(Reuters circulated the following on February 28.)
CHICAGO — The aging U.S. infrastructure needs billions of dollars of new investment and repairs from roads to rails, ports and the electrical grid, executives told the Reuters Manufacturing Summit this week.
That huge repair bill offers big financial opportunities for equipment makers, but projects would have to surmount enormous hurdles first, such as getting approval from lawmakers loathe to seek tax increases, executives said.
Several high profile infrastructure failures in recent years such as the deadly interstate bridge collapse in Minneapolis last year have exposed flaws, but tend to be forgotten quickly and the topic has barely gotten notice in the presidential race this year, executives said.
“You would have thought that that bridge collapsing would have been a wakeup call,” Norfolk Southern chief executive officer Wick Moorman said. “It doesn’t seem to have done anything.”
Moorman said the U.S. has lacked the will to address critical infrastructure needs that might require tax increases or to simply speed the construction of new projects to improve rail or road service.
Enrique Santacana, head of U.S. operations for Swiss engineering company ABB, said the electrical grid has seen some improvements since the Northeast blackout of 2003, but much more investment will be needed.
“Here in the U.S. and other western economies like Western Europe, you have aging infrastructure that has to be replaced and for many years, we should have been replacing it and we didn’t and it is almost like catching up,” Santacana said.
The underinvestment runs into the “tens of billions” of dollars and replacing 40 to 45 year old transformers and related equipment for U.S. electrical utilities provides a big opportunity for ABB, he said.
“I think everybody is very well aware what is going on and the amount of investment that needs to go in to make sure these blackouts don’t happen again,” Santacana said.
But despite years of federal transportation reports on the deteriorating conditions of bridges, little infrastructure investments have been made, said John Stropki, chief executive of welding equipment maker Lincoln Electric Holdings.
Stropki said the United States needs continuous investments and not just because that would be good for Lincoln Electric.
“I can tell you if it is not done, I think it is going to be bad for the economy in general,” Stropki said.
Ports on the West Coast of the United States are stretched thin and approaching maximum capacity and need more investment to meet 10 percent annual growth rates, said Gerry Wang, chief executive of container shipping company Seaspan.
Rehabilitating and expanding ports runs into the millions of dollars and building new ports from scratch costs billions of dollars, something that might require a jump start from the government first, Wang said.
“I am a strong believer that for long term infrastructure investments the government should lead,” Wang said. “You can always privatize it, sell it in bits and pieces.”
The U.S. also must consider building new nuclear plants if it wants to keep up with energy demand, executives said.
Moorman said railroads, which compete with trucking companies in shipping many goods across country, could benefit “in a perverse way” from an apparent lack of will to repair and expand the U.S. highway system.
“There is neither the money nor the political will to build another interstate highway system,” Moorman said. “It doesn’t seem like there is the money or the will to keep the one we have got in good repair, let alone add any substantial amount of capacity to the highway system.”