How Government Funding Might Affect the Steel Construction Market

As everyone knows, the structural steel construction market has been affected adversely by the recession and subsequent slow economic recovery.  And the introduction of–or the reduction of–government funding will undoubtedly affect this industry.  But which way?  The answer is of importance to those of us who work with steel including metal bending companies like ours that specialize in curving steel for construction.

According to the American Institute of Steel Construction (AISC), “the United States structural steel industry supplied fabricated and erected structural steel framing for over 8,000 buildings and bridges in 2012, down substantially from a peak of nearly 20,000 in 2006 and 2007.”  The structural steel fabricators who provide the steel framework for buildings are suffering from this depressed market.  Consequently, specialty subcontractors such as Bender/Rollers are likely to experience a comparable reduction in business.  As a percentage of the construction market, however, steel is maintaining its dominant share (53%) over alternate materials like its closest rival, concrete (26%).  AISC anticipates that the industry will expand marginally during 2013.

If we drill down into where the money is being spent, we find that much of the new construction is occurring in hospitals, schools, and municipal buildings.  These buildings are often supported at least partially, if not entirely, by federal, state and local funding.  Hence, any disruption to that funding will adversely affect these markets.  Bridges and transportation projects depend to a great extent on government funding.  The majority of these projects is federally funded and requires states to match a certain percentage of federal funds.

According to an October 2013 report by AISC, Structural Steel: An Industry Overview, there will not be a significant increase in building construction until three things occur:  1. Credit improves, 2. Employment returns to pre-recession levels, and 3. GDP growth rates begin to exceed 3%.

Government spending on construction is undoubtedly a contributor to the amount of steel construction in the United States.  But some economists argue that excessive government spending and regulation have put a damper on the recovery which will continue to depress the economy including the market for steel construction–whether funded by government or private investment.  What do you think?


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