The Infrastructure Investment and Jobs Act (IIJA), signed into law by President Joe Biden on November 15, represents a unique opportunity for the US construction industry. Also known as the Bipartisan Infrastructure Bill, the $1.2 trillion IIJA earmarks $550 billion in federal spending over the next five years for projects ranging from bridges and roads to broadband, water, and energy systems.

While construction material manufacturers, project developers, and EPCs will undoubtedly benefit from this historic investment, the IIJA will also create unique challenges. The stakes — and the rewards — for these stakeholders are very high.

Smooth Sailing or Trouble on the Horizon?

Along with traditional projects (roads, rail, and airport modernization), the IIJA will see an unprecedented expansion of high-speed internet and clean energy infrastructure. Manufacturers supplying materials and services for these initiatives will need to overcome several obstacles to thrive in this fast-paced environment, including:

Supply Chain Disruptions. IIJA projects may worsen already critical supply challenges. Credit agency Fitch Ratings states that “supply constraints are limiting the pace of [the current] recovery and resulting in higher prices.” And, according to Fitch, “materials and components for construction costs increased at a double-digit year-over-year rate since March and rose 19% in August.”

Ongoing Labor Shortages. Manufacturers will need to add skilled workers to meet the increased demand created by IIJA initiatives. However, a study by Deloitte and the Manufacturing Institute found companies are having significant difficulties filling almost 500,000 open positions. Employers reported that it was 36% harder to find talent than in 2018.

Innovation and Competition. Many IIJA ventures will require leading-edge technology, and manufacturers will need to develop innovative solutions to meet those requirements. At the same time, providers should expect fierce competition for IIJA projects and must find ways to cut costs, streamline processes, and create unique value-add for developers and contractors.

Scale and Speed. To meet demand, manufacturers may need to scale operations dramatically. That could mean hiring more staff, increasing production facilities, and expanding supply chains. Speed will also be critical — whether it’s bringing products to market earlier, providing more responsive customer service, or offering expedited product delivery options.

While these challenges are not new for most manufacturers, given the scope and relative speed of IIJA initiatives, success will depend on excellent planning and near-flawless execution.

Product Developers — Choose Your Manufacturer Partners Carefully

As IIJA projects roll out, developers and engineering, procurement, and construction contractors (EPCs) will face many of the same issues as material manufacturers. Their challenges will be more acute in some ways, as labor shortages, delivery delays, and quality issues can all impact already-thin margins and demanding project schedules.

Carefully choosing suppliers will be a critical success factor for developers and EPCs. At Kris-Tech, we’re focused on refining and evolving our operations to help our customers successfully (and profitably) navigate upcoming IIJA infrastructure projects. Here are our top recommendations to our customers:

Consider industry leaders that can scale.  Choose manufacturers with sufficient stock or production capabilities to meet your requirements.  Product availability and lead times can mean the difference between meeting your margin targets or incurring liquid damages due to delays.

Look for manufacturing partners with robust supply chains. Investigate where your supplier sources materials and manufacturers their products. Companies that use US materials and manufacture in America are typically less subject to supply chain disruptions. Choosing domestic suppliers and products may also be advantageous when bidding on IIJA-funded projects.

Insist on a track record of quality. Manufacturers should conduct ongoing, documented testing of their products and materials. Products should conform to established industry standards and hold applicable certifications.

Seek out innovation. Does your manufacturer partner offer solutions that ‘give you an edge?’ Can those solutions lower your labor costs or reduce project completion times?

Expect world-class customer service. Receiving timely, accurate information and extraordinary service are just the beginning. Minimal product lead times, flexible packaging, and expedited delivery options can help keep your projects on time and under budget.

Making the Most of a Once-in-a-Generation Opportunity

The infrastructure projects that will result from the Bipartisan Infrastructure Bill represent a unique opportunity for construction material manufacturers, project developers, and EPCs. To ensure success, manufacturers will need to address operational challenges (e.g., supply chain disruptions and labor shortages), scale production, and bring innovative solutions to market.

Project developers and EPCs should seek out and partner with manufacturers that can demonstrate they’re meeting these challenges. Together, they can enjoy a profitable, growing business while helping to rebuild America’s infrastructure.

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