California Asphalt Magazine Forecast Issue 2015

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Publisher’s Letter Dear Readers, Welcome to the annual forecast issue of California Asphalt magazine. As the outgoing chairman of the association, I’m pleased that this is one of the many tools and services the association offers its members to help them better understand our industry, discern important trends and be prepared for the inevitable challenges that lie ahead.

Before we look ahead, however, I’d like to take a moment to review some of the important accomplishments of our association over the past year: Our legislative advocates, working in concert with other allies, were successful in securing $350 million in “cap and trade” revenues devoted to transportation programs, with a large chunk of that money going directly to roads. We also were successful in advancing other legislation that could result in new revenue streams for our strapped transportation coffers, including a pilot program to test the feasibility of a mileage-based fee that may ultimately replace the fuel taxes we pay at the pump.

The diligent work of members, supported by staff, have resulted in meaningful progress on some longstanding issues over material test delays, test accuracy and lab technician training. Our association spearheaded a multi-association letter that was delivered to California State Transportation Secretary Brian Kelly on May 21, 2014, that triggered a materials “summit” meeting later in the year and two task forces that are developing many common-sense proposals that should improve these areas dramatically.

We have reached out to local agencies on an unprecedented scale in the past year, including holding numerous technical committee meetings, seminars and other knowledge-transfer activities. Hundreds of public agency representatives, and the consultants they hire, have benefited.

Our Political Action Committee boasted a 100 percent success rate in the candidates we supported over the past year, and our plant tours for elected officials opened many eyes and helped dispel many myths about our industry. Our Legislative Committee kept tabs on bills circulating at the Capitol that could be harmful to our members.

We continue to work very closely with Caltrans on the development and deployment of the new edition of the Section 39 asphalt pavement specifications, which draws heavily on elements of the federal “Superpave” initiative. The constructive dialog between Caltrans and the companies that supply materials for and build public roads is resulting in a better, more buildable specification.

Our association worked very closely with other like-minded entities and associations, including the National Asphalt Pavement Association, Asphalt Pavement Alliance, Asphalt Institute, other state asphalt associations and others to promote sharing of best practices,

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California Asphalt Magazine • 2015 Forecast Issue

important new research and other information that will demonstrate that asphalt pavements that are a better value than ever.

Our asphalt pavement conferences – in the spring in Southern California and in the Fall in Northern California – have become must-attend events for our industry and agency personnel. The equipment expos we have added recently have also proven to be enormously popular.

Our policy committees, including our Technical Advisory Committee, Environmental Committee and Legislative Committee, have been active formulating policy, positions and synthesizing information that is relayed to the membership in a useful and timely way.

Our networking and social events, including our annual golf tournament, Day at the Races at Del Mar, paving contractor events and Annual Dinner, continue to be popular ways for the industry to come together to develop and strengthen relationships that are so essential to doing business in our industry.

In the coming year we will study closely the data from our membership satisfaction survey, review and update our strategic plan, and make sure that all of our activities are aligned with member needs and expectations. I thank you for your input, your participation and for your support, and I wish you a happy, healthy and prosperous 2015.

Finally, I would be remiss if I didn’t offer my sincere thanks and appreciation for our industry leaders who came together in 2011 and hammered out the agreement that resulted in two regional asphalt associations unifying as one in 2012. While many contributed to the effort, I’d like to offer special thanks to Don L. Daley Jr. with California Commercial Asphalt, Len Nawrocki with Valero Marketing & Supply, Alan Wessel with Vulcan Materials, Ron Stickel with Teichert Materials, Ladd Stephenson with Syar Industries, and my co-chair in 2012-13, Jeff Reed with George Reed Inc./Basic Resources. I’ll always cherish the memories of how our industry leaders stepped up to do something special for the greater good, and the result has been a strong and effective association that represents all of our interests more effectively than ever before.

Sincerely,

John Holliday, Chairman, CalAPA Holliday Rock California Asphalt Magazine • 2015 Forecast Issue

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Contents 4 10 16 18

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Publisher’s Letter The UCLA Anderson Forecast for the Nation and California Annual CalAPA Survey Page 10

Q & A with Gary Gallegos – Executive Director of San Diego Association of Governments (SANDAG) Bowman Asphalt, Inc. – Central Valley’s Quality Full Service Construction Company and Material Producer

Page 18

Advertiser Index

Page 26

CALIFORNIA ASPHALT PAVEMENT ASSOCIATION www.calapa.net

HEADQUARTERS:

EXECUTIVE DIRECTOR: DEPUTY EXECUTIVE DIRECTOR: MEMBER SERVICES MANAGER: TECHNICAL CONSULTANT: GUEST PUBLISHER: PUBLISHED BY:

GRAPHIC DESIGN: CONTRIBUTING EDITORS:

ADVERTISING SALES:

P.O. Box 981300 • West Sacramento • CA 95798 (Mailing Address) 1550 Harbor Blvd., Suite 211 • West Sacramento • CA 95691 • (866) 498-0761 Russell W. Snyder, rsnyder@calapa.net Tony Grasso, tgrasso@calapa.net Sophie You, syou@calapa.net Rita Leahy, PhD., P.E., rleahy@calapa.net John Holliday, Chairman, CalAPA, Holliday Rock Construction Marketing Services, LLC • P.O. Box 892977 • Temecula • CA 92589 (909) 772-3121 • Fax (951) 225-9659 Aldo Myftari, aldo@ironads.com David Shulman and Jerry Nickelsburg, Senior Economists, UCLA Anderson Forecast, Brian Hoover, CMS, LLC and Russell W. Snyder, CalAPA Kerry Hoover, CMS, (909) 772-3121 • Fax (951) 225-9659

Copyright © 2014 – All Rights Reserved. No portion of this publication may be reused in any form without prior permission of the California Asphalt Pavement Association. California Asphalt is the official publication of the California Asphalt Pavement Association. This bi-monthly magazine distributes to members of the California Asphalt Pavem­­ent Association; contractors; construction material producers; Federal, State and Local Government Officials; and others interested in ensuring that asphalt remains the high quality, high performance pavement choice in the state of California.

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California Asphalt Magazine • 2015 Forecast Issue

California Asphalt Magazine • 2015 Forecast Issue

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from

WALL STREET to MAIN STREET

The UCLA Anderson Forecast - December 2014 Report By: David Shulman, Senior Economist, UCLA Anderson Forecast

From Wall Street to Main Street While stocks have tripled off of their financial crisis lows of March 2009 and are now trading well above the old high reached in November 2007, the feeling on Main Street has been far less ebullient. As we have noted in prior quarters, we believe that the tepid 2 percent growth path experienced from 2009-2014 is now in the process of ramping up to a sustained period of 3 percent growth in real Gross Domestic Product (GDP), which will bring with it a sense of economic progress on Main Street.

Specifically we are forecasting 2.8 percent growth in the current quarter and for growth to average 3.1 percent in both 2015 and 2016.

Mostly Good News and Some Bad News from the Drop in Oil Prices In recent weeks, the price of oil went into a free fall.

After trading for much of the year in the $100 a barrel range, the price of oil plummeted to around $75 a barrel. Should the oil price remain at this new level, and we expect it will, there will be huge benefits to consumers. For example, such a price reduction translates to at least a 50 cent a gallon price cut for gasoline. With the U.S. consuming about 135 billion gallons of gasoline a year that calibrates into a $67 billion a year boon to consumers.

Simply put, more than half the consumer benefit of lower oil prices will be absorbed by U.S. producers.

That, in turn, will lead to lower than otherwise incomes, employment and capital spending in the oil producing regions of the United States, which have been the fastest growing regional economies in recent years. We note that this has become a high class problem as domestic oil and gas liquid production has surged from 7 million barrels a day in 2009 to an estimated 10 million barrels a day in 2014 and will likely reach 11 million barrels a day in 2015.

Meantime, headline consumer prices will actually decrease in the current quarter and will be flat first quarter of 2015. However, once the oil price reductions run through the system we forecast that consumer prices will begin to increase at a clip in excess of 2 percent. Why? The higher wages we 10

are forecasting along with rising rents will work to elevate the core consumer price index that excludes food and energy. Further, the broader consumption deflator used in the GDP accounts, and the critical targeting variable of the Federal Reserve will be running at a much cooler 1.8 percent - 2.0 percent until late in 2016.

