Friday, November 25, 2016

Constructing the Future.

Image from Skanska USA - Planned LaGuardia Airport
upgrade.
Construction is an industry bound to see sustained solid growth in the both the near and distant future. Of course, as a New Yorker working on a $3 Billion public works construction program, you might say my view is skewed. However, sitting inside the industry, and being cognizant of upcoming trends, allow me to elucidate.

A vision of the New New York Bridge,
We are somewhat lucky in New York, and not least of which, the City of New York, where mega projects happen concurrently in a variety of locations. The major LaGuardia Airport renovation recently began spinning up to the tune of $4 Billion. Large swaths of that money is dedicated to be spent on subcontractors and firms capable of taking on smaller pieces of the larger project. At the same time as the LaGuardia project announced its commencement, Governor Cuomo additionally announced $3 Billion dollars for the refurbishment and renovation of New York Penn Station as a world class transportation hub through a public private partnership.

Lastly, another $1 Billion has been announced for added transportation construction of a third rail line on the LIRR. All of this, of course, is aside from the significant housing construction set to start up as developers activated projects before expiration of the 421-a tax credit, and separate from the New Tappan Zee Bridge (also known as The New New York Bridge) already underway with a total project budget of $3.98 Billion.

But that is just New York. The rest of the country is similarly seeing either the need for, or the current stimulation of the construction industry. The World Economic Forum issued a report in May of this year saying: “ The construction industry serves almost all other industries, as all economic value creation occurs within or by means of buildings or other “constructed assets”. As an industry, moreover, it accounts for 6% of global GDP. It is also the largest global consumer of raw materials,...” That total is significant, making “constructed assets” all the more important.

By way of example of projects soon to come through the construction pipeline: The United States New England region - Connecticut, Rhode Island, and Massachusetts - began leveraging their collective bargaining power as a triumvirate of entities for the purchase of clean energy megaprojects. The largest offshore wind farm recently concluded its construction just off the shore of
The Deepwater Wind project off
Rhode Island's shore in the Long
Island Sound.
Rhode Island and is producing 30 MW of electricity. Not megalithic on any scale, but
Rhode Island is not in need of, for example, the 120 MW necessary for running New York State. Other projects are sure to follow as multistate reforms to our power grids and energy distribution occur. Beyond energy industry refurbishment, nationwide transportation infrastructure currently ranks exceedingly low. An October, 2015 Fortune article cites the Economic Policy Institute finding that roads, bridges, rail, and air transport systems are in direct danger of critical collapse without upgrades and improvements. One plan to utilize $275 Billion in infrastructure banks for seed money to spur infrastructure spending is an idea that promises to grow and sustain the heavy construction industry around the country for years to come. Driving on those upgraded and refurbished roads will be the vehicles of the future, and highly skilled, futuretech constructors will be necessary for either out-of-the-ground development, or wholesale repurposing of existing locations for their production.

These totals and projects are all public institution related and funded. The amounts and directions of projects from the private industry will demonstrate a yawning chasm of difference in their price tags and style. However, the variety and viability of private industry megaprojects will similarly be dependent on transportation, energy distribution, and supply infrastructure meaning that the completion of both have interdependencies. The two things in combination are bound to create a growth opportunity for constructors for years to come.

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