by Christine O'Keefe, Ph.D.
May 3, 2018
Facing doubled commute times and the resulting road rage, commuters dread navigating through construction in the morning. However, insufficient repairs and updates can also lead to crowded roads, a pervasive problem in the US. In 2017, for example, two of every five miles of roadway in the country were congested with traffic, resulting in an additional 42 hours of driving per person annually.
Why? Many view lacking investment in infrastructure as the culprit.
With one in every five miles of highway pavement in poor condition, the American Society of Civil Engineers (ASCE) estimates that repairing America’s transportation infrastructure would require over $2 trillion, $1.1 trillion more than the projected $941 billion in current funding.
Though major, such an investment now could yield savings in the long run, especially with the use of construction chemicals like concrete and asphalt additives, which can reduce infrastructure aging rates (and thus the frequency of repairs).
As such, efforts to repair old thoroughfares and increase the lifespan of new roads and highways will serve to bolster demand for construction chemicals, particularly in the South and West, where the population is forecast to grow at an above average rate. Meanwhile, a need for repairs and updates—particularly to bridges and other exposed metal structures—are expected to support demand for rustproofing and waterproofing protective coatings.
Beyond roads and bridges, the vast majority of US infrastructure is in desperate need of repair, including in the utilities sector. In fact, on the ASCE’s Infrastructure Report Card, the country received an overall D+ score, with its water and sewer systems earning grades of D and D+, respectively.
Much of the current infrastructure was placed during the early- to mid-1900’s, using pipes with an estimated 75-100 year lifespan. Consequently, 240,000 water main breaks occur in the US each year, a number that will only grow as the water system ages and the burden on it increases. Through 2037, for example, 56 million new users are expected to be connected to centralized water treatment infrastructure, and the EPA estimates that $655 billion is necessary to meet the investment needs for repairs and updates over that period.
Repairing existing water and sewer lines stands to benefit future demand for caulks and adhesives, while investment in new construction of sewer, water, and electrical transmission structures would be a boon for manufacturers of rustproofing and waterproofing protective coatings and sealants.
Nevertheless, potential demand gains for construction chemicals in utilities applications will turn with the political tides, as federal, state, and local lawmakers decide where infrastructure falls on their list of budgetary priorities.
To address the problems with America’s infrastructure, the Trump administration released its infrastructure plan – the Legislative Outline for Rebuilding Infrastructure in America – in February 2018. The plan proposes to turn $200 billion in spending on infrastructure over the next 10 years into $1.5 trillion in investments from the public sector and local and state governments. Additionally, the plan aims to streamline the permit and approval process from 5-10 years to less than two.
The plan has many critics, most of whom are concerned that the proposed amount of federal spending places too large a financial burden on local and state governments. Between 1995 and 2015, infrastructure spending by local and state governments increased over 40%, while from 1985 to 2015 federal spending dropped by 50%. As a result, local and state governments pay over 60% of new infrastructure construction costs, and over 90% of repair and maintenance costs.
The uncertain future of the Legislative Outline for Rebuilding Infrastructure in America may have an impact on state and federal funding for infrastructure spending, including construction chemical purchases. However, private investment will continue to support infrastructure construction and repair, supporting a healthy base of demand for construction chemicals. Gains in infrastructure spending will greatly improve the construction chemicals industry.
To learn more about the nearly $10 billion dollar construction chemicals industry in the US, check out The Freedonia Group’s new study, Construction Chemicals in the US. This comprehensive industry report includes:
Christine O’Keefe, Ph.D., is an Industry Analyst at the Freedonia Group, where she focuses on chemical topics and food ingredients.
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