Final Thoughts

Final Thoughts

Written by Tim Triplett

Sky-high prices not just for steel, but for construction materials of all kinds, are threatening the prospects for construction demand. And federal infrastructure spending proposed by the Biden administration could carry an even heftier price tag for taxpayers.

The Associated General Contractors of America reports that the construction industry is experiencing an unprecedented mix of steeply rising materials prices, snarled supply chains and staffing difficulties, combined with slumping demand that threatens to push some contractors out of business and is adding to the industry’s nearly double-digit unemployment rate. The ship blocking the Suez Canal halfway round the world is even having an impact here close to home as hundreds of vessels are prevented from delivering their goods, including various construction-related materials.

In a Construction Inflation Alert posted by AGC last week, the trade group called for immediate action by federal officials to end tariffs and quotas that are adding to price increases and supply shortages. Officials at all levels of government need to identify and remove or lessen any unnecessary or excessive impediments to the importation, domestic production, transport, and delivery of construction materials and products, AGC said.

AGC Chief Economist Ken Simonson will get into more detail on the state of construction and the many challenges the industry faces as the featured speaker during Steel Market Update’s next Community Chat webinar beginning at 11 a.m. ET on Wednesday, March 31.The webinar is free and open to all. To register, click here.

Also on Wednesday, President Biden is scheduled to unveil details of his multi-trillion-dollar infrastructure program—the next step in his plan to rescue the economy from COVID-19. With the condition of the nation’s roads and bridges earning a weak C- from the American Society of Civil Engineers, it’s easy for steel and other industries to get behind a new infrastructure initiative. But Biden’s plan goes far beyond concrete and asphalt. His vision for “building back better” includes improvements to railways and ports, the electrical grid, 5G telecommunications and a massive shift toward green energy—not all of which are highly steel intensive. And any new steel demand that results could be many months, if not years, away.

Infrastructure spending is not without its detractors. Many believe it’s unwise to double down on infrastructure so soon after spending trillions to keep the economy afloat through the pandemic. And there are those who contend the need, and the potential payoff, from a massive infrastructure program has been greatly exaggerated. With the economy already well on its way to recovery, perhaps it’s time for some fiscal responsibility, they argue.

Every new administration pledges to make infrastructure work, and the jobs it creates, a top priority. And every time, the cost and the politics undermine the true potential for progress. Even with the Democrats in control of Congress and the White House this time, history is likely to repeat itself. Then again, never before in history (with the possible exception of the Great Depression) has the U.S. had as powerful an incentive as the COVID pandemic to get this right.

As always, your business is truly appreciated by all of us here at Steel Market Update.

Tim Triplett, Executive Editor

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