Bumpy road ahead for US infrastructure and steelmakers who create it
OREANDA-NEWS. August 07, 2015. Half a loaf is better than none, but what about 1/24 of a loaf? That’s a question the steel industry and other major stakeholders in US infrastructure projects may be asking themselves this week.
Last week Washington legislators rushed out of town after approving a mere three months of federal funding for transportation infrastructure projects — after giving up on a comprehensive six-year plan that authorized the spending of \\$350 billion.
The eleventh hour crisis measure will only serve to pause the contentious funding debate until October when it will likely get caught up in federal budget talks and renewed government shutdown threats by Republicans.
Infrastructure spending deserves better, and a long-term program of five or six years is needed for planners, engineers and material suppliers, like steelmakers, to gain traction.
A series of short-term funding renewals — 35 over the past decade — has made planning for big projects difficult, if not impossible. And with the nation in its worse infrastructure shape ever — with 65% of its major roads rated as substandard and one in four bridges requiring major repair or replacement — big plans are needed.
The American Iron and Steel Institute has long advocated for a multi-year program and robust national infrastructure spending, including “a sustainable, long-term financing scheme based on user fees for federal transportation infrastructure investment.”
That last part is critical. The US has not raised its gasoline tax in more than 20 years. Despite inflation, it has stood at 18 cents/gallon since 1993. Furthermore, cars are much more fuel-efficient these days and shrinking fuel consumption means shrinking gas tax revenue.
It’s ironic that the same patriotic Americans who are certain the USA is the best country in the world don’t want to pay taxes to keep it that way. Other western nations already have superior infrastructure. In less than a decade the US has fallen from 7th to 18th place globally in the quality of our roads and bridges, according to the latest World Economic Forum rankings.
"I guarantee you this is not how China, Germany, other countries around the world — other big, powerful countries around the world — handle their infrastructure,” President Barack Obama said in response to last week’s three-month infrastructure funding extension. “We can’t have bridges collapsing and potholes not being filled because Congress can’t come up with an adequate plan to fund our infrastructure budget for more than three or five or six months at a time.”There seems to be nothing controversial or partisan about upkeep — and who’s going to argue against all the well-paying jobs it would create? Furthermore, who could argue against the results? In the context of America’s recent history, it seems much better to spend billions on better roads and bridges for citizens and businesses alike than trillions on wars with no resolution.
As a practical matter for steelmakers, US construction consumes about 25% of domestic steel production — the largest single end-use market for steel. The military? Less than 1%.
Sadly, the key word in the recent approval of crisis infrastructure spending is “crisis.” Lately America seems to have lost its initiative and finds itself merely lurching from crisis resolution to crisis resolution. Considering the chronic inaction of Congress, it may take a crisis — a collapsed bridge on a busy highway? — for the government to get serious about literally rebuilding America.
Money to fix US roads and bridges was set to run out July 31, so it’s a good thing Congress voted at the last minute to keep it flowing, especially considering we’re at the peak season for construction. But no one knows how long this spending debate would have lasted in Washington, if not for the legislators’ August vacations.
We can only hope they saw some startling examples of America’s crumbling roads and bridges on their way to the beach.
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