Is Infrastructure Build More than a Dream?
By Dan Markham
A major U.S. infrastructure undertaking represents one of the biggest items on the typical steel executive’s wish list. The reasons are obvious and multiple.
A full-fledged, wholly committed effort to shore up the nation’s system of highways, bridges, railroads and waterways, each in various stages of disrepair, carries benefits on many levels for the supply chain. The most direct gain is in the increased demand for steel products in the construction process, from rebar for major highway work or plate for bridges or long products for rail projects. If an energy grid upgrade is part of the package, the bounty is spread to other steel products. And with any kind of “Buy America” provisions included in the bill, the domestic supply chain would benefit more than they would from growth in other steel-consuming sectors.
But it doesn’t stop there. Any major investment would also generate increased demand for the types of heavy equipment needed to do the work. That’s even more steel demand produced.
Finally, when the work is complete, a better infrastructure grid will benefit all industry, reducing transportation and other costs for American businesses. Given all that, it’s easy to see why steel executives continue to push for the type of infrastructure program President Donald Trump championed during the campaign and into his first months in office.
Yet, as Gerdau Long Steel North America President Peter Campo pointed out at June’s Steel Survival Strategies meeting in New York, none of this is new. The need for comprehensive infrastructure overhaul dates back more than a decade. However, despite strong bipartisan support, or at least bipartisan lip service, such a program remains elusive. Because when it gets to the tricky part of funding such a much-needed effort, that support tends to evaporate. “Unless we have some way to pay for it, I think we shouldn’t talk about how wonderful it is,” Campo argued.
Some Congressional Republicans, elected on a Tea Party platform of minimal to no government spending, will be difficult to move. Other members of Congress will balk at any kind of tax increase to support it, even though it’s been almost a quarter-century since the federal gasoline tax, the traditional means of funding major highway work, has been raised. Finally, some Congressional Democrats may support the idea of an infrastructure build in theory, but are unwilling to give the Trump Administration any kind of political victory.
By all means, trade groups such as the AISI, SMA and MSCI should use their available weight to lobby Congress to embark on a public works project, outlining all the reasons it is necessary from economic competitiveness to basic safety. Yet Campo’s correct that until such an effort is more than just an item atop a wish list, the steel industry may want to avoid touting the impending riches it will bring.