Road and Highway Construction – Feeling the Lingering Impacts of the Pandemic

While labelled ‘essential’ early in the pandemic, the construction industry has not escaped COVID-related issues, from employee shortages and job delays to rising prices and the disruption in the flow of equipment and material to job sites. Throughout the pandemic, it was often public construction projects that saw more limited disruption. In the Census Bureau’s most recent release on construction spending, public construction projects in power, sewage and water disposal and highway and street offered some of the only examples of year-over-year growth in the non-residential market. However, a reading of headlines from across the country shows that this sector of the construction market has not escaped the problems experienced by the market as a whole. Public works contractors are having issues finding skilled labor and supply chain-related delays are common. DOT contractors cite shortages in everything from plastics and streetlight parts to lumber, concrete, asphalt and equipment. As a result, construction is starting later or lasting longer.

The most recent government data shows that prices contractors pay for construction materials continue to exceed the prices they paid a year ago and public works administrators are worried that a potential increase in infrastructure spending comes at a time that their budgets won’t go as far. While the price of construction equipment has not seen the dramatic price fluctuations of other inputs, like lumber or steel, the construction equipment market has been impacted. Analysts report lower machine activity and an increase in equipment age within the average fleet. With contractors facing delays in the delivery of new construction equipment, owners are holding onto existing equipment. Disruptions at manufacturing facilities, like the recent John Deere strike, will further impact potential inventory issues.

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¹ Monthly Construction Spending, August 2021, Released by US Census Bureau October 1, 2021