Horizon Newsletter • July 29, 2024
ARTBA U.S. Highway & Bridge Construction Update at NAPA Midyear Meeting

The XBE team attended the NAPA Midyear Meeting in Brooklyn last week. It was wonderful to see many XBE community members there.

The meeting mainly discussed familiar topics: sustainability, workforce development, safety, and funding.

Regarding funding, Josh Hurwitz from the American Road & Transportation Builders Association (ARTBA) gave an excellent "U.S. Highway & Bridge Construction Update" presentation (download here). He also announced that ARTBA has partnered with NAPA to produce State Fact Sheets (see slide 30 for an example) that will be released soon.

His presentation is important for all XBE customers, not just asphalt contractors. I recommend you review it closely.

In particular, I noted the following key points:

  1. Highway-related investment is up dramatically. New capital funding in state DOT budgets is up nearly 40% from 2021 - 2024.
  2. Post-IIJA funding levels are uncertain. There's hope that current levels are the new baseline, but that is not at all assured.
  3. Bid prices have risen much more than material input pricing. This is due to material price inflation risk aversion and supply/demand imbalance.

None of us have a crystal ball, but it appears there is more downside than upside risk as it relates to demand (because of IIJA's timeline and general concerns regarding inflation) and pricing (as supply-demand balance returns or worse and inflation risk estimates fall) in the next five years. The timing of this risk varies by market, but most will feel the pressure within three years.

In order to sustain current levels of profitability, most contractors will need to improve their operational efficiency as they won't be able to count on demand and price increases.

Thankfully, XBE provides the Playbook and the platform to make that happen. If your market isn't yet feeling demand or pricing pressure, now is a good time to get ahead of those challenges by creating an operational efficiency Game Plan. If you are already feeling that pressure, the second best time is now.

The XBE Customer Success team is available to help develop your Game Plan to leverage the broad and deep capabilities of XBE. Please don't hesitate to take full advantage.

As always, thanks to all XBE customers for your continued partnership.

Regards,

Sean Devine
Founder & CEO, XBE