Construction and demolition contractors have a great deal to look forward to by the end of 2022. Last year, President Joe Biden signed an infrastructure bill into law that allocates $1.2 trillion to these projects over five years. The country’s roads, bridges and railways, in addition to other infrastructure, will be addressed by the law. The administration says the deal will add 1.5 million jobs per year over the next decade.
While the law’s stated purpose is to improve the country’s infrastructure, leaders in the construction and demolition industries are expecting broader impacts, some of which could change how these industries operate moving forward.
The Infrastructure Investment and Jobs Act promises to make several improvements to the country’s infrastructure. It allows for repairing and rebuilding roads and bridges and focuses on climate change mitigation, resilience, equity and safety.
Biden outlined various priorities from the Infrastructure Investment and Jobs Act, including an emphasis on avoiding waste, buying American products and services, creating good-paying jobs and building resilient infrastructure that can withstand the impacts of climate change.
In the United States, 1 in 5 miles of highways and major roads and 45,000 bridges are in poor condition. The legislation reauthorizes surface transportation programs for five years and invests $110 billion in additional funding to repair roads and bridges and to support major projects.
The legislation also allocates $66 billion in additional passenger rail funding to eliminate the Amtrak maintenance backlog.
Each state benefits from the funding, according to the U.S. Department of Transportation (DOT).
But the infrastructure investments don’t end with roads, bridges and passenger rail. Some of the other projects that can now be funded by grants include eliminating lead service lines for drinking water, expanding internet access, upgrading power infrastructure and building a network of electric vehicle charging stations.
“This is by far the largest federal funding for infrastructure in our country’s history,” says Ken Simonson, chief economist for the Associated General Contractors of America (AGC), Arlington, Virginia. “This broadens the categories beyond what the government has traditionally supported before.”
While the increase in funding and projects will help the construction and demolition industries, industry leaders believe the legislation will affect them in other ways, also.
Jeff Lambert, executive director of the National Demolition Association (NDA), Washington, and Drew Lammers, vice president of outside operations at Cohen, a metal recycler based in Middletown, Ohio, say they expect the law to increase recycling and cleanup opportunities.
“The Infrastructure Act includes $21 billion in funding to address legacy pollution and can be used to clean up brownfield and superfund sites,” Lambert says. He adds that the NDA believes “communities and agencies will turn to demolition and remediation experts to begin this much-needed work.”
Lammers says metal recyclers also will benefit through this demolition activity because of how much rebar and steel will be collected from these sites. This material eventually will be sent back to steel manufacturers to be recycled in new products.
“This is going to be like a domino effect for the multiple companies involved in the process of construction and demolition,” he says.
Simonson says the law also increases production capacity for materials, such as rebar recycled from existing infrastructure projects. He adds that the law expands the types of projects that are eligible for funding. As a result, the number of jobs in the construction industry will increase.
“In addition to the benefits to communities, the environment and the job opportunities, this once-in-a-lifetime investment will foster investment in workforce development,” Lambert says. “We hope to see an increase in state, local and federal investment in workforce development to meet the demand,” he adds.
The law also looks to address the grant review process for projects and includes reforms to streamline and expedite the federal permitting and environmental review processes, Lambert says. This could speed up the time it takes to complete a project, so contractors will be able to take on more projects more quickly.
Obstacles in the way
While the infrastructure investments certainly will help the construction and demolition industries, some contractors say they think the legislation does not do enough to address ongoing issues the industries are facing. Specifically, Lambert and Lammers say they believe it won’t help solve the ongoing labor shortage.
“We would like to see Congress and the administration further address the skilled labor shortage in the construction industry,” Lambert says. “Currently, over 400,000 jobs need to be filled today on existing projects.”
While part of the legislation’s goal is to add jobs, Simonson says he believes the cost of labor is going to increase substantially because of the boom in new projects, increased demand for workers and the ongoing labor crisis. The construction and demolition industries are going to struggle to find workers because prospective employees are finding jobs in other industries that allow them to work from home or that offer better benefits, he says.
“Contractors have their work cut out for them in attracting enough workers, paying them enough and retaining them,” Simonson says. “But there are also a lot of opportunities out there, and there will be for a long time.”
Other obstacles that could hinder the law’s benefits to these industries include how COVID-19 will affect supply chains in addition to the already diminished workforce, Simonson says.
“The industry has a low vaccination rate among workers and an increased hesitancy to get it,” he says. Construction and demolition firms are more vulnerable to short-term losses in workers. This means companies could lose jobs because their workers are not vaccinated, he adds.
The cost of materials also could increase because of tight supplies. While it’s unclear exactly what materials could be affected, Lambert and Lammers say they expect concrete, copper and steel to see prices rise because of the increase in road and bridge projects.
As more projects are approved, Simonson says, equipment and vehicle costs also could spike as demand for the equipment needed to fulfill larger contracts increases.
Despite the bill’s passage, the timing of projects remains unclear. Neither Lambert nor Lammers say they expect to see much financing released this year.
Lambert says the Environmental Protection Agency and the DOT will evaluate grant applications and select applicants for funding in the fall.
“It could be a year or two before the industry sees many of the benefits or impacts of this bill,” Lammers adds. “The administration still needs to write the rules to send the money, and once they send the money, the states need to write their rules on how to give the money out based on federal guidelines.”
When contracts are awarded, some forms of infrastructure will see more benefits than others at first. Simonson says the three projects that will get approved first are public roads and bridges, transit work and alternative energy projects.
Because the wait could be long for some contractors, depending on the type of work, Simonson suggests theylook for other sources of project funding in the meantime.
“There’s a lot of money coming, but it’s still too hard to tell when this bill will be rolled out,” he says. “I think contractors should line up the equipment and personnel you think you need, but it’s still too early to guess when these projects will come along.”