With lower oil prices adding fuel to rising employment and wages, consumer spending will ramp up from a 2 percent or so pace to over 3 percent over the next two years. Unlike prior cycles, these gains will not be funded out of a lower savings because the income growth will be there to support the higher level of spending. CAM California Asphalt Magazine • 2015 Forecast Issue

The UCLA Anderson Forecast for California The Changing Face of Construction and Manufacturing By: Jerry Nickelsburg, Senior Economist, UCLA Anderson Forecast, Adjunct Professor of Economics, UCLA Anderson School

The California Outlook remains much the same as it has over the past 12 months. In spite of all of the turmoil in the world, labor markets keep improving a pace with nothing spectacular derailing the recovery process. A year ago we forecast that California employment would grow at 2 percent, faster than the U.S., fast enough to drive down the unemployment rate to 8.2 percent. We were right on target with the employment forecast, but the labor force did not grow as fast as we anticipated and the unemployment rate dropped a full 0.9 percent more than forecast. The latest job numbers (45,000 new payroll jobs in October) do not give us any reason to think that the projected fall in the unemployment rate to approximately the same as the U.S. by the end of 2016 is in jeopardy.

The short story of the forecast is that it is not much changed. The latest data show the growth of housing starts were slightly slower than predicted, a slowdown which we attribute more to the difficulty of beginning construction on multi-family projects in already developed areas rather than a change in the underlying fundamentals of demand and supply. We expect continued weakness abroad, in particular slower growth in Japan, China and the European Union, which will reduce the growth of manufactured goods for export other than components for commercial airplanes, and increased consumption at home which will generate more demand for transportation and warehousing services. Though each of these three factors will have an impact on our forecast, the net effect is for 2015 to look much like 2014 – a good but not spectacular year – and 2016 to show stronger growth and an unemployment rate plummeting to 5.3 percent.

Indeed, our optimism about the future of the California economy is only tempered by two elements; 1. That Sacramento could take the passage of the rainy day fund as the solution to the volatile revenue stream relied upon for State government funding, a topic we have discussed previously, and 2. The changed nature of labor demand in California leaves a sizable segment of the State’s working population out in the cold. In California Asphalt Magazine • 2015 Forecast Issue

this California Report we will discuss the latter in the context of the market for construction and manufacturing workers.

Through the recovery phase of this business cycle we have been talking about California as a bifurcated economy with an increasingly prosperous coastal region driven by technology and an inland region stuck in the construction/ manufacturing contraction doldrums. While this characterization [ Continued on page 12 ]

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has helped guide our understanding of the recent evolution of the California economy, from the viewpoint of the sixth year of economic expansion those lines have become blurred. Construction employment, for example, has returned and is an important part of current job growth in the state, but we do not expect it to hit the levels of 2003 much less 2006 again any time soon. As well, manufacturing is finally beginning to grow once again, but those laid off in the last recession do not find solace in this fact as manufacturing employment continues to transform in fundamental ways.

as evidenced by the slowdown in home price appreciation, potential home sellers are more able to formulate when and for how much to sell their home. It is our expectation that the inventory listed for sale will continue to increase at a measured pace over the next few years and by the end of the forecast horizon will look quite normal.

Manufacturing The permanent loss of manufacturing jobs has been a salient characteristic of the last three recessions and certainly contributed to the geographical variation in the 2008/2009 recession’s impact. In today’s California the story is more complex and nuanced than that. A county by county comparison of the percentage Construction and Housing of the workforce in manufacturing in 2007 to One of the oft-expressed concerns about housing markets is over their fragility. Pundits observing the the subsequent recovery of jobs shows little rising prices of houses associate the increasing lack correlation between the two. In fact each county is unique in its own advantages and weaknesses and of affordability squeezing out potential buyers as putting a damper on the market. More importantly, in the type of manufacturing it was doing in 2007. the consequent impact on home sales is seen as Manufacturing jobs have been declining in discouraging the construction of new housing units. Home prices have indeed risen sharply in the California since 1990. However, the output of the manufacturing sector has not. Today factories past year, though that trend seems to have abated produce more goods with many fewer people in recent months. But, this only brings them back and that additional productivity allows them to to where they were pre-bubble (2004). That means that home prices have not appreciated over the last be competitive with producers throughout the world. But not only are they producing more goods 10 years in nominal terms (excluding inflation) and with fewer workers, the workers have decidedly have actually fallen after accounting for inflation. different skills. We have no reason to believe that these trends will not continue until, aside from Evidence that the state is moving to more normal craftsman or artisanal manufacturing, none of real estate markets is also seen in the level of the old style mechanical processes exist. Our foreclosures. They have now dropped to 6 percent expectation for manufacturing employment in of all home sales with total foreclosure and short sales falling to 11 percent. Even though the number 2015 and 2016 is that it will be moderately larger, but one must keep in mind that such a forecast of homes sold in the last few months is only means something quite different for the labor force about 60 percent of the number expected in more than it would have in the aftermath of pre-1990 normal housing markets, the level of foreclosures recessions. is about right for a such a market. Now that home prices levels more aligned with fundamentals [ Continued on page 14 ] 12

California Asphalt Magazine • 2015 Forecast Issue

California Asphalt Magazine • 2015 Forecast Issue

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The Forecast What do these facts about construction and manufacturing mean for the future evolution of the California Economy? They have been in play since the beginning of the recovery and are expected to remain so. The transformation of the Golden State to the Information Economy of the 21st Century will continue apace. The real implication is that having the appropriate skills in the labor force is critical to keep the faster-than-the-U.S. economic growth going for the long-term. Because of this, the shape of immigration reform, the ability of California to attract highly-skilled labor from other parts of the U.S. and home grown workforce development could derail, or accelerate the forecast growth rates presented here.

The current forecast is for continued steady gains in employment through 2016. The increase in U.S. growth rates from construction, automobiles, and business investment as well as higher consumer demand will continue to fuel our local economy.

What this means is a steady decrease in the unemployment rate in California over the next two years. We expect California’s unemployment rate to be insignificantly different from the U.S. rate at 5.3 percent by the end of the forecast period.

Our estimate for the 2014 total employment growth is 1.8 percent, and for 2015 and 2016 the forecast is for 2.1 percent and 2.2 percent. Payrolls will grow more at about the same rate the three years.

Real personal income growth is estimated to be 3.1 percent in 2014 and forecast to be 4.5 percent and 4.5 percent in 2015 and 2016, respectively. The unemployment rate will hover around 7.1 percent through the balance of 2014. Unemployment will fall through 2015 and will average approximately 6.6 percent a slight decrease from our last forecast.

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In 2016 we expect the unemployment rate to be approximately 5.6 percent, a half percent higher than the U.S. forecast.

The information provided in this article is only a small excerpt of the UCLA Anderson Forecast for the Nation and California. To see the UCLA Anderson Forecast in it entirety, please contact: UCLA Anderson Forecast at (310) 825-1623 or visit their website at www.uclaforecast.com CAM California Asphalt Magazine • 2015 Forecast Issue

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Exclusive: Sharp rise in optimism in our 5th annual ‘better or worse’ survey By: Russell W. Snyder

Executive Director, California Asphalt Pavement Association (CalAPA)

The results are in. The fifth annual CalAPA “Better or Worse” survey is showing a sharp rise in optimism, even though there still remains a healthy dose of skepticism about prospects for 2015.

The single-question, non-scientific poll of more than 2,400 “Asphalt Insider” newsletter subscribers, conducted earlier this month, marked the second straight year of rising positive feelings for the new year, with 51 percent of respondents saying that 2015 will be better than 2014. That compares to 34 percent last year and only 25 percent in 2012. A total of 194 people took the survey. It was the first time in the history of the survey that the “better” choice surpassed 50 percent.

The percentage of respondents who predicted next year will be worse than this year also continued to drop slightly to 14 percent, compared to 19 percent last year and 21 percent in 2012.

