The collapse of the Minneapolis bridge spanning the Mississippi River last week buoyed a number of so-called "infrastructure stocks." Not from any glee, of course, at the loss of life, but because the tragedy highlighted the deterioration of the country's bridges and roadways, and that might spur greater spending.
Unfortunately, we've had these tragic collapses in the past and despite initial media frenzy, things seem to go back to business as usual. In 1967, a bridge over the Ohio River fell, killing 46 people. In 1983, a section of the I-95 bridge spanning the Mianus River in Connecticut collapsed, killing three people. In fact, about 1,500 bridges have collapsed between 1966 and 2005, according to the Texas Transportation Institute. It was only two years ago that the American Society of Civil Engineers gave the country a "D" after assessing 12 categories of infrastructure, including highways, wastewater treatment, and railroads.
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This most recent bridge collapse comes on the heels of a 100-year-old steam pipe rupturing in New York City, killing one person and causing millions of dollars in lost business. And of course, the 800-pound gorilla in the room: the common knowledge that the infrastructure in place in Louisiana at the time of Hurricane Katrina was woefully inadequate, to put it mildly.
Perhaps there will be a greater consensus built this time that the backbone of the country needs bracing.
Yet as we all know, politicians are slow to part with money unless they see something in it for themselves. Self-preservation may be the key to having them act this time around.
The Mississippi River bridge that collapsed had been rated as "structurally deficient" by state inspectors as far back as 1990. In fact, according to the ASCE, more than 70,000 bridges in the U.S. carry that designation. Interestingly, bridges received one of the highest grades from the engineering report card with a "C."
Driving around the New York metropolitan area as I do, I'm often stuck in traffic and left with little recourse but to sit and look at the bridges, tunnels, and roadways that I'm traveling on. More often than not, I'm left shuddering as I see the cracking walls, spalling cement, and rusting bolts that hold the structures together.
Although the construction efforts that went into creating them are awe-inspiring in themselves, it also brings to mind the fact that much of the nation's infrastructure was built more than 40 or 50 years ago. The funds needed to finance the repair projects are woefully lacking. According to the government, the federal Highway Trust Fund will have a $4 billion deficit come 2009.
Whether the money is ultimately to be found by increasing the gas tax (transportation projects are currently financed by an $0.185 per-gallon gas tax) or through privatization projects or other means, the need is certainly great. Yet, as noted previously, government moves at a glacial pace, and while Mueller Water, Fluor, URS
The stocks may rise now on the hopes of such largesse being doled out in the future, but the near term will rest more on operations from projects already in place. Buying these stocks is definitely an investment in the future.
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