of Hot Mix Asphalt as part of the Superpave™ mix design procedure. The primary operating parameters for the SGC include the pressure applied to the specimen during compaction; the speed of gyration/rotation; the number of gyrations applied to the specimen; and the angle of gyration.

Each week we highlight a key point or best practice of interest to asphalt paving crews, inspectors and others working in the field. We welcome suggestions. More tips can be found in our "Asphalt Parking Lot Construction Checklist" HERE. Information on the CalAPA "Quality Paving Certificate" program is HERE.

COMPACTION/DENSITY: The plans and specifications should specify that density is tested. The inspector needs to monitor the specified compaction density with a gauge to ensure that final target densities are achieved. Regular visual inspection of the mat during compaction is also required: look for segregation, indentations, properly sealed joints, and under-compacted areas.

Each week we highlight a term that is specific to climate-change issues related to the asphalt pavement industry. This feature is intended to raise awareness of the asphalt industry's climate-change initiatives and the specialized terminology that goes with them. More information on "The Road Forward" asphalt industry climate initiative can be found HERE.

STONE MATRIX ASPHALT: Gap-graded mixture designed for rut resistance and durability.

"When the well is dry, we know the worth of water."

– Benjamin Franklin

We hope you enjoy CalAPA's Asphalt Insider newsletter. We are committed to providing you with the most up-to-date information on technical issues, regulation, news, analysis, events and trends in California that is of interest to the asphalt pavement industry and our various agency partners. To subscribe to the newsletter, click HERE. For comments, questions or to suggest a story idea, click HERE.

Sincerely,

Russell W. Snyder, CAE

Executive Director

California Asphalt Pavement Association (CalAPA)®