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Shortage of local asphalt crisis looming on the horizon

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Construction costs have jumped between 15 percent and 30 percent in the past two years because of price jumps in steel and concrete -- and another cost hike is on the immediate horizon. This time the increase will be in asphalt.

While the runs on steel and concrete can be linked to a growing demand on international markets, the asphalt situation and -- what some are calling an "oncoming crisis" -- is specifically a North County problem, according to subcontractors.

Currently a handful of asphalt plants are located in North County and within five years, experts say, they will all be closed.

That will leave roadwork contractors and specialized sub-markets in the construction industry going elsewhere for supplies, Steve Jarvis, a manager at Joe's Paving Co., an Escondido-based firm.

There is a plant currently owned by Vulcan Materials Co. in Pala that is scheduled to close this year. Hanson Aggregates will also lose a plant they have operated at Cal State San Marcos in the next two or three years, contractors said.

While this may seem like a lot of lead time to deal with the problem, it also takes about five years to get an asphalt production facility proposed, permitted and built. The actual construction, however, only takes about four months, the rest is permitting time, Jarvis said. "I can build one of these things over a summer," he said.

Asphalt subcontractors located in North County will be forced to travel north to Hemet or Temecula, or south to central San Diego for their supplies.

One ton of asphalt in the county costs about $36 and most agree that the price likely will not change much.

The cost, however, is what is likely to be the most straining cost burden, Jarvis said.

For example, shipping a ton from an Escondido plant to another site in the same city costs about $6, while shipping the same ton to Encinitas can cost about $40 a ton and to Julian can cost about $43 per ton.

"This is where the prices are really going to shoot up," Jarvis said.

Most will have to either rent or purchase new trucks and send them back and forth to dealers far away. The costs of the trucks, the gas and the manpower will add to the costs of the jobs, which will be passed to consumers.

"It will add costs to the end buyer because the developer is not going to take the costs," Jarvis said. "The consumer will always take the added costs."

Another problem is that work schedules will be affected because the trucks will have trouble making deliveries because of traffic congestion, said Bob Kennedy, project manager for Southland Paving Inc.

"You can't get the stuff in the morning and the afternoon because of traffic," Kennedy said. "So, completing a job becomes a lot more difficult."

There is also the possibility that shortages may arise. In preparation, asphalt contractors like Kennedy are going to have to schedule projects further in advance.

Contractors like Jose Salinas, owner of San Marcos-based LC Paving, are going to order the asphalt from a broker and have it delivered, an expensive proposition. "It'll cost more but it will save us the traffic," he said.

The result will be felt on the bottom line, said John Dempsey, president of Lusardi Construction. "It's simple economics, when there is a shortage of a project and it's harder to get, the project costs go up," he said.

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