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 8,700 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 40 workers, and generates about $14 million annually.
- The highway, street, and bridge construction industry consists of 8,700 companies that employ about 353,400 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
Recent Developments
Apr 16, 2024 - Steady but Slower Industry Growth
- The highway, street, and bridge construction industry is expected to experience slower but steady sales growth in the coming years. The industry’s year-over-year sales rose 13% in 2022, then moderated to 4.6% in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales growth is projected to rise to 4.8% in 2024 and 5% in 2025. The industry will then see flat but steady average annual growth of about 4.7% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
- In late March, a containership struck a support pier of Baltimore’s Francis Scott Key Bridge, causing the entire bridge to collapse into the Patapsco River. According to Construction Dive, civil engineering experts said that while concrete bollards protected the bridge’s piers, the barriers were not designed to withstand an impact of that size. Such barriers are intended to protect against small fishing vessels or pleasure boats; the Dali containership weighs 95,000 tons unloaded. While industry experts suggested it’s economically infeasible to design bridges to withstand containership impacts, the Key Bridge disaster serves as a lesson, and it will affect how future bridges are designed and built, as standards are updated regularly.
- Total highway and street construction spending is projected to rise 12% in 2024 over 2023, according to FMI’s second-quarter 2024 North American Engineering and Construction Outlook. While 2024 highway and street spending will remain well above historical norms, funding from the Infrastructure Investment and Jobs Act (IIJA) will begin to taper off. Inflation and other cost pressures are expected to ease in 2024, prompting states to move forward on projects that had been paused due to high costs. FMI also expects highway project investments to shift from renovations to new and expanded capacity, including several new and replacement bridges. Highway and street construction spending is expected to slow to 7% growth in 2025, then drop further to 4% in 2026, 3% in 2027, and 2% in 2028.
- In March, the Federal Highway Administration (FHWA) announced a proposal that would halt a 40-year-old policy of offering waivers to the agency’s Buy America requirements for manufactured goods used in highway projects funded by the federal government, according to Construction Dive. The Buy America initiative began in 1983 to incentivize domestic production of manufactured products used in federally funded projects. The waiver program allowed contractors variances in cases where a lack of available domestic goods could slow or halt projects. In addition to its proposed rescinding of the Buy America waiver, the FHWA issued a request for information (RFI) regarding domestic availability of manufactured goods commonly used in FHWA-funded projects. The RFI will help create standards for manufactured products included in Buy America requirements, which contractors have often complained are unclear. The comment period through the RFI will be open through May 13, 2024.
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