A sizeable number of votes fell into the “about the same” category, with 32 percent predicting that 2015 will be about the same as 2014, compared to 42 percent last year and 41 percent in 2012. The percentage of respondents who said they didn’t know or did not have an opinion reached a new low for the survey: 1 percent.

The survey question is purposefully vague: “For your company or organization, how do you think 2015 will compare to 2014?” However, most of the voluntary comments offered up by survey respondents centered around how much work is expected in the coming year. The answer varied by company, agency and region, reflecting the size and diversity of California’s economy.

“Lower volume of available Caltrans work will keep number of bidders high and margins low,” wrote one producer member. Added another: “While overall revenues may continue to improve in 2015, the shortfall in funding and competitive pressure will keep margins about the same as 2014.”

As economists have noted, the slow economic recovery in California has been uneven, and depending what region of the state a business is located contributes to how much economic activity is taking place. The survey comments seemed to bear that out.

“Forecast for work is amazing,” wrote on respondent, while another said glumly, “no money, no work.” Yet another provided a bit more detail: “The decrease in public works (Caltrans specifically) will impact the market as a whole. Strengthening 16

private works opportunities will continue to boost and offset the impact of diminishing Caltrans projects.”

Agency responses were similarly mixed. “Can’t get any worse than it is,” said one, while another state agency representative wrote, “I work for Caltrans. Project funding levels and workload have been in decline for several years. 2015 will be about the same as last year.”

About 60 percent of funding for transportation in California comes from local sources, with state and federal funds making up most of the rest.

Industry and agency representatives both worried about the loss of experienced workers, either through layoffs or retirements, and the high cost of doing business. Said one agency representative, “No succession planning for upcoming vacancies due to retirements.”

Still, coming on the heels of years of cutbacks, some agency personnel noted that it presented an opportunity to streamline and make operational efficiencies. Commented one: “We’ve made some organizational changes due to retirements, and I expect our operation will run better. We’ve also hired two young whippersnappers to support our senior engineering staff.”

About one-third of survey respondents were agency representatives, all from California. Overall, however, agency respondents were less optimistic than their private-industry counterparts, with only 38 percent saying next year will be better, 24 percent saying it will be worse and 37 percent predicting it would be about the same. CAM California Asphalt Magazine • 2015 Forecast Issue

QA

with

Gary Gallegos

Executive Director, San Diego Association of Governments (SANDAG) By: Russell W. Snyder Executive Director, California Asphalt Pavement Association (CalAPA)

Editor’s Note: Gary Gallegos is executive director of the San Diego Association of Governments (SANDAG), and is a nationally recognized expert in transportation, land use, regional public policy making, and bi-national planning and diplomacy.

As one of the longest-serving executives of a regional transportation planning agency in the California, his views on transportation planning and funding are widely respected in public policy circles. The agency he heads, SANDAG, is the leading research, planning, and transportation agency for the San Diego region. The agency builds consensus; makes strategic plans; obtains and allocates resources; plans, engineers, and builds public transportation, and provides information on a broad range of topics pertinent to the region’s quality of life. Agency policymakers are elected officials from each of the area’s 18 cities and the county, which at 3.2 million residents is the second most populous of California’s 58 counties.

Gallegos leads a staff of about 350 professionals who develop public policy initiatives for elected officials on numerous issues encompassing population growth, transportation, environmental management, economic development, municipal finance, bi-national coordination, and public safety.

His recent accomplishments at SANDAG include overseeing the completion of the Interstate 15 Express Lanes, a $1.3 billion expressway within a freeway, and spearheading the acquisition of the State Route 125 toll road, commonly known as the South Bay Expressway, for $341.5 million.

In January of 2003, Gallegos ushered SANDAG into a new, expanded role. State Senate Bill 1703 consolidated the responsibilities of SANDAG with many of the functions of the Metropolitan Transit Development Board and the North County Transit Development Board, allowing SANDAG to assume regional transit planning, funding allocation, project development, and eventually construction. In 2004, Gallegos led the charge to extend TransNet, a regional half-cent sales tax for transportation; 67 percent of county voters approved the extension. Administered by SANDAG, 18

the original 20-year TransNet program generated $3.3 billion to fund highway, transit, and local road projects.

The 40-year TransNet extension will raise another $14 billion for similar improvements.

Gallegos also led the effort to create Gary Gallegos, Executive the TransNet Early Director, San Diego Association Action Program, of Governments (SANDAG). which focuses on jump-starting construction of the top priority transportation projects and programs identified in the Regional Transportation Plan. Most recently, Gallegos has worked with partner agencies toward securing the federal and state approvals necessary to create a third international border crossing in San Diego County – Otay Mesa East – and a short connecting highway. SANDAG will administer a toll that will generate funds to pay for the facility. Prior to joining SANDAG in 2001, Gallegos was District 11 Director for Caltrans, which covers San Diego and Imperial counties. He holds a bachelor’s degree in civil engineering from the University of New Mexico, and is a registered civil engineer.

Asphalt Insider: As one of the longest-tenured executives currently serving as head of a regional transportation agency, what are some of the trends you have seen over the years?

Gary Gallegos: Looking back, the local sales tax programs have been the bread and butter of what’s happening in our region, and we have been able to leverage those dollars with state and federal dollars.

But without those local sales tax measures, we would have not gotten as much as we’ve gotten done to date. So, that’s been a key factor. But one California Asphalt Magazine • 2015 Forecast Issue

of the challenges we’ve seen since I’ve been here, since gas taxes at the state and federal level are not indexed (for inflation), it used to be that we would get STIPs (State Transportation Improvement Program dollars) to add new projects. But what we’ve seen now is the money that California generates in taxes pretty much goes to maintain the system, so there’s not a heck of a lot left for building new stuff. So that’s been a big change looking back. We’ve also seen recently that there is a point, probably 10 years ago, where construction costs were rising faster than revenues. So that was a concern for us locally, because generally revenues were going up 6 percent a year and costs were going up at about an 8 or 10 percent clip.

Then the Great Recession hit and the capital piece of our program was somewhat of a beneficiary, if there is a beneficiary in a recession. We lost 20 percent of our revenue, which was huge, but at the same time we saw construction costs go down anywhere from 30 percent to 40 percent on many of our projects.

AI: Yes, we know. It’s been a very competitive environment, and many contractors and suppliers had to make painful cuts to stay in business.

GG: Your industry really tightened their belts.

There were a lot of contractors, a lot of competition, and so we’ve gotten a lot of value out of the dollars that we have because competition has been really tough, and tight, in the construction industry.

AI: That’s also been the case with Caltrans work.

The department has reported for a few years now that winning bids on projects have been coming in about 30 percent below the engineer’s estimate.

GG: We thank the industry for that because they continue to do good work, with a lot more competition.

AI: Along those lines, how would you characterize your agency’s relationship with the contractors that build your projects?

GG: I would characterize it as generally pretty good.

For a lot of us, even at the local level, we tend to borrow Caltrans specifications, so our contracts look a lot like theirs, and we’ve got an industry that’s grown up and gotten used to doing that work. I think generally we have a pretty healthy relationship. I would say, though, that one of the things that excites me is that we’re now trying new methods, like CM/GC (Construction Manager/ General Contractor), which we’re proposing to use California Asphalt Magazine • 2015 Forecast Issue

here in San Diego on a couple of big projects. I really like the prospect of CM/GC because I think there’s a lot to be learned from the contractor’s perspective before we do the design, and so this is allowing us, in essence, to bring in a contractor’s perspective at the CM stage and, if it works right, that CM then becomes the General Contractor at the end. I think it results in a better, more cost-effective project, so we’re real excited about that prospect.

AI: That type of project delivery, while popular and successful in the private sector, has been somewhat slower to take hold in the public sector, where it’s been a little controversial.

GG: I’m not sure what you mean by controversial.

AI: Well, the union that represents state engineers has opposed the concept, and only a few state projects have been approved to date to utilize CM/ GC. The traditional way the state has built projects for many decades, design-bid-build, has been around for a long time and any time there is a big change in the way things are done it’s bound to run into opposition.

