Is your business in the construction industry? Better get ready: you’re about to see some good times.
Not that times haven’t been already good over the past few years. Thanks to lower taxes (and new tax incentives), relatively low interest rates and a growing economy the construction industry has been experiencing the kind of growth not seen since the early 2000s. In fact, the biggest problem that I hear from most of my clients in the industry isn’t the lack of work, but the lack of people. That’s an issue that’s going to challenge the industry for the foreseeable future, particularly in light of this past week’s midterm elections.
Now that the Democrats control the House of Representatives, many are talking about stalemate in Washington. That may be so. But members of the Trump administration and its dealmaker-in-chief have gone out of their way to emphasize certain shared priorities with the Democrats. And the one area where they agree on most is the state of our country’s roads, bridges, utilities and airports.
“We have a lot of things in common on infrastructure,” the president said at a news conference on Wednesday.
The incoming House speaker, Nancy Pelosi, and the Senate majority leader, Mitch McConnell, agreed that infrastructure spending is a potential area for common ground. According to CNBC, Wall Street is thinking the same thing. Stocks of some of the country’s biggest companies that support the construction industry, like United Rentals, Vulcan Materials and Caterpillar, as well as other machinery manufacturers and equipment lenders, rose this week.
“Since his earliest days as a candidate, Trump, a world traveler, cited the deplorable condition of the US infrastructure compared to nations around the world,” one analyst was noted as saying in the CNBC report. “From airports to bridges, the US has one of the world’s oldest infrastructures, and public works programs like this have always been a central principle of Democratic policy.”
It’s true. And like him or not, the president has been doing – or at least trying to do – what he promised during his campaign. The last Congress pulled the plug on his infrastructure spending proposal over budget concerns and his insistence on including his controversial border wall. But this Congress, I believe, will be much more interested in making a deal. Their leaders have been talking about infrastructure for as long as the president has.
If you don’t believe me, pay attention to Peter Defazio, a Democratic congressman from Oregon who is likely to become the chairman of the House transportation and infrastructure committee. Defazio wants to pass a $500bn bill that would fund new roads, bridges and transit improvements and he aims to get this done early in 2019. “This guy’s a builder,” Defazio said in reference to the president. “Infrastructure is a common ground. He gets it. It takes investment and real money.”
So what does this mean for the tens of thousands of small businesses – drywall contractors, painters, installers, architects, excavators, hardware stores, drivers, safety consultants, waste removal firms and all the others that directly and indirectly rely on the construction industry for their livelihoods? How about would-be entrepreneurs, investors and startups looking for the next growth industry? To them I say: follow the money.
Assuming all the bipartisan talk comes to pass then the construction industry is going to see billions of dollars coming from the federal government in the next few years. I’m betting that my smarter clients in the industry are already making plans for hiring, inventory purchases, scheduling and investments in technology, equipment and property that will help them prepare to take advantage of what looks like a coming boon.