Trump’s Infrastructure Spend a Boon for Construction and Insurance – IF it Happens

For all President Donald Trump’s positive talk of a boom in infrastructure growth, the anticipation has yet to become a reality for construction firms and their insurers.

Brian Shea, senior vice president of construction at Arch Insurance, said the President’s heralded infrastructure boom has created optimism in the construction world but, as yet, it remains business as usual.

“In general, people are cautiously optimistic,” Shea said. “I think folks hope it comes to fruition. But folks who tend to be in that space – the large infrastructure space; the heavy highway, street and road space – have come to know that politicians can talk sometimes, and it doesn’t always come to fruition.”

Trump has promised to spend $1 trillion on infrastructure, telling Congress in February: “Crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports and railways gleaming across our beautiful land.”

But while the talk on Capitol Hill hasn’t yet created opportunities, the proposed injection of construction work would certainly be warmly welcomed, Shea said.

“Right now we’re not seeing those figures show up,” he said. “Business isn’t down, per se, but it’s kind of stable in that space. We’re not seeing a lot of change. What we are seeing, there’s a lot of really, really big projects – the Tappan Zee Bridge and other monster highway jobs – but you’re not seeing a lot of the regular jobs that tend to be good bread and butter for a lot of the mid-level contractors in that space.

“We don’t see the number of $50, $60, $70 million contracts that really feed a lot of good mid-level [regional] contractors. We’re seeing the nine-figure and $1 billion projects, and that’s really making this space confined to the larger players.”

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Work in the private sector continued to be strong, Shae said. It’s the mid-level regional contractors on public works that need the infrastructure promise to materialize.

“I think it’s just getting harder and harder for those mid-level contractors to survive in the infrastructure space. If they haven’t been bought by an international firm, they’re kind of sitting around waiting for that to happen.

“It’s getting harder and harder for them to keep moving, to keep fighting the fight. They’re losing out to those better resourced, mega- multi-international firms. Of course there are exceptions, but as a general rule against the landscape that’s the case. It’s kind of sad to see, but it is happening.

“I think Trump’s [infrastructure] Bill, if it were to happen, it would supply a lot of life to that level. Because then the international firms, the European firms, would have to access a lot of these regional firms to do the work.”

The federal highway bill two years ago had given the industry a short boost but more was needed, Shae said.

“It’s good that he [Trump] is talking about it. He’s not saying that it needs to stay flat, or go down, or we can’t afford it. He’s saying it needs to get done. It does appear to be a priority for him. This means jobs as well as infrastructure … it’s just a matter of funding it, isn’t it, and where are you going to take the money from to pay for it.”

Sam Boyer, Insurance Business  April, 2017

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