GG: I wouldn’t disagree with that. I think there’s obviously going to be a learning curve. But as a guy who has been in this business for a while, what excites me is, you look at complicated urban projects – we’ll spend years designing them, and we throw the plans over the wall to bid them, and we give you 12 weeks, 10 weeks, eight weeks to bid them, and you’ve got to give us your best price. I think CM/GC offers the benefit of a situation where both the industry wins and the agency wins, because we’re going to get, hopefully, the better ideas as we’re designing the project and, to the extent that there’s agreement on the price, you’re also going to be the general contractor at the end.

And, if not, we’re going to put out a set of plans to everybody to bid. I think it is going to result in a better team and a better project.

AI: You mentioned the importance of sales tax measure funds to your transportation program.

Statewide, so-called “self-help” counties where voters have enacted their own sales tax measures devoted to transportation – and there are 20 out of California’s 58 counties at last count that have such programs – generate approximately 60 percent of the total revenues devoted to transportation programs. Certainly, our transportation programs would be in much worse shape without them.

San Diego has been one of the leaders in this area. [ Continued on page 20 ]

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Tell us a little bit about what local sales tax measures devoted to transportation have meant for your area.

GG: First of all, in San Diego, we passed our first measure in 1987, and that was for 20 years. It went into effect in 1988, and was supposed to run until 2008. During that measure, we delivered 21 projects over a 20-year period. We had things like, our trolley line got better as a result of that measure. We had SR (State Route) 125 that was brand new. SR 52, SR 56, improvements on 78 – there were a host of improvements. Then, in 2004, a few years in advance of the measure expiring, we went back to the voters for our second measure, and this time – and I think we’re still unique in this way – we actually got the voters to say “yes” to a 40-year tax.

So if you go back to Santa Clara (County), I think their first measure was 10 years. Our first measure was 20, and then the standard sort of became 30. But in our case, in 2004, we were able to get the voters to extend our sales tax measure for an unprecedented 40 years. It was an extension, so we were able to start bonding against those dollars, and again our timing was good because the cost of projects went down. But also the cost of money is pretty incredible.

We’ve been borrowing in the 3 percent to 4 percent range on dollars that we’re going to pay back over a 40-year period. So that’s been very historically low interest rates. That’s allowed us to advance a bunch of new projects for San Diego, and probably one of the anchors in terms of projects has been the I-15. In 2004, who would have thought, when we got voters to say “yes,” that in 2006 the state would pass an infrastructure bond, and in 2008 when we were in the depths of the Great Recession, there would be a federal economic stimulus program.

In a matter of six years, who would have thought that we would have had to deal with all of those.

But all of those presented opportunities, and I think one of things we strive to do here in San Diego, working with our partners at Caltrans, MTS and North County Transit District, is to be ready with good projects. And so we’ve been able to advance our flagship projects, like I-15. We now have a complete managed-lane system up the I-15. We’ve got major HOV (High-Occupancy Vehicle) lane expansions on the 805. We’ve started to improve and double-track our rail line to Los Angeles on the LOSSAN (Los Angeles-San Diego-San Luis Obispo) corridor, and most recently, probably one of our big successes over the summer was we were able to get the a coastal permit for all the improvements on I-5 and the LOSSAN Corridor – unanimous approval from the California Coastal Commission. We got a lot of good stuff moving.

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Left to right: Escondido Mayor Sam Abed, SANDAG Executive Director Gary Gallegos, and San Marcos Mayor Jim Desmond at a January 2012 ribbon-cutting event celebrating the completion of the last segment of the 20-mile I-15 Express Lanes facility.

AI: You and your agency have a well-deserved reputation as skilled negotiators. You bought a toll road, didn’t you?

GG: I almost forgot to mention that – talk about a good deal. (Editor’s Note: State Route 125, known as the South Bay Expressway, was one of the state’s first public-private partnership created to build a privately financed toll road. The 10-mile north-south route through eastern Chula Vista between Otay Mesa Road to SR54 in Spring Valley and was built in segments in the 1990s and 2000s.

California Transportation Ventures, Inc., operated the route until it declared bankruptcy in 2010).

In the case of SR125, which we’ve been deeply involved with going back to my days at Caltrans, the operator literally turned the keys back to the bank and said, “you have this road now.” As the banks were emerging from bankruptcy, we ended up buying the road. We ended up buying it for about 35 cents or 40 cents on the dollar, and we’ve been operating it with a different business model. And the reason I highlight that is I think that idea may provide solutions for the future. What we were able to do with the toll road is we were able to match some sales tax money with a very good deal, and lower our debt structure so that we were able to lower tolls by 50 percent. And by lowering tolls by as much as 40%, we had an under-utilized facility that, arguably, had a lot of extra capacity that was untapped. On a typical day at one segment it was carrying 20,000 vehicles a day. Now, on some of our best days, it is carrying 50,000. And so here’s a facility that we’re getting a lot more utilization from, and we’re making the [ Continued on page 22 ]

California Asphalt Magazine • 2015 Forecast Issue

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money to pay the debt, but the debt is structured in a way that it doesn’t totally depend on tolls.

AI: And you put money back in people’s pockets.

Those who choose to use the facility pay a lot less than they used to.

GG: Right. Tolls are a piece of it, and it allows the cost to be more reasonable and for people to use it more. But I think that’s a model for the future where tolls and fees may have to be part of the equation. SR125 has been a good example for us to get smart about how to operate a facility where you have to generate revenue. With that in mind, we actually got a bill passed that would allow us to toll SR11 – a new route that would tie in to the border crossing at Otay East. The idea here was that we could use the toll revenues not only to pay for the road, but to actually pay for the border crossing itself. For the first time, we’re in Washington asking the federal government, not for money, but for permission for this toll road.

AI: One of the things that makes your area unique in California is that you share an international border, with Mexico. Efficient movement of people, goods and services is important everywhere in our state, but moving across international borders efficiently must present its own set of challenges.

GG: The motivator from a SANDAG and a San Diego perspective is we’ve done some economic studies that tell us that we’re missing out on about $6 billion of economic output because the border doesn’t work well. That’s one of the drivers to strengthen our economy long-term, and so we actually have the first phase of SR 11 under construction, and we’re wrapping up the T&R study, the investment-grade Traffic and Revenue Study, and working with Mexico with the idea that, hopefully, we would be able to start construction on a border crossing sometime in 2016-17, and probably have it open by 2017-2018.

AI: People not familiar with the area may not realize the massive, integrated economy that exists between San Diego and Northern Mexico.

GG: For Californians, and your readers, when you think about the powerhouse that is the California economy, which is the eighth largest in world if it was its own country, Mexico is California’s largest export market. California exports more products to Mexico than it does any other place, so it’s a pretty important, strategic trading partner for the 22

state. One of the things that a lot of people don’t recognize is that this global economy that we live in, products are assembled with components that come from many different parts of the world. So, when we buy a product that comes from China, the American content in that product is probably in the neighborhood of 2 to 4 percent. But when we buy a product that is made in Mexico – flat-screen TVs are a good example – 40 percent of the product is American-made. So, in terms of trade, and imbalance of trade, Mexico is a pretty strategic partner because not only do we export stuff, but the stuff that we import has a ton of American product in it.

It’s creating jobs on both sides of the border.

AI: So, SANDAG has been in the news recently, but not necessarily the kind of news coverage you would want. Lawsuits that were filed by environmental groups challenging your long-term transportation plan as not doing enough to reduce Greenhouse Gas (GHG) emissions, considered a contributor to climate change, have so far prevailed in court. Most recently, the state Court of Appeals agreed on a 2-1 vote with the previous ruling of a Superior Court Judge. What’s your reaction?

GG: We got some bad news right before Thanksgiving that an appellate court, on a split decision of 2-1, ruled pretty much in favor of the petitioners, and so where we are is we plan to go to our board this Friday and have a closed-session discussion about that with them about what the next steps might be.

One of the options might be to do nothing, and another option is to appeal it to the state Supreme Court. So we’ll have to see what our board says about that. (Update: the SANDAG board, meeting on Dec. 5, voted to appeal the case to the state Supreme Court.)

AI: Can you talk a little bit about why the petitioners prevailed? It seemed that they were arguing that not enough analysis was done on the environmental implications of the transportation plan.

