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 8,600 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 43 workers, and generates about $14.4 million annually.

    • The highway, street, and bridge construction industry consists of 8,600 companies that employ about 370,000 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

                              Jun 14, 2024 - Input, Wage Costs Tick Upward
                              • Highway, street, and bridge construction firms may feel margins pressured by higher materials and labor costs. In April 2023, Highway, street, and bridge construction wages rose slightly compared to the same month in 2023, according to the US Bureau of Labor Statistics (BLS). Also in April, BLS data show highway, street, and bridge construction wages rose four times faster than prices for asphalt paving mix compared to the same period a year earlier, according to the BLS. Industry employment increased moderately year-over-year in April, according to the BLS.
                              • According to Construction Dive, in comments at the National Institute of Building Sciences’ Building and Innovation Conference in late May 2024, a research engineer for the Federal Highway Administration’s (FHWA) Office of Infrastructure Research and Development suggested contractors and engineers need to account for climate change in their road designs and risk assessments. The speaker, Amir Golalipour, noted that road builders must be prepared for more extreme weather, rising sea levels, and hotter temperatures, which damage highways. According to the National Oceanic and Atmospheric Administration, in 2023, there were a record 28 different billion-dollar weather and climate disasters in the US. Golalipour said flooding can reduce a road’s strength by half and that roadways face similar threats from fires, higher rain levels, and extreme freeze-thaw events. He also noted roads made from recycled asphalt are vulnerable to extreme weather.
                              • Federal investigations into the collapse of Baltimore’s Francis Scott Key Bridge after it was struck by a containership hope to discover the cause of the accident but also how infrastructure could be better protected from similar events. In speaking at a hearing by the US House Committee on Transportation and Infrastructure about the federal response to the disaster, US Coast Guard Vice Admiral Peter Gautier said the ever-increasing size of containerships is “placing greater demands on marine transportation infrastructure that may not have kept pace with increased risks that these vessels may pose.” In the wake of the collapse of the Key Bridge, the National Transportation and Safety Board (NTSB) is examining pier-protection upgrades on other bridges that suffered similar collisions but didn’t collapse.
                              • Midway through the five-year spending plan under the Infrastructure Investment and Jobs Act (IIJA), only about 38% of the funding has been announced, according to Construction Dive. So far, of the $1.2 trillion in spending authorized by the IIJA, about $454 billion in project spending has been announced. Of spending announced to date, bridges and roads have accounted for the largest share, followed by rail, broadband, power, and water, according to CNBC analysis of data released by the White House. However, some industry insiders suggest more spending is required to upgrade and repair the US’s aging infrastructure. In a recent report, the American Society of Civil Engineers (ASCE) gave US infrastructure the grade of “C minus” and rated US roads, bridges, airports, and water systems as being in “poor” to “mediocre” condition.
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