Transportation and Infrastructure Committee Ranking Member Sam Graves (R-MO) and Committee Republicans today heard from state, local, and industry stakeholders about how inflation is affecting their ability to plan and execute infrastructure improvements, and how issues with inflation, supply chain, energy instability, and workforce shortages are all exacerbating one another.
Committee Republicans convened a roundtable discussion on these issues this week.
“Just yesterday we saw the annual inflation rate reach 9.1 percent, the highest it’s been in four decades. That’s an increase of 550 percent in the two years since President Biden took office, which is simply staggering,” said Ranking Member Sam Graves. “Companies, states, and local governments are struggling with the cost of fuel, materials, equipment, and everything that goes into planning projects and building our infrastructure. Today’s discussion with stakeholders made it clear that these problems are multi-layered and feed into one another. And it will only get worse if we go into the recession that many economists are predicting. That’s why we need to stop the reckless federal spending, stop creating more regulatory barriers, and stop stifling domestic energy production. I appreciate those who participated today for sharing their perspectives on these important issues.”
Challenges and issues discussed by participants at today’s roundtable included:
Some states will not be able to deliver the number of projects they previously expected because of inflation, supply chain, and workforce issues. One state is seeing a 40-50% increase in costs for the top eight project construction materials (such as concrete and steel).
Because of these issues, it’s even more critical to address transportation bottlenecks and focus on roads, bridges, and other infrastructure that will help to more efficiently move goods. 13% of truck fuel is wasted just sitting in traffic and bottlenecks.
The inflation rates for construction materials, fuel, and other inputs (many of which are significantly higher than the Consumer Price Index) are making it difficult for some companies to remain competitive or even afloat.
One local government official noted five capital projects that have all experienced at least 100% cost increases over the original project budgets, which led to at least one being put on hold for the foreseeable future.
One construction company referred to three projects in Ohio they were very recently involved in. Inflation caused the company's bids for these projects to exceed the state’s estimates by 23 to 85%, and the state rejected the bids.
An all-of-the-above energy policy is necessary in order to help bring down prohibitive fuel costs and promote greater energy independence and stability.
Businesses in the construction industry face the dilemma of either passing along inflationary cost increases to consumers and customers or going out of business.
Because of inflation and workforce shortages, some companies simply don’t bid on some projects they otherwise would have, especially if they are multi-year projects. Inflation is resulting in changes to the bid process, with project prices now being determined at the time of delivery instead of at the time of the bid, and companies are shouldering all of the risk.
Regulatory burdens can have profound effects on construction, manufacturing, trucking, and other sectors. Manufacturers are closely monitoring 77 outstanding regulatory actions coming out of the Biden Administration, due to their potential impacts.
A lack of adequate, safe truck parking remains a critical issue in the supply chain and the transportation of goods. One panelist noted the negative impacts on productivity, because truckers spend an average 57 minutes out of their allowable hours of service per day looking for safe parking instead of transporting goods. Panelists also discussed the importance of removing barriers to entry in trucking to help ensure we have enough drivers to meet the needs of commerce.