GG: I think the biggest challenge is the petitioners are arguing that we should have used the governor’s executive order as one of the thresholds in CEQA (the California Environmental Quality Act, which requires study of the environmental impacts of projects). While it didn’t go that far, the court did suggest that we should have done more analysis in that area to show that there was consistency. One of the challenges we see in the whole area of climate change is that the governor’s executive order was a very global executive order. The state has decided that the California Air Resources Board (CARB) is California Asphalt Magazine • 2015 Forecast Issue

the one that does the scoping plan and does the implementation of the goals that (former) Gov. Arnold Schwarzenegger set for the state in his executive order, and we feel that we have complied given the targets that we’ve gotten. Obviously, the courts see it a different way – that we should have done more.

And I think it’s hard to figure out what “more” is. Reduction of Greenhouse Gas is complicated.

It’s not easy, and there are a lot of smart people working on it, but there’s not a lot of easy answers right now. So that’s one of the things our board will have to consider in terms of where we’re at. I’d say, at the end of the day, the petitioners generally would like to see more investment in public transit and less in roads. While we’re doing a lot more in public transit, we’ve got to take into account the whole county and its needs. Our county is big and diverse.

There are a lot of areas where we are doing a lot of positive things with public transit, and other areas where we have to improve our road system. That’s probably where the two collide.

AI: Speaking of roads – this is California Asphalt Magazine, after all – how would you characterize the overall condition of the roads in San Diego?

The administration of our current governor, Jerry Brown, has made a point of emphasizing “fix it first” – or a priority on maintaining the current system over system expansion. How would you characterize what is happening in San Diego?

GG: I’d say the state system is in fairly decent shape.

We’re blessed with some of the best weather in the world, so when it gets below 60 degrees San Diegans start getting cold (laughs), so it’s really ideal climatic conditions, so the interstates in general are in pretty good shape. I think Caltrans continues to do a very good job of maintaining them and keeping them in good shape. But our local streets are definitely are in need of some help. Our cities are struggling to figure out how to keep up with the maintenance and reconstruction of the local system. And remember, there are a lot more miles of local roads than state routes. So, I think our local roads are probably not in as good a condition as our state highway system is. But when you do your trip, at the end of the day, it’s the entire trip that counts, not just the state highway trip, right?

AI: A chain is only as strong as its weakest link, so to speak.

GG: Right. So we continue to be an advocate with our cities to try to help them get more of their roads paved and resurfaced and sealed up. Back to our local sales tax measure, that’s another tool for them, California Asphalt Magazine • 2015 Forecast Issue

Left to right: Samuel Johnson, SANDAG Director of Operations, Jim Linthicum, SANDAG Director of Mobility Management and Project Implementation, Jerome Stocks, former SANDAG Chair and Encinitas Mayor, Richard Chavez, SANDAG Principal Transportation Engineer, and Gary Gallegos, Executive Director of SANDAG, celebrating the completion of the 20-mile I-15 Express Lanes facility in January 2012.

because about a third of our local sales tax revenues go to our local governments to help them maintain the local road system.

AI: Looking ahead, what do you see in the future for your program and your region?

GG: Moving forward for us, we’ve taken a corridor approach, where we go in and try to fix a whole corridor, rather than a bunch of small projects at one time. Our three big projects that are on our radar screen for 2015 are to continue to finish the improvements we started on I-805, then we have a light rail line that we hope to start construction on next year sometime – that’s what we call our Mid-Coast line. That would connect our two busiest employment centers in San Diego with the rest of the rail system. That’s about a $2 billion project. And then there is our North Coast Corridor, which is a combination of improvements to the rail line and starting to expand I-5. We haven’t touched I-5 in many, many years here in San Diego County, and it’s definitely in need of some capacity enhancement. That’s actually about a $6 billion investment. But given the price tag on that, the $6 billion investment will be made over a roughly 30-year period. The first piece that we would hope to start construction on, sometime in 2015, would be to extend the HOV lanes all the way to Oceanside. Those are sort of the big mega-projects that we have. We are wrapping up rehabilitating our light rail line down to San Ysidro to the border to Tijuana, and that’s another major project that will be getting done this next year. [ Continued on page 24 ]

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[ Continued from page 23 ]

AI: Is there anything else that you would like to add?

GG: I continue to be cautiously optimistic, now that Congress is now under one party’s control, that maybe we’ll get a long-term surface transportation bill from the federal government. Hopefully that’s one area – infrastructure – that Republicans and Democrats can agree on. I suspect it will still be a hard sell as how you pay for this stuff, but I continue to be optimistic that, instead of the Senate having one bill and the House having another bill, and both not going anyplace, maybe now those bills will be reconciled and sent to the president. I’m hoping that 2015 brings more certainty out of the federal government.

AI: By one count, there have been 10 short-term extensions passed by Congress in the six years since the last Surface Transportation Act expired in 2008. The Highway Trust Fund is basically on the brink of insolvency, and is being propped up by the general fund – something unthinkable just a few years ago. How has this level of uncertainty affected your program?

GG: From the very start with our sales tax measure – and I don’t think this is unique to San Diego – we leverage state and federal funds to match the local funds, and so that’s how our measure was put together over that 40 years, so the less money we get from the federal government, than the less ability we have to leverage funds. The bottom line is it will take us longer to get all our projects done in our sales tax measure program. We kind of assumed and anticipated that about half of the money in our program was going to come from state or federal sources, and so any delay, the short-term backand-forth in Congress, it’s had an impact in the number of projects that we would have out on the street. If we had more federal money, we would probably have more projects out on the street now.

AI: The system is buckling under the weight of the accumulation of all of these rules, regulations, court challenges, etc.

GG: I think all of these rules, if taken individually, have merit, but as a whole sometime’s it is almost impossible to get anything built.

AI: And yet, while most people say they want to protect the environment, people still have to get to work, or get the kids to school or after-school activities. Businesses need to move goods and 24

services. No one wants to pay higher taxes, but people definitely don’t want to be idling in congestion, either. When voters are presented with a commonsense proposal to improve transportation, and they can see a direct link between their dollars and the projects that will benefit them and their quality of life, and there is transparency and accountability, they have been very supportive. The threshold for voter passage of new taxes, or the extension of expiring taxes, is two-thirds, an extraordinarily high standard, yet voters in San Diego and 19 other counties have approved them multiple times. That seems to be a testament to how well-managed these programs are and the confidence the public has in them.

GG: I think you’re spot-on, and that’s the experience we have had here in San Diego. As our elected officials have often said, promises made, promises kept. When you look at, statewide, and here in San Diego, 60 percent of the investments are being made with these local funds, it’s very important that we keep the promises to the voters that we have made, and that is what is contributing to the success of these programs. In the case of San Diego, there’s a detailed expenditure plan that lays out exactly how taxpayer money will be spent, and what we’re going to work on, and almost all of the other self-help counties are no different. We have an independent taxpayer oversight committee that looks over our shoulders on a monthly basis and we’re audited frequently and we report back to the public how we are doing. I think that transparency and accountability is the secret to the success of those programs. And, as I said, as our board characterizes it all the time, promises made, promises kept. CAM

California Asphalt Magazine • 2015 Forecast Issue

New Member Spotlight

Central Valley’s Quality Full Service Construction Company and Material Producer

By Brian Hoover

B

owman Asphalt, Inc. has come far since 1990 when Gary Bowman worked out of his pickup doing striping and filling potholes. Bowman started out in the late 80’s working for Toste Paving on the Central Coast. He then decided that there was a future in the grading and paving business and he quickly grew his company from striping and patching potholes to paving parking lots, city streets and federal highways.

Then in 2004, Bowman Asphalt, Inc. began producing asphalt after attending ConExpo, where he met with representatives from AlMix and purchased a new duo drum asphalt plant. The AlMix plant features independent aggregate drying and asphalt mixing drums. In addition, longer dryers incorporate an early entry Reclaimed Asphalt Pavement (RAP) system. High-speed mixers thoroughly incorporate additives, while the main plant burner efficiently incinerates light ends. Bowman Asphalt, Inc. produces from 100,000 to 180,000 tons annually, but that Top & Background: Bowman Asphalt’s AlMix plant in Bakersfield.

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California Asphalt Magazine • 2015 Forecast Issue

Left: Jim Williams, Plant Manager.

