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Home / Industry / Manufacturing /  Manufacturers expect infrastructure projects to boost sales—and ease transport snarls

US manufacturers said the new $1 trillion infrastructure bill will support years’ worth of public works projects that will create demand for maintenance equipment and construction supplies, and potentially push prices higher.

Manufacturers expect to also benefit from having refurbished and expanded ports, airports and roads in place, executives said, easing some long-running bottlenecks and helping companies move parts and products more efficiently.

At Stellar Industries in Garner, Iowa, President David Zrostlik said he anticipated infrastructure projects funded through the bill will boost orders for his company’s construction-equipment maintenance trucks. He said it would be difficult for Stellar to fill all of the expected orders in the short term, especially since his company’s backlog is already at eight months.

“It means we will just see this level of business continue on for months, if not years, going forward," Mr. Zrostlik said.

Congress passed the bipartisan spending package late Friday, and President Biden is expected to sign the bill into law soon. The legislation directs tens of billions of dollars over the next five years or more to repair bridges, redesign intersections, expand rail service and upgrade airports and power lines, representing the largest federal infrastructure investment in more than a decade.

Manufacturers and construction companies are already struggling to meet increased demand this year as labor and part shortages delay output. Total construction spending and consumer purchases of goods both are running significantly higher than before the pandemic, according to federal data.

Industry executives said the projects funded by the new bill aren’t likely to get under way for several months or a year. That lag could give companies time to catch up with current backlogs created by supply-chain constraints and tight labor, they said.

Trimble Inc., which makes surveying equipment and construction software, said the bill would boost the company’s long-term outlook and start to affect results in 2023.

“It does take time," Chief Executive Robert Painter said. “You move from feasibility to plan to design to an estimate to start."

Kip Eideberg, the head of government relations for the Association of Equipment Manufacturers, said members of the industry group will start seeing increased orders from the law in the first quarter of 2023.

“Will this drive new demand for new equipment? Categorically, yes it will," he said.

Factories will also be big users of the new infrastructure, Mr. Eideberg added, because they are reliant on global supply chains to both get components and reach customers. “The benefits for our industries are going to be state-of-the-art infrastructure that allows us to compete in a global economy," he said.

Jim Glazer, chief executive of aerial lifting truck maker Elliott Equipment Co., said that new building projects could eventually reduce transportation costs. “Everything from the electrical grid, which needs improvement, to ports and roads and bridges," he said.

FRP Holdings Inc. owns property in the U.S. that is mined for construction aggregates, like sand and gravel. Financial chief John Baker III told investors Thursday that he expects the infrastructure bill to lead to higher selling prices.

“Any additional demand, like the kind we see should this bill become law, would stretch supply when supply is already stretched pretty thin, which should lead to meaningful price increases," Mr. Baker said.

Trinity Industries Inc. expects the infrastructure bill to increase purchases of the highway guardrails it makes, Chief Executive E. Jean Savage told investors Oct. 21. Typically, construction companies buy guardrail purchases close to when construction is set to begin, meaning that some orders will start sometime next year.

‘Will it have an impact? Yes, but it’s most likely at least six months to 12 months out," she said. Trinity last week said it will sell its highway business to a private-equity firm.

Some manufacturers said the wait for new demand could be helpful as it’s already difficult to produce enough due to supply chain, labor and logistical constraints.

Stephen Bullock, president of curbing machine maker Power Curbers Cos., thinks the law could increase demand for his products by nearly one-third over the next three to five years. He worries that supply chain and labor shortages will make it difficult for both manufacturers and construction companies to finish projects on time.

“Between supply chain issues and labor shortages, if it takes a year, that’s not necessarily a bad thing," Mr. Bullock said.

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