The Aging Infrastructure Threat and Opportunity

Infrastructure problems in the US (and most of the developed world for that matter) have come to forefront once again following the bridge collapse in Washington State. Unfortunately this is nothing new, as the below video from Bloomberg highlights.



This interview seems to imply that our infrastructure problems are just focused on the roads, and primarily bridges. However this is an over simplification of the problem. The problem of an aging infrastructure goes far beyond roads and bridges. It is all encompassing and includes the the aging electric grid, corroding pipes, inadequate telephone/internet infrastructure, railroads, etc. It also does not take long to see these the resultant affects of the the infrastructure problem first hand, that is if you are observant and take a look at the forest for the trees. Power outages that last days and weeks after storms, steam pipes explosions, long and continual delays at airports, increasing frequency and severity of traffic jams, brown outs during the peak summer electricity use months and more are all examples of where the infrastructure is ripping apart at the seems.

To fix infrastructure frailties, will take investment. Actually, a lot of investment. The American Society of Civil Engineers, the lobbying group for those involved in infrastructure projects, so some grain of salt has to be taken, detail in the below report not only the state of the infrastructure decay but the cost to repair it to what they consider a passing level. The group pegs the price tag at $3.6 trillion, more than $1 trillion greater than their estimate in the 2009 report card. That is a pretty penny, especially considering the cost represents more than 25% of US gross domestic product.

2013-Report-Card.pdf by plato363

In my opinion, the Obama administration and Congress missed the opportunity to fix the aging infrastructure in the US back in 2009, with the stimulus programs that mainly went to special interest groups. The problems of funding, economic uncertainty, cost/benefit analyses, and special interest groups have all held back what is needed investment. That said, a missed opportunity to correct the problem then essentially creates an investment opportunity for investors now.... depending on your time frame. It is my opinion that the required investments will be made at some points. This suggests that construction equipment companies, infrastructure contractors, mining concerns, and other related companies will all benefit from this mega-trend. The mega-trend is still in its infancy and depending on the time frame great investment are likely to be found in companies addressing this need.