Above: Delsa Trammell, Plant Administrator.

number is likely to increase in 2015 as demand increases.

Jim Williams is the plant manager for Bowman Asphalt, Inc. and has been with the company for five years. Jim sold Gary Bowman asphalt and aggregates as a representative for Vulcan Materials, before accepting his position with Bowman Asphalt, Inc. in 2009.

“At Bowman Asphalt, we strive to be the preferred supplier in our geographical market,” says Williams. “Our products and excellent customer service have allowed us to build a reputation that keeps contractors coming back. Our actions speak for themselves and our customers know that Bowman is going to treat them right. The future is bright as we continue our steady sustainable growth.”

Bowman Asphalt, Inc.’s asphalt plant, along with their grading and paving and concrete divisions, allow them to realize the benefits

of being a fully integrated general engineering contractor.

Around 50 percent of the materials produced by Bowman Asphalt are utilized on their own jobsites, while the other half is sold to contractors in their region. They have produced materials for large highway jobs, including 20,000 tons for Highway 178 in 2008, 30,000 tons for Highway 119 in 2012, and can produce as little as 125 tons when needed.

“We are evolving rapidly thanks to the efforts of individuals like Oscar Villanueva, our batch operator, Justin Krause in quality control, Ron Perry, who keeps it all going smooth mechanically and the rest of our dedicated team members” says Williams.

Jose Hernandez heads up the construction division that currently has two paving crews, three grading crews, excavating crew, and a concrete division new to the company just this year. Bowman Asphalt, Inc. stays

California Asphalt Magazine • 2015 Forecast Issue

busy with around 70 percent focused on private work, and the remainder public works.

Companies like Chevron call on Bowman Asphalt to pave roads and construct concrete pads for their Central Valley oil field operations. “Qualifying to work in the oilfields is challenging and having a stellar safety record is of paramount importance,” says Williams. “At Bowman Asphalt, we have a modification rate of 68 which is among the best in our industry.”

The company also performs a good deal of work for the City of Bakersfield and Kern County, as well as the State of California and other agencies. They recently completed a two yearlong fog seal contract with the City of Bakersfield and continue to do street maintenance for them on an ongoing basis. They will soon be starting a large job for Walmart and just recently completed a [ Continued on page 28 ]

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1

2

3 1) Ron Perry - loading out Class II Base.

2) Oscar Villanueva, Plant Operator.

3) Justin Krause – Quality Control.

4) Jordan Bartlett - Feeding the asphalt plant.

4 [ Continued from page 27 ]

concrete and site development project as the general contractor for a school in Bakersfield. “We also do a good deal of land development work for home builders and private industry,” says Williams. “In everything we do, maintaining a high level of safety consciousness is what matters most. We go above and beyond to keep our employees safe and we are proud of our achievements in accident prevention.”

Bowman Asphalt, Inc. also maintains an in-house service department that works both in the shop and out in the field to keep its pavers, rollers, motor graders, excavators and long line of other heavy equipment and trucks up and running at all times. Elisa Spink is the company’s office manager and has been with Bowman Asphalt, Inc. for seven years. She first became acquainted with asphalt during her years working in the housing industry. “Part of my job is to find ways to be more profitable and efficient without cutting corners or compromising safety,” says Spink. “Performing our own equipment repairs and maintenance is one way of 28

accomplishing this. Additionally, we continue to evaluate our asphalt plant production numbers to see what we can do better.

Quality sustainable growth is what we strive for and our future expansion will be dictated in this manner.”

Another way Bowman Asphalt is preparing for future growth is by joining associations like the California Asphalt Pavement Association (CalAPA). They just recently joined CalAPA as the association’s newest producer member, after attending the recent Fall Conference in Sacramento. “Before joining Bowman Asphalt in 2010, I had spent 15 years on the sales side of the asphalt and ready mix business. It was here that I learned the value of developing resources and building relationships within an industry,” says Williams. “Upon becoming a member, we immediately began networking and introducing ourselves to suppliers and other contractors in the industry. As an example, I recently called Syar Industries and introduced myself as a new CalAPA member. I hit them with a whole list of questions and they were extremely helpful and accommodating.”

According to Williams, this is just the beginning of the benefits that Bowman Asphalt expects to reap as a member of CalAPA. “We also look forward to attending conferences, classes, technical meetings, dinners and other industry events,” says Williams. “Continually educating ourselves and doing what we can to remain on the leading edge is in our opinion one of keys to our bright future in this exceptional industry.”

Gary Bowman’s entrepreneurial spirit infused this company with inspiration and integrity from the start and that same spirit will continue to drive the company’s success in the future.

Bowman Asphalt has been a leader in the paving industry for the past two decades with professionalism, accountability and a commitment to excellence.

Their construction services include paving, grading, seal coating, full site development, power sweeping, oil spreading, subdivisions, commercial and site development and so much more. Their plant operations offer hot mix asphalt, cold mix, recycled class II base, asphalt grindings, 3/4” rock, 1/2” rock, 3/8” rock, sand, rock dust and

California Asphalt Magazine • 2015 Forecast Issue

1

4 other premium quality materials.

For more information on Bowman Asphalt, Inc. and their offerings, please visit them online at

2

5 www.bowmanasphalt.com or call their construction offices in Bakersfield at (661) 334-1356 or their asphalt plant and recycling

California Asphalt Magazine • 2015 Forecast Issue

3 1) Paving Hwy. 119, July 3rd.

2) Paving on Chevron’s oilfield lease.

3) Supplying Asphalt to the City of Bakersfield.

4) Paving a new parking lot for Cal. State Bakersfield.

5) Fog Sealing Cal. State Bakersfield.

facilities in Bakersfield at (661) 322-3424. CAM

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John Frederickson Retires After 42 Years in the Asphalt Production and Paving Industry

By Brian Hoover

There are certain names that everyone seems to know in our seemingly large yet intimate industry and one of those is most certainly, John Frederickson.

His career in the asphalt production and paving industry spans almost 43 years and during this time, he has been instrumental in the success and development of several large and respected entities.

When you peel back all of the layers, you see that Frederickson officially began his work career as a draftsman for McDonnell Douglas in Long Beach. He was just 20 years old and after completing college courses in drafting, he spent the next 18 months working on designs for the DC10 wide-body jet airliner. Fate would then lead him to apply for and accept a job working at one of Sully-Miller Contracting Co.’s (Sully-Miller) rock plants. Frederickson worked hard and was quickly promoted to a job at the hot mix asphalt plant, where he worked his way up to chief dispatcher for both the rock and hot mix plants.

From here, Frederickson moved into the corporate office, where he assumed a position in recycled materials sales. During his time managing the recycled materials division, the company grew from three sites to 13 and from one to five crushers. All of this took place from around 1972 to 1976 and he was quickly building a reputation as a hard working and dedicated employee.

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The hard work paid off again in the early 1980s, when he was again promoted, this time as the ready-mix transportation manager for LA and Orange County. This was essentially a sales manager position that also included production responsibilities and Frederickson was once again up to the task. He spent a large amount of his time supervising the numerous trucks and drivers, before accepting a management position for SullyMiller’s LA and Orange County ready mix facilities.

Sully-Miller acquired Blue Diamond Materials in 1975 and Frederickson was asked to take over as the vice president and general manager of sales for the materials division, which would now be facilitated through Blue Diamond Materials, a DBA of Sully-Miller. Then in 1992, he accepted a position at Kern Rock, a division of Hanson

Aggregates (Hanson), where he would serve as the president of operations over an area that covered the Bakersfield/ Tehachapi/Lancaster region, all the way over to the backside of Big Bear in Crystal Hills. A few years later, Frederickson would be called upon to manage the operations in the San Diego area for Hanson, all while still maintaining his position and responsibilities in Kern County.

During this period, Hanson acquired a ready mix business and rock quarry from Fenton, as well as the ready mix and rock operations at Nelson and Sloan. Acquiring rock reserves was now one of Hanson’s top priorities and they called on Frederickson to head up a team, as the vice president in charge of acquisitions. He finished his career at Hanson in this capacity, while also serving part time as president of the Hanson Las Vegas operations, through its sale in 2000.

