U.S. manufacturers say the new $ 1 trillion infrastructure bill will support long-term public projects that will create demand for maintenance equipment and building materials, potentially raising prices.
Manufacturers also expect to benefit from repairs and expansions of ports, airports and roads, CEOs said, alleviating some long-standing difficulties and helping companies transport parts and products more efficiently.
At Stellar Industries in Garner, Iowa, President David Zrostlick said he expects infrastructure projects funded by the bill to increase orders for his company’s construction equipment maintenance trucks. He said it would be difficult for Stellar to fulfill all the expected orders in the short term, especially since the company is already eight months behind.
This means that we will simply see this business volume continue for months, if not years, “said Mr Zrostlik.
Congress passed the bipartisan spending package late Friday, and President Biden is expected to sign the bill soon. The legislation targets tens of billions of dollars over the next five or more years to repair bridges, redesign intersections, expand rail services and upgrade airports and power lines, the largest federal infrastructure investment in more than a decade.
Manufacturers and construction companies are already struggling to meet increased demand this year as labor and parts shortages slow production. Total construction costs and consumer purchases of goods are significantly higher than before the pandemic, according to federal data.
Industry leaders said projects funded by the new bill are unlikely to start within a few months or a year. This lag can give companies time to catch up with current backlogs caused by supply chain problems and limited manpower.
Trimble Inc., which makes surveying equipment and construction software, said the bill would improve the company’s long-term prospects and begin to affect results in 2023.
“It’s taking time,” said CEO Robert Painter. “You are moving from a feasibility to a design plan to a potential start.”
Kip Eideberg, head of relations with the government of the Association of Equipment Manufacturers, said that members of the industrial group will begin to see an increase in orders in the first quarter of 2023.
“Will this trigger a new search for new equipment? Definitely yes, it will happen, “he said.
Factories will also be major users of the new infrastructure, Mr Eideberg added, because they rely on global supply chains to both receive components and reach customers. “The benefits for our industries will be state-of-the-art infrastructure that allows us to compete in the global economy,” he said. Jim Glaser, CEO of Lift Truck Manufacturer Elliott Equipment Co. said new construction projects could ultimately reduce transportation costs. “Everything from the power grid that needs improvement to ports, roads and bridges,” he said.
FRP Holdings Inc. owns properties in the United States that are used to extract construction aggregates, such as sand and gravel. FC John Baker III told investors on Thursday that he expects the infrastructure bill to lead to higher selling prices.
“Any additional demand, if this bill becomes law, would stretch supply when supply is already quite weak, which should lead to a significant price increase,” Mr Baker said.
Trinity Industries Inc. expects the infrastructure bill to increase the purchase of guardrails for highways, which the company produces. Construction companies usually make purchases of guardrails near the start of construction, which means that some orders will start next year.
“Will there be an impact? Yes, but it will most likely be in at least 6 to 12 months, “she said. Trinity said last week it would sell its highway business to a private investment company.
Some manufacturers have said that anticipating new demand can be useful, as it is already difficult to produce enough due to supply chain problems, labor and logistical constraints.
Stephen Bullock, president of Power Curbers Cos. believes that the law could increase demand for its products by almost 1/3 over the next three to five years. He worries that supply chain and labor problems will make it difficult for both manufacturers and construction companies to complete projects on time.
Junior Trader Nikolay Stoychev