Global Vantage – Building with Biden: The American construction industry post-TrumpJanuary 2021
On 20th January 2021, Joe Biden became the President of the United States. Antony Smith considers what the Biden administration could have in store for the American construction industry in our latest Global Vantage article.
From impeachment to insurrection, the Presidential election season has been fraught with controversy. With that mind, you could be forgiven for having missed out on some of the campaign promises made by the candidates over the past few months. As American politics enter a new chapter, we decided to take a step-back and consider what we know so far about the Biden administration’s plans for American construction and infrastructure over the next four years.
Perhaps the most significant construction-related item on the Biden-Harris ticket was the “Build Back Better” (“BBB”) plan, which is aimed at creating jobs and stimulating the domestic economy post-Covid. The BBB includes a raft of initiatives that look to take advantage of “American ingenuity to build a modern infrastructure and an equitable, clean energy future.” Amongst other things, this is set to involve widespread investment in sustainable infrastructure, including the provision of high-quality, zero emissions public transport in every American city that has 100,000 or more residents. In addition, there are plans to upgrade some 4 million buildings in an effort to make them more energy efficient, as well as ‘weatherising’ 2 million homes.
On paper, the ambitious plans proposed by the BBB certainly sound promising. The US has long-suffered from its infamously out-dated infrastructure, with the “Report Card for America’s Infrastructure”, published every 4 years by the American Society of Civil Engineers (“ASCE”), consistently handing-out low grades for the nation’s efforts. Indeed, the final report in the ACSE’s recent “Failure to Act” series estimates that failure to invest in American infrastructure could result in the loss of up to 3 million jobs by 2039. Against that backdrop, it is clearer than ever that radical action is needed to try and counter-act decades of underinvestment in the sector.
Yet, whilst Biden’s proposals give reason for hope, they could carry an “opportunity cost”. As has been widely publicised, Biden has indicated that under his Presidency the US will re-join the Paris Climate Accord, a promise backed-up by the support that he showed for green issues during his campaign. If this green-thumbed focus continues over the next four years, then it seems likely that related propositions such as an “enforcement mechanism” for regulating carbon emissions may also be introduced. In practice, this could mean levying a “carbon tax” or at the very least greater scrutiny over the sustainability of projects, including the type and provenance of materials used in construction. Whilst these measures no-doubt come with good intentions, the additional bureaucratic “red-tape” will almost inevitably increase development costs, presenting hurdles for contractors looking to profit from the “clean energy revolution”.
Aside from the BBB and the campaign’s focus on green policies, another important issue during this election cycle was immigration, which, despite playing a more ‘reserved’ role in public debate than it did in the 2016 Presidential election, remains a key issue for Americans. For the construction industry, immigration is particularly relevant in a labour context. In recent years, the domestic construction market has become increasingly reliant upon non-US citizens, particularly those entering the country from the southern border. Therefore, any tightening of immigration regulations could have major implications for the industry, leading to skill gaps and worker shortages on major projects. However, with Biden intent on modernising the American immigration system and reversing Trump policy in this area, the early signs are that there should be less cause for contractors to be concerned about this issue than under the previous administration.
To summarise, the plans put forward by President Biden for the modernisation of American infrastructure suggest that there is reason for optimism. The US has been in desperate need of federal action to stem the tide of deterioration for several decades, and now seems just as good a time as any to put concrete plans into action. Whilst Americans have heard these kinds of promises before, not least of all from President Trump, who less than 2 years ago touted plans for a US $1.5tn infrastructure investment that never came to fruition, the recent Senate runoffs in Georgia have cemented Democratic control over both branches of Congress, which should give Biden both the political and the social mandate necessary to push-on with his plans.Download PDF