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It will likely cost much more money to recover from Hurricane Sandy than is currently estimated.

AS A NEW Orleans resident and a mildly impacted victim of Hurricane Katrina back in 2005, I feel deeply for those who suffered the ravages of Hurricane Sandy, especially those who lost loved ones and their precious homes and businesses.

Gulf Region residents have lived through the long post-Katrina recovery and have seen its effects unfold. The recovery cost an estimated $125 billion, funded by insurance companies and government projects over the past seven years.

I believe that the start of the Hurricane Sandy rebuilding process puts a stake in the ground as the beginning of a long-awaited recovery for the construction materials industry.

No one estimated at the time of Katrina or in the months afterward that the eventual cost would approach anywhere near $125 billion. But as homes, businesses, and commercial and industrial buildings were repaired, the bill climbed. Then, the cost of flood protection and public infrastructure came into better focus. What was initially estimated at $25 billion ballooned five-fold.

So now the first estimates for Sandy are trickling in. New York alone will require $42 billion in aid; New Jersey estimates $30 billion. In addition, private insurance proceeds are estimated at another $10 billion to $20 billion, and are likely to be much more when all of the claims are settled.

Given the much larger population on the East Coast, I am convinced these estimates are too low. Some of the amounts in New York's aid request were staggering. The Metropolitan Transportation Authority totaled its damages at $4.8 billion and said it would cost $600 million just to repair a single subway stop in Lower Manhattan. When officials start to assess the collateral damage to public infrastructure, such as water and sewer systems, flood protection and control, beach erosion, hospitals, schools, government buildings, and more, the costs climb year after year.

Affect on construction

Demand for ready-mixed concrete, construction aggregates, and manufactured concrete products in the areas impacted by Sandy will escalate in 2013, and will remain at above-average levels for several years. This will result in above-average demand for cement and other materials that will be drawn from beyond the usual regional boundaries, improving the outlook nationally.

For example, in Louisiana alone, the hardest hit state by population in 2005, ready-mixed concrete production increased from 1.7 percent of national production in 2004, to 3.9 percent by 2010. While U.S. ready-mix consumption was 0.85 yards per-capita in 2011, Louisiana's has climbed and was almost triple the national average by 2011, at almost 2.2 yards-per-capita.

The attendant pull-though in construction aggregates and concrete products in our region has been similar. Had the national housing crunch not tempered total demand in our region, shortages would have continued beyond the first couple of years. Now, against the backdrop of a recovery in housing and the increased concrete production it will generate, add the demand from the recoveries in New York and New Jersey, and the national construction materials recovery will accelerate.

We have seen the housing market recover recently. Couple this with demand from the Sandy recovery, and we can mark fall 2012 as the moment when the bell rang for the next growth cycle for the ready-mixed concrete industry.

Pierre Villere is president and managing partner of Allen-Villere Partners. Contact him at pvillere@allenvillere.com or telephone 985-727-4310. Visit www.allenvillere.com.