President Joe Biden has announced a $973 billion infrastructure plan to rebuild the nation’s roads, bridges, and other infrastructure. This plan will push money into America’s construction industry giving it a massive boost.
With the reconstruction of roads and bridges and the modernization of buildings, companies with heavy machinery such as Caterpillar and building materials company, Vulcan Materials, will see years of additional business. The stock prices of both companies rose when the announcement for the future plans were revealed. Smaller construction-related companies profited as well, Dycom, which provides contractor services to construction companies, share price rose nearly 6%.
Economists and business leaders said that the infrastructure plan should have been implemented long ago. As the country’s roads, bridges, and other infrastructure are aging and have not undergone necessary major repairs. In its 2021 report, the American Society of Civil Engineers gave American highways a bad grade, saying that 40% of the system is now in poor or medium condition. Bridges, schools and most of America’s critical infrastructure are not much better.
The terms of the agreement for the planned infrastructure improvements still has a long way to go. As Biden stated that he would only sign the agreement if the larger $4 trillion reconciliation bill, containing his other priorities, also appeared on this list.
Citigroup expects that almost all heavy machinery manufacturers in its coverage area will benefit from government spending, but Caterpillar may be the biggest winner. A report released by Citigroup last week stated "This is a small surprise for anyone who has experienced major highway projects. Caterpillar has a strong market share in most heavy construction equipment categories in North America."
