Last year, the global construction equipment market was estimated to be sized at around $145.5 billion USD, but if President-elect Donald Trump has anything to do with it, that number may be on the rise.
Back on the campaign trail, Trump promised to spend $1 trillion within the next 10 years on a variety of infrastructure projects if elected. While that number may seem extreme, financial analysts believe this promise can lead to the approval of a spending bill already sitting in Congress.
“The GOP Congress is likely to work with Trump to pass a budget reconciliation bill that includes major tax and health-care changes, and the president-elect is probably going to want an infrastructure component as well,” said Loren Smith at Capital Alpha Partners LLC, a Washington, D.C.-based consultancy to the Wall Street Journal.
Since his win was announced, construction stocks have soared to new heights. Concrete, sand, and gravel suppliers Vulcan Materials Co. and Martin Marietta Materials Inc. grew to 10% and 12% respectively, while companies Manitowoc Co. and Terex Corp, which both manufacture construction equipment, increased 15% from the week before.
Trump has explained that he would develop a system of tax credits that will finance much-needed upgrades to roads, bridges, and airports through a partnership with public and private construction businesses.
While establishing these relationships can take a good chunk of time, financial analysts believe the long-term financial gain will be significant. As of right now, infrastructure work accounts for $150 billion going back into the U.S. economy. Trump claims that his suggested infrastructure program can increase that number 60%.
However, Trump hasn’t released any details on what projects he plans to create while in office. The only specific idea he identified is building the controversial border wall with Mexico. But if that plan ever got off the ground, the materials would come from an international company instead of a domestic partnership.
“If the wall were to be built, then we would of course be prepared to supply building materials for it,” said a spokesman for Germany-based HeidelbergCement AG.