John Frederickson had served faithfully for 28 years and he now felt that it was time to go out on his own in the asphalt emulsion business. The timing was not the best in the year 2000 and this along with other unfortunate circumstances, stopped his startup short in 2004. Frederickson did not miss a beat however and he soon found himself being asked to look after two rock plants in San Diego for Jack Brouwer of Superior Ready Mix. For the

California Asphalt Magazine • 2015 Forecast Issue

Wade Anderson, California Commercial Asphalt (left), John Frederickson, Escondido Asphalt and Scott Taylor, Alta Environmental at a CalAPA Golf tournament.

next two years, Frederickson oversaw the operations at the Mission Gorge and Triple T rock plants, as well as for the company’s hot mix plant. He transferred over to another one of Brouwer’s companies, SRM Construction, where he served as the general manager. Then in 2006, while living in Escondido, he struck up a conversation with George Weir. George was looking for the right person to help him out on the materials side of his business and as it would happen, Frederickson lived right down the street from George. He agreed to take on the job as the chief operating officer at Escondido Asphalt, as well as oversee Escondido Sand & Gravel, Inland Valley Materials and the San Pasqual Organic Farm, an orange production facility that lies adjacent to the rock plant. This would be Frederickson’s last stop in his long and storied career and Escondido Asphalt has grown dramatically under his supervision these past eight years. “I have enjoyed

my time and the people I have met along the way. Most all of the individuals that you come in contact with in this industry are good, honest, forthright people. They would never put on airs and their word is their bond,” says Frederickson.

“What you see is what you get in our fine industry and I was very fortunate to build so many lasting relationships over the years. I look forward to continuing these relationships, while spending as much time as possible with my wonderful family.”

Frederickson will remain on in a consulting role, as he brings his successor up to speed. He is however looking forward to retirement and the time he can now spend with his wife, Carol, of 45 years, his two children and six grandchildren.

“My grandchildren are all under the age of 16 and they always have something going on. They live close by and will continue to keep us very busy.” Frederickson also has a passion for golf and plans

California Asphalt Magazine • 2015 Forecast Issue

on continuing to play as much as possible. He and his wife, Carol are planning a trip to visit the Redwoods in Washington.

“We did this when our children were little and it is time to do it again,” says Frederickson. “ I have a niece up there that we have not seen for some time and we are looking forward to this trip.” He and Carol have several other destinations on the books, including their annual vacation to Hawaii.

Frederickson leaves the asphalt industry, leaving his mark of excellence and determination. But others have left their mark on him as well.

“There are so many individuals that positively impacted my career and life in general. If I had to mention just one, it would be Bill McCullough, who served as vice president of the Sully-Miller materials division for years,” says Frederickson.

“Bill was my mentor over the span of my career and I want to thank him for his knowledge and friendship.” CAM

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California Asphalt Magazine • 2015 Forecast Issue

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Attendees get the latest on technical innovations, regulation and funding at CalAPA Fall Conference in Sacramento; Caltrans construction chief honored

Keynote speaker at the 2014 CalAPA Fall CalAPA’s Rita B. Leahy, PhD, P.E. introduces Conference on October 29-30th held at a technical speaker. the DoubleTree In Sacramento, Calif. was Howard Marks, Ph.D., J.D., Vice President, Environment Health & Safety, National Asphalt Pavement Association.

Len Nawrocki, Valero Marketing & Supply (left), John Greenwood, Skanska USA Civil West, John Holliday, Holliday Rock, Mark Leja, P.E., Chief Caltrans Division of Construction and Jeff Reed, George Reed Construction, Inc.

U.C. Pavement Research Center, Berkeley’s Hui Li (left), Qi Ren, Yuan He, Dr. James Susan Kruse and Nina McKenna with Signore, PhD., Director & Principle Ramos Oil Co. exhibited at the Fall Investigator of UCPRC with Jeff Reed, Conference.

George Reed Construction, Inc., also from UCPRC are Jimmie Zhou, Randy Gee, Hannah Curran, Jeff Buscheck and Zia Alavi.

Attendees at the CalAPA Fall Asphalt Pavement Conference and Equipment Expo, held on Oct. 29 & 30th in Sacramento, learned of the latest research and best practices in asphalt pavement design and construction, as well as getting a preview on upcoming environmental regulations and funding projections.

Caltrans Construction Chief Mark Leja, who co-presented on partnering with the construction industry alongside Ghilotti Bros. President and fellow partnering champion Mike Ghilotti, was presented with a special award from the asphalt pavement industry in recognition of his soon-tobe-completed career in state service.

More than 220 attended the two-day conference and equipment expo at the Doubletree Hotel in Sacramento. The event featured dozens of vendor booths and outdoor displays of the latest in asphalt paving equipment and measuring equipment.

National Asphalt Pavement Association Vice President of Environment, Safety & Health, gave a preview of upcoming environmental regulations and trends, and a later seminar presented by Jeff Lane of Teichert Materials and attorney Braiden Chadwick focused on new regulations in storm-water permitting in California.

Practical information on pavement noise was offered up by Contra Costa Transportation Authority Executive Director Randy Iwasaki, and 34

Vin H. Cay with the City of West Sacramento (left) talks about transportation funding with CalAPA advocate Jeff Sievers (center) and Assembly Transportation Committee Senior Consultant Janet Dawson.

Mike Ghilotti, Owner, Ghilotti Brothers Construction (left), Mark Leja, P.E., Chief Caltrans Division of Construction holding his special recognition award from CalAPA with John Holliday, Holliday Rock and Jeff Reed, George Reed Construction, Inc.

Equipment Expo at the 2014 CalAPA Fall Conference on October 29-30th held at the Doubletree In Sacramento, Calif.

other presentations covered pavement smoothness, porous asphalt pavements, pavement milling, pavement preservation and recent changes in Caltrans asphalt pavement specifications.

Mike Duman, Chief Operating Officer for the California Division of the Federal Highway Administration (FHWA), the Day 2 keynote speaker, lamented the lack of a long-term federal transportation bill.

“There are many more needs than there are resources,” he said. “We have to set up a way to prioritize those needs and the ability to report back our progress.”

Earlier in the conference, a special “expert panel” discussion on transportation funding was held, moderated by Transportation California Executive Director Will Kempton and featuring the insights of Iwasaki, Assembly Transportation Committee Senior Consultant Janet Dawson and CalAPA advocate Jeff Sievers of the firm Carpenter, Sievers Takahama.

Kempton said “the tyranny of the minority” has held back some recent transportation sales tax measures, which must muster a two-thirds majority of voters to pass. Currently, 20 of California’s 58 counties generate dollars for transportation through local sales tax measure, accounting for more than 60 percent of the money that is devoted to roads, panelists noted.

California Asphalt Magazine • 2015 Forecast Issue

Dawson said the “ambiguity” of the state’s “capand-trade” program for fossil fuels has hampered the ability of transportation advocates to generate those dollars back to roadways.

Agreed Kempton: “All of the dollars we are generating in sustainability should not be at the expense of existing roads.”

Toni Carroll, Northern California Area Manager - Technical Services for Vulcan Materials, ran through and overview of the many recent changes to the voluminous Caltrans Section 39 asphalt specifications, and urged local agencies that reference the specification: “Definitely read through it before you send a job out.”

Leja, the Caltrans construction chief, gave an overview of his department’s successes in utilizing “partnering” techniques to reduce conflict, claims and delay on highway construction jobs, a point that was driven home by Ghilotti, a prominent partnering champion in Northern California. platinum sponsor Akzo Nobel Asphalt Pavement & Recycling Technologies, Inc. Ergon Asphalt & Emulsions Knife River Corporation Paramount Petroleum Corp.

Leja, who has announced he will retire from state service at the end of the year, was presented with a special award at the conference recognizing his dedication and service to the state.

Thanks partly to the technical ingenuity of Scott Dmytrow with Telfer Oil, the Wednesday evening reception at the hotel turned into a World Series viewing party, with the game broadcast on the exhibition floor to the delight of the many baseball fans in attendance.

To view and download presentations delivered at the conference go to the CalAPA website: http:// www.slideshare.net/CaliforniaAsphalt/. To view photos from the event visit CalAPA’s Facebook page: https://www.facebook.com/#!/CalAPAnews.

