How Infrastructure Impacts Business

Infrastructure is a framework of systems and facilities serving a city, state or country. Infrastructure includes roads, bridges, mass transit systems, energy, broadband, airports and seaports. A strong and healthy infrastructure not only makes it possible for Americans to enjoy an excellent quality of life; it’s also critical to the operation of every business.

To be effective, infrastructure requires continual maintenance and new construction. In 2020, the federal government spent $63 billion on infrastructure and granted an additional $83 billion in infrastructure funding to states. Typically half of federal transportation spending goes towards highways, and 22% is allocated to air transportation.​

Cities, counties and states are responsible for local road maintenance and construction. They pay for this through gasoline and license taxes, tolls, user fees, and user taxes, as well as occasional funding from the federal government.

This level of investment by the federal government, states and localities has been insufficient to maintain or modernize the system. America’s infrastructure receives a C- grade, according to the American Society of Civil Engineers (ASCE). The ASCE continues to advocate for increased investment in the infrastructure of the U.S., due to the deterioration of infrastructure over the past several decades, a growing population, and the need to put new infrastructure in place to support today’s transportation methods. The ASCE says that, by 2039, investing in our infrastructure at our current rate will lead to a loss of $10 trillion in our GDP, $2.4 trillion in exports, and more than three million jobs.

Every business in every industry is affected by infrastructure issues. Here are the challenges faced by businesses for different types of infrastructure.

Roads, highways, and bridges

Effective transportation on our roads, highways, and bridges is important to the smooth running of all parts of companies’ supply chains, as well as delivery of goods and services.

Here are some common ways failing infrastructure in this category affects businesses:

• Traffic congestion delays appointments and deliveries. Small, onsite service providers, such as plumbers, schedule fewer service calls, resulting in less revenue. Large businesses, like UPS, have delivery drivers waiting extra time, resulting in an annual cost of $114 million.
• Bridges and roads that are unsafe or closed for repairs require businesses to find workarounds to transport materials, which cost them time and money. This also has an effect on the workforce. Failing infrastructure makes commuting more expensive and time-consuming.
• Roads and bridges that can’t safely bear the weight of vehicles and machines also require businesses to develop alternate transportation routes, which costs them money and time.

Mass transit: buses, subways, and railroads

Inefficient public transit in America leads to longer travel times, as well as a slowdown in workers’ economic output. Given that pre-pandemic U.S. public transportation systems collectively carried 34 million passengers each weekday, such delays have a major negative impact on business revenue.

Airports and seaports

Airport infrastructure has not kept pace with the continuing demand for air travel. Many airports are at or exceeding their capacity, which causes congestion, delayed flights, and longer flight times. All of these issues affect productivity and revenues.

Seaport infrastructure affects all businesses in a supply chain, including suppliers, manufacturers, logistics companies, freight forwarders, and more. Improving port infrastructure leads to more timely deliveries, greater reliability, and less damage, all of which increase revenues and global competitiveness.

​ Electricity and water

Infrastructure in America provides the framework for generating, transmitting, and distributing electricity and water, as well as other types of energy. These are necessary for the function of all businesses.

When the electricity goes out, work often comes to a standstill. That can cost a business thousands or even millions of dollars based on unplanned downtime. Deteriorating water infrastructure leads to an increase in street flooding, shutdowns, and damage from storms. These increase production costs for businesses.

Broadband

Broadband Internet is reaching the point of becoming as essential as other types of infrastructure, such as electricity. The private sector has been responsible for creating this infrastructure, but there are parts of the U.S. that still do not have broadband, including rural areas and tribal lands. Providing this infrastructure will not only give all Americans access to the Internet, but it will also provide businesses with a larger audience for Internet-enabled products and services.

Political, financial, and public sentiment regarding infrastructure

The public and business community are in agreement that infrastructure is important and that more funding is needed to support America’s infrastructure needs. The sticking point is always about the money. Where will it come from?

In early January 2021, over 100 national and local organizations — led by the U.S. Chamber of Commerce and the Bipartisan Policy Center — launched the "Build by the Fourth of July" coalition, to advocate for a federal infrastructure bill.

On March 31, 2021, President Biden announced The American Jobs Plan. On June 24, 2021, Biden and a bipartisan group of 21 senators agreed to move forward with a series of infrastructure initiatives totaling $1.2 trillion. The legislation, which passed on November 5, 2021, provides funding to cover improvements to roads, highways, bridges, mass transit, ports, energy and communications.

The plan offers solutions to the issues brought to light by the ACSE, including:

• GDP will increase, as the improvements to infrastructure lead to more revenue and productivity for businesses
• Exports will increase, as infrastructure improvements reduce business costs and make U.S. products and services more competitively priced
• Jobs will be created to support these infrastructure initiatives, especially in these industries: materials (cement, concrete, and construction); construction equipment manufacturers; transportation (to deliver materials and equipment to construction sites); engineering and construction software and project management

Infrastructure is the foundation for the operation of every business in the United States. A strong infrastructure is critical to keeping Americans safe and prosperous.