By: John Vogel, Executive Vice President, Chicago Pneumatic Construction Equipment
It’s no secret that it has been a rough run for some manufacturers, dealers, and contractors alike for the last few years in the construction industry. Many factors contributed to the slump in the economy in general, and plenty of folks in this industry have found themselves tightening their belts to keep their organizations afloat.
The housing market crashed, stocks plummeted, and the very institutions that we trust to keep our financial house in order – banks – were tanking left and right. Also during that time span, we had been operating on a series of highway bill extensions (ten in total) that frankly did nothing for boosting contractor confidence. With the previous highway bill, SAFETEA-LU (an acronym for it’s proper name: Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users) expiring in 2009, contractors were left holding the proverbial bag for a government that basically said: “Well, there’s no additional money for our roads and bridges, and we can’t all decide on a dollar amount and delivery for a new reauthorization bill, so let’s just keep extending the bill for about six months at a time until the public forces us to act.”
Through all the doom and gloom of the last six years, there was a silver lining, and that has been the emergence of a healthy rental market. This is just one of the byproducts of a down economy. Infrastructure projects didn’t stop completely, so contractors still needed equipment, but since they didn’t have a whole lot of confidence in the market, the last thing that they wanted to do was spend their hard-earned capital on construction equipment, especially when they couldn’t guarantee their next paycheck – a “perfect storm” for the rental industry.
That being said, a series of extensions was not the ideal way for the construction sector to operate, regardless of the positive effects for the rental industry. Putting folks back to work repairing our roads and bridges under the umbrella of a long-term highway bill is really the only way to get moving in the right direction.
Save The Roads
Comprehensive infrastructure funding on a federal level is one of the factors that is proven to boost the economy time and time again. Investment in infrastructure from our government makes projects much more available for contractors, and helps them make decisions on personnel, equipment, and training, based on what will be coming down the pipeline.
The more important factor to consider is that there is absolutely no shortage of road construction projects out there. Bad roads and structurally deficient bridges are more commonplace than one would think. There are a number of shocking statistics out there that would make motorists think twice before hopping in the car, if they only knew. For instance, the American Society of Civil Engineers (ASCE) recently gave U.S. roadways a nearly-failing grade of D-minus. Not scary enough? How about the chilling fact that a whopping 25% of all bridges in this country are structurally deficient? What about the fact that a third of all traffic fatalities have to do with the poor condition of U.S. roadways?
The simple answer to fixing all these problems is to repair the roads and highways that connect our society.
Investment in infrastructure is something that helps not only our entire industry, but it impacts the strength of the entire economy as well. The immediate benefit of a reauthorization bill is that it puts folks back to work right away, but the real payout is when those workers are confident enough in their occupations that they go out and buy houses, cars, and appliances. They take vacations and purchase goods, all contributing to the well-being of our economy.
The Concrete Facts
For every one billion dollars invested in infrastructure, it instantly creates 28,000 jobs, and an immeasurable number of benefits to other sectors. On top of that, transportation and infrastructure experts estimate that for that same billion-dollar investment, the country’s economy is stimulated to the tune of roughly 6 billion dollars – a 6-to-1 return on investment.
Simply put, there is really nothing that helps boost business in this country like more federal dollars allocated towards road construction projects. Furthermore, when you take into consideration the sheer payout of ROI from investing in infrastructure, it’s hard to imagine why it took so long for our government to agree on even a medium-term highway reauthorization bill.
Our divided government eventually did agree on a solution. On July 6th, 2012, after 3 years since the expiration of the previous highway bill, and ten extensions later, Congress and President Obama finally signed in to law MAP-21 (Moving Ahead for Progress in the 21st Century). Great, we signed a bill into law to get folks back to work and improve our infrastructure. Case closed, right? Wrong. Unfortunately, the final bill was very little more than an extension of current funding levels for the next two years. Set to expire in September of 2014, MAP-21 did not accomplish much more than to boost contractor confidence slightly. Many industry experts agree that MAP-21 was a step in the right direction, but in order to make our roads safer and really get our economy humming again, the funding levels need to be increased over a longer period of time.
That being said, manufacturers did immediately appreciate the increase in contractor confidence thanks to the legislation. Take, for example our line of rig-mounted hydraulic breakers. These breakers are without a doubt among the best in the industry when it comes to road demolition applications, and once MAP-21 was enacted into law, we saw an increase in sales for this equipment that is primarily used for road construction applications.
The Road Ahead
Manufacturers of construction equipment, equipment dealers, and contractors all stand to benefit greatly from long-term highway legislation. Quite honestly, so does every single man, woman, and child in the country. An influx of infrastructure dollars is directly related to the health of the economy, and it’s important for the general public to understand the implications of the failure to pass a long-term highway bill, immediately following the expiration of MAP-21.
Without a long-term highway bill or funding extensions, folks can expect highway projects to simply drop off, putting thousands of people out of work almost instantly. In addition to folks being out of work, the even more serious implication is the safety of our roads and bridges. How many bridge collapses does it take until we, as a society, stand up and tell our government that they need to pay attention to our infrastructure?
Even though the bill doesn’t technically expire until September of 2014, the evident lack of cooperation in our government will be a hurdle in getting legislation squared away for 2015. The health of the economy hangs in the balance, and long-term highway reauthorization legislation is the cure.