Highway, Street & Bridge Construction

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 8,800 construction companies in the US build transportation-related infrastructure; including highways, roads, streets, airport runways, and bridges. Companies may also build driveways and parking areas. Industry revenue consists of new construction (59% of industry sales), additions, alterations, or reconstruction (22%), and maintenance and repair (19%).

Dependence On Government Spending

The majority of industry revenue comes from publically funded programs, mainly state and local government projects.

Variability In Costs

With low margins, variability in the cost of materials and labor can be a challenge, particularly for fixed unit price and lump sum contracts.

Industry size & Structure

A typical highway, street, or bridge construction company operates out of a single location, employs about 39 workers, and generates about $14 million annually.

    • The highway, street, and bridge construction industry consists of 8,800 companies that employ about 345,200 workers and generate $124 billion annually.
    • Government contracts account for about 73% of industry revenue, and the majority of government contracts are issued by state and local governments.
    • Large companies include Kiewit Corporation, Granite Construction, and US divisions of Skanska.
    • Most small to medium-sized companies operate within a limited geographical market.
                              Industry Forecast
                              Highway, Street & Bridge Construction Industry Growth
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Nov 15, 2022 - Civil Contractor Optimism Softens
                              • Business optimism among civil construction contractors and engineers moderated in the third quarter of 2022 compared to Q2, according to The Civil Quarterly released by Dodge Construction Network, Infotech, and Hexagon in October. About 53% of civil contractors surveyed in Q3 said they expect their revenue to increase over the next 12 months, which was down from the 66% who had the same expectation in Q2. In Q2 2022, 51% of civil contractors felt their profits would rise over the next 12 months, but those expecting rising profits fell to 45% in Q3. Among civil contractors who expect revenue and/or sales to drop over the coming year, 60% believe an economic downturn will result in fewer private projects. More than 90% of survey respondents said their projects have been affected by rising construction materials costs.
                              • Labor shortages in construction and related industries could blunt the impact of the Infrastructure Investment and Jobs Act (IJJA), according to a report released by consulting firm McKinsey in October. McKinsey estimates that by 2028, the contractor and subcontractor jobs shortfall could reach more than 160,000. The construction sector already suffers from a prolonged labor shortage, and other spending packages – including the CHIPS Act and the Inflation Reduction Act – will create even more demand for jobs in construction and related industries. To address the projected shortfall, McKinsey suggests recruiting among veterans and the formerly incarcerated, beginning apprenticeships and vocational training at younger ages, and upskilling workers from other fields.
                              • On a seasonally adjusted basis, the total value of highway, street, and bridge construction put in place increased by 1.5% in September 2022 compared to August, according to the US Census Bureau. Unadjusted highway, street, and bridge construction spending was up 7.36% in September compared to a year earlier and rose by 7.36% on a year-to-date basis over the first nine months of 2021.
                              • The IRA also includes $5.8 billion in tax credits and direct funding to reduce emissions from manufacturing plants that make products such as concrete and asphalt, according to The New York Times. The new law aims to support the use of more sustainable materials in infrastructure projects. The IRA also provides $5.5 billion to federal agencies to buy low-emissions materials for their projects. The IRA’s supporters believe the law will incentivize manufacturers to reduce their emissions so their products become eligible for purchase. The National Asphalt Pavement Association has received interest from its members seeking guidance about how to take advantage of the new programs under the IRA.
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