The 2015 CalAPA Spring Conference & Equipment Expo will be held April 15 & 16 in Ontario, Calif.

For sponsorship and exhibitor information, contact Sophie You of CalAPA at (916) 791-5044. CAM

Gold sponsor Geosphere Consultants Sully-Miller Contracting Co. Surfa Slick, LLC Valero Refining

SILVER sponsor SWT Group

Exhibitors Ames Engineering, Inc. Aqua Patch Road Materials, LLC Asphalt Interlayer Association BG Chemical Caterpillar Ergon Asphalt & Emulsions, Inc. Herrmann Equipment, Inc./Bomag InstroTek, Inc. James Cox & Sons MeadWestvaco Nixon-Egli Equipment Co. Paramount Petroleum Corp.

Pavement Management Solutions, Inc. Pavement Technology, Inc. Pine Instrument Ramos Oil Company RMA Group Roadtec Sales & Distribution Services, Inc. Sonneborn, LLC Spectra QEST Surface Systems & Instruments, Inc. Telfer Highway Technologies Troxler Electronic Labs Vijay Software

California Asphalt Magazine • 2015 Forecast Issue

35

New Members of CalAPA SIERRA TRANSPORTATION ENGINEERING, INC. Sirous Alavi President sirous@ste-group.com

17752 Skypark Circle, Suite 240 Irvine, CA 92614 P: 949.222.2246 www.ste-group.com

MIKE ROBINSON, LLC Mike Robinson

Owner mike@mikerobinsonllc.com 1317 Bridle Way Minden, NV 89423 P: 775.342.6000 www.mikerobinsonllc.com

CalAPA Annual Meeting and Dinner Jan. 15, 2015 Jonathan Club 545 S. Figueroa St. Los Angeles Lt. Gov. Gavin Newsom to be the keynote speaker for CalAPA’s Annual Dinner Jan. 15 in Los Angeles

Vulcan Materials is the largest producer of construction aggregates in the United States. The West Region proudly supplies the highest quality materials for the production of roads, highways, dams, airports, seaports, commercial centers and residential housing as well as other Construction Material needs.

Serving all of California Southern California Area Los Angeles Basin Inside Sales: 626-633-4228 Customer Service Center (Dispatch) 626-856-6156

San Diego Area

Inside Sales: 858-530-9472 Customer Service Center (Dispatch) 858-530-9465

Central California Fresno

Inside Sales: 559-434-1202 Customer Service Center (Dispatch) 559-846-2852

Bakersfield

Customer Service Center (Dispatch) 661-835-4800

Technical Services Laboratories Northern California Technical Service Manager Phil Reid: 559-333-5647

Pleasanton Laboratory

Greg Vinson: 925-485-5977 Lab # 925-485-5982 Gary Dunkel: 559-351-6650 Lab # 559-434-3223

Bakersfield Laboratory Bob Lee: 661-979-9211

Southern California Technical Service Manager Tim Reed: 626-856-6190

Senior Technical Services Superintendent

Pascal Mascarenhas: 626-856-6190

Los Angeles Basin Laboratory (LA East)

Sacramento Area, Roseville

San Diego Basin Laboratory

Grass Valley Area, Nev City, Auburn Area HMA Inside Sales: 530-273-4437

West Region Administration 818-553-8800

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Day at the Races July (Tentative) Del Mar Racetrack 2260 Jimmy Durante Blvd.

Del Mar

Fresno Laboratory

Northern California Bay Area, Pleasanton: 925-846-2852 HMA Inside Sales / Dispatch: 916-773-3968

Spring Conference (So Cal) April 15 & 16th DoubleTree Hotel 222 N. Vineyard Ave. Ontario

Greg Reader: 626-856-6190

Robert Piceno: 858-547-4981

Annual Golf Tournament September (Tentative) Pacific Palm Resort 1 Industry Hills Pkwy.

City of Industry Meeting dates are subject to change. Watch the weekly Asphalt Insider newsletter for meeting updates or call CalAPA at (866) 498-0761 to confirm meeting date and location.

California Asphalt Magazine • 2015 Forecast Issue

California Asphalt Magazine • 2015 Forecast Issue

37

Blue Diamond Materials........................................................38 Bomag America........................................................................9 Coastline Equipment...............................................................9 CEI Enterprises, Inc................................................................21 Clairemont Equipment..........................................................33 E.D. Etnyre & Co......................................................................37 GuardTop.................................................................................32 Hawthorne CAT.........................................................................7 Herrmann Equipment, Inc.....................................................23 Holt of California.......................................................................7 Johnson Machinery..................................................................7 Kenco Engineering.................................................................37 Nixon-Egli Equipment Co...................................... Back Cover Paramount Petroleum Corp....................................................2 Pavement Recycling Systems...............................................38 Peterson CAT.............................................................................7 Quinn Co....................................................................................7 RDO Equipment Co..........................................................13, 39 RDO Integrated Controls.......................................................29 Roadtec......................................................................................8 Sakai.........................................................................................13 Scott Equipment....................................................................15 Valero Marketing & Supply.....................................................3 Volvo Construction Equipment & Svcs...............................32 Vulcan Materials Company...................................................36 Western Oil Spreading Services..........................................17

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California Asphalt Magazine • 2015 Forecast Issue

Nixon-Egli Equipment Co., Vögele and G.M. Sager Construction Co., Inc. (Below) Mike Sager, Sean Lema and Lupe Florez of G.M. Sager Construction Co., Inc. pictured in their Pomona yard.

(Above) G.M. Sager Construction Co., Inc.’s brand new Vögele Super 700 paving machine from Nixon-Egli Equipment Co.

Gary Sager started out in 1980, performing small asphalt repairs from the back of his pickup truck. His family owned construction company, G.M. Sager Construction Company, Inc. (G.M. Sager), has come a long way since those first days when Gary broke up asphalt with a sledgehammer and removed it with a pickaxe.

Today, G.M. Sager is a diversified general engineering construction business with 35 employees that offers a wide range of construction capabilities. G.M. Sager is centrally located in Pomona and performs work in Los Angeles county, Orange County and San Bernardino County. They are known throughout the industry, for their impeccable work performing asphalt repairs, trench paving, parking lot construction, grinding, pulverizing, slurry seal and striping. They also have a very capable concrete division that performs curb and gutter, cross gutter, ADA ramps, bus pads, sidewalks and much more. Additionally, G.M. Sager provides rough and fine grade services including site cleanup, material import/export, over excavation, rock base and soils testing capabilities.

G.M. Sager recently purchased a Vogele Super 700 paving machine from Nixon-Egli Equipment Co. for their trench resurfacing projects. The Vogele Super 700 is designed to operate in confined work areas and is equipped with a track gauge of 3 feet 7 inches and a clearance width of 4 feet. Mike Sager serves as the corporate secretary for the family business and he comments, “The electrically heated AB 200 V screed paves widths from 20 inches to 10 feet 6 inches. The screed allows paving up to within 2 inches of obstacles such as walls, trees, and curbs. Each wing of the 5.5-ton hopper can be raised independently, and there are three individual, reversible drives for the conveyor and each auger.” He adds, “The Vogele Super 700 is a superior machine that lays a very nice, smooth mat very quickly. Although it is a compact machine, the hopper can accommodate a full-size dump truck and is outfitted with state-of-the-art controls.”

G.M Sager has been doing business with Nixon-Egli Equipment Co. for many years. “Nixon-Egli has always treated us fairly and been there for us when we needed them with excellent support. When we needed a compact paving machine, we didn’t look anywhere else,” says Sager. “They are conveniently locate in Ontario and their sales representative, Alan Hahn, is an asset to them, as well as to us. He is very knowledgeable and always goes out of his way to make sure that we have everything we need. Nixon-Egli is a superior company that we will continue to do business with in the future.”

California’s Largest General Line Construction and Municipal Equipment Dealer.

So. California: 2044 S. Vineyard Ave., Ontario, CA 91761 • (909) 930-1822 No. California: 800 E. Grant Line Rd., Tracy, CA 95304 • (209) 830-8600 www.nixon-egli.com