Construction Industry Growth Trends Driving Infrastructure Investment in 2018 and Beyond

The construction industry has experienced a notable upswing in activity, with market indicators pointing toward sustained expansion across multiple infrastructure sectors. Understanding the forces behind this growth is essential for contractors, project managers, and industry stakeholders who need to plan ahead and allocate resources effectively. This article examines the key trends shaping construction industry growth in 2018, from transportation construction activity to state-level funding initiatives and the federal policy landscape. For additional context on regional market dynamics, the discussion of reasons behind the growth of UAE construction industry offers a useful comparative perspective on how different markets respond to infrastructure investment.

Transportation Construction Activity Surges Across Key Sectors

Total transportation construction activity in the United States reached impressive levels in 2018, reflecting a broad-based recovery across multiple infrastructure categories. According to data from the American Road and Transportation Builders Association (ARTBA), total transportation construction activity year-to-date rose by 5 percent compared to the same period in 2017, reaching $47.8 billion. This uptick signals that demand for infrastructure work continues to strengthen, driven by a combination of economic growth, deferred maintenance needs, and increased state-level investment. As noted in the 2018 analysis of trending growth in construction industry, the pace of activity suggests that by year-end the sector could see $136.5 billion in total work completed.

Highway Construction Holds Steady

Highway construction has remained a cornerstone of the transportation construction market. Growth for highway construction alone was projected to reach 2 to 3 percent for the full year. While this may appear modest compared to some other sectors, the sheer scale of highway work means that even single-digit percentage increases translate into billions of dollars in additional activity. Contractors working in this space have benefited from consistent state Department of Transportation lettings and a steady pipeline of preservation and rehabilitation projects.

Bridge Construction Faces Headwinds

Bridge construction experienced a contraction in 2018, declining by approximately 8 percent compared to 2017 levels. This decrease, amounting to roughly $2.8 billion, reflects the cyclical nature of large infrastructure projects and the timing of major federal funding allocations. Several factors contributed to this decline:

• Completion of several major bridge projects that had been funded under earlier transportation bills
• Uncertainty around future federal cost-sharing mechanisms for bridge replacement programs
• Delays in state-level bridge inspection cycles feeding into the project pipeline
• Competition for skilled labor and materials that pushed some bridge projects into later bidding cycles

Despite the short-term dip, the long-term outlook for bridge construction remains positive given the well-documented backlog of structurally deficient bridges across the country. The American Society of Civil Engineers continues to highlight bridge infrastructure as a critical funding priority.

Airport Construction Takes Off

The standout performer in the transportation construction sector was airport construction, which posted extraordinary growth of more than 64 percent in 2018. This surge is driven by several converging factors:

• Record passenger volumes requiring expanded terminal capacity and upgraded facilities
• Federal Aviation Administration grant programs providing dedicated funding for airport improvement projects
• Increased passenger facility charges that give airports more local revenue for capital programs
• Private investment in airport concessions, parking structures, and ground transportation facilities

The airport construction boom has created significant opportunities for both general contractors and specialty subcontractors, particularly those with experience in aviation-related concrete and steel work. This segment is expected to remain a bright spot in the construction market for the foreseeable future.

State-Level Funding Initiatives Fill the Federal Void

With the absence of a comprehensive federal infrastructure bill, states have taken the lead in funding transportation construction projects. This grassroots approach to infrastructure investment has produced a remarkable wave of legislative activity. In 2018 alone, 215 transportation-related funding bills were introduced across 39 different states. This surge in state-level action reflects growing recognition that waiting for federal action is not a viable strategy for addressing critical infrastructure needs. The construction equipment rental industry growth opportunities that have emerged from this increased activity demonstrate how state funding creates ripple effects throughout the construction supply chain.

Ballot Measures and Voter Support

In 2017, voters approved $4.25 billion in transportation funding initiatives at the ballot box, signaling strong public support for infrastructure investment even when it involves tax increases or bond measures. The 2018 election cycle showed even greater momentum, with more than 100 ballot measures related to transportation funding in the works. This level of voter engagement represents a significant shift from previous decades, when transportation funding measures often struggled to gain approval.

Common types of transportation ballot measures include:

1. Local option sales tax increases dedicated to transportation projects
2. General obligation bonds for road and bridge improvements
3. Property tax levies designated for transit and highway maintenance
4. Fuel tax increases at the county or state level

State Funding Mechanisms in Practice

States have employed a diverse range of funding mechanisms to support transportation construction. The following table summarizes the most common approaches and their relative adoption across states:

The diversity of these approaches reflects each state’s unique political and fiscal environment. Some states have successfully combined multiple funding sources to create robust, diversified transportation programs that can weather economic fluctuations.

The Highway Trust Fund Challenge and the Path to 2020

While 2018 brought welcome growth, the shadow of the Highway Trust Fund crisis looms over the industry. The two-year budget agreement passed earlier in 2018 increased infrastructure spending by $5.2 billion per year, and the FY18 Omnibus Appropriations Bill raised total federal infrastructure spending by $7 billion in the asphalt pavement market alone, representing a 15 percent increase. However, these measures are temporary stopgaps rather than permanent solutions. Industry leaders attending construction conferences that drive professional growth and industry innovation have consistently identified long-term highway funding as the single most important policy issue facing the sector.

ARTBA executive vice president of advocacy David Baurer has warned that without a replacement for the two-year budget agreement, the Highway Trust Fund will face an immediate solvency crisis in 2020. The numbers are stark: to maintain current highway spending levels beyond 2020, Congress will need to find an additional $93 billion to write a five-year surface transportation bill, or $115 billion for a six-year bill. As documented in the construction industry 2013 state of the industry report, the challenge of maintaining sustainable funding for infrastructure has been a recurring theme for the better part of a decade.

The Shuster Infrastructure Proposal

Representative Bill Shuster, then chairman of the Transportation and Infrastructure Committee, released an infrastructure plan designed to generate $284 billion over a ten-year period. The proposal included several controversial but potentially effective funding measures:

• A 15-cent increase in the federal gas tax, the first such increase in decades
• An electric vehicle battery tax to ensure that EV owners contribute to road funding
• A 4.3-cent tax on commuter train tickets
• A bicycle tire tax to capture revenue from non-motorized road users
• A vehicle miles traveled pilot program to test distance-based road user charging

Baurer noted that the Shuster proposal was designed to support growth while addressing the immediate insolvency crisis facing the Highway Trust Fund. He acknowledged that raising the gas tax is not a sustainable long-term solution, but argued that it represents a necessary interim step. The ultimate goal is to identify a durable, long-term funding mechanism that can support infrastructure investment for decades to come.

The Bipartisan Opportunity

Infrastructure investment remains one of the few genuinely bipartisan issues in Washington. Both parties have expressed support for increased infrastructure spending, and the public consistently ranks infrastructure improvement as a high priority. However, disagreement over how to pay for it has prevented meaningful progress. The 2018 growth in construction activity has given the industry a temporary reprieve, but the funding cliff approaching in 2020 means that contractors cannot afford to be complacent.

Strategies for Sustaining Growth in Construction Markets

Given the positive