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US Infrastructure – State Level Analysis of the Impact of COVID-19

DuckerFrontier, June 9, 2020

DuckerFrontier first analyzed the impact of Covid-19 on the infrastructure industry in May in its report US Infrastructure Expected to Fare Well in the Post-Pandemic Environment. Since then, the Building and Construction team has continued to analyze the impact at a state level to help companies continue to determine what’s ahead for the infrastructure sector and how to best navigate.


 

Pandemic Regional Impact to the Environment

Most every state within the U.S. was affected by Covid-19; however certain areas were less-impacted and therefore not subject to “stay-home” orders. It’s within these states where public works projects continue, deemed an “essential service” despite other infrastructure market segment projects being temporarily halted. Construction teams do remain on-call in case of urgent repairs to ensure little-to-no disruption in services provided.

DuckerFrontier has developed a tool utilizing multiple industry end segment data to further understand those states where infrastructure development has been impacted most. Data analyzed for each state and overall includes but is not limited to:

  • Water and wastewater/sewer funding and spend
  • Infrastructure funding and spend
  • Rainy day fund levels
  • Covid-19 impact

Regionally, the south faired best with its more densely populated areas not impacted nearly as much as those in the Northeast, West or the Great Lakes regions. Additionally, states in this region that did experience a similar number of cases were subject to less restrictions.

Several key states took a varying, but positive approaches to the pandemic. The state of Texas left restrictions to the various city mayors to manage through March 31st; the state opened its retailers, shopping malls and restaurants as of May 1st, however with limited occupancy of 25% to start. California was an early responder, placing the state into “shelter in place” by mid-March; the state has a large financial reserve as compared to others and therefore can manage state projects and needs more effectively. Finally, New York was hit the hardest by Covid-19 and the state was closed in mid-March as well; this state will be heavily impacted compared to others in the short term, however the 2017 Clean Water Infrastructure and Quality Protection Bill coupled with a potential 2020 Water Bill leaves this sector with an incredible opportunity to rebuild and recovery rapidly.

Despite activity in infrastructure continuing in some areas, spending is anticipated to decline overall in the near-term, impacting the transportation segment hardest. However, as mentioned in our first Infrastructure update – US Infrastructure Expected to Fare Well in the Post-Pandemic Environment – we are still anticipating activity within the industry with a continued urge from lawmakers for a federal stimulus boost. A future stimulus Phase 4 package is aimed at infrastructure and construction and, when coupled with low interest rates to secure long-term debt, the industry is well-positioned for rebound.

Leading Segments for Growth

  • Infrastructure spending remains a popular component of future spending bills that will include additional stimulus tied to labor and activity versus budget bail outs at a local level Interest rates help more now to secure long-term debt and create the best environment to spend
  • The government was already planning to shell out trillions of dollars – the Trump administration and congress want a 2 for 1: big spending, give jobs, get infrastructure
  • There will likely be more Public Private Partnerships – to mobilize in certain areas, allow for private job growth, manage funding needs, and innovate. COVID-19 response is paving the way for private/public possibilities
  • While roads will be a big focus, we see great attention and linkage to safety, response for water infrastructure and communications (rural access for 5G, data exchange, etc.)

DuckerFrontier’s Building & Construction team is at the forefront of key trends impacting the industry amid COVID-19 disruptions. Visit our COVID-19 Resource Hub for the latest insights and implications for global business, or contact us to connect with a team member.

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