If there was a single jaw-dropping moment during Tuesday’s Tampa Steel Conference, Walter Kemmsies delivered it. The managing partner for The Kemmsies Group was offering a macroeconomic outlook on the North American steel industry, with a special focus on his area of expertise: ports, rail and infrastructure.
As with many observers, Kemmsies cited the desperate need for investment in many of our primary infrastructure outlets –bridges, railways and others. But Kemmsies went one step further, suggesting the amount of steel that would be required to meet a significant, but conservative, investment that would address the existing needs.
Kemmsies estimates approximately 218 million tons of metal, spread out over the course of five years, would do the trick. Approximately 90 percent of that would be steel, with an additional 28.9 million tons of aluminum required on investments into the electrical grid.
Breaking it down by segment, Kemmsies said 142,000 tons would go toward rail investments; 9.3 million tons for highways and bridges; 50,000 tons for ports; 129.4 million tons for water systems; and 49.4 million tons for distribution centers.
And you thought supply was tight now?
Pressed by conference host John Packard of Steel Market Update, Kemmsies gave a clear explanation of his figures, noting he does a ground-up method of calculation using existing needs and how much steel is used to achieve each aim. “I’m a bit of a geek. I thought it was a really fun thing to do.”
Given the existing state of the federal coffers, such investment may be hard to find support for in D.C., even as it’s a stated priority of the new administration. That’s why Kemmsies believes the next spend should tap heavily into the private sector.
“We have $95 trillion in private wealth, a lot of it unproductively used, as we saw last week on Wall Street,” Kemmsies said, alluding to the GameStop monkeyshines that have dominated financial news recently.
“I hope we come through this time," he said. "It is getting operationally very difficult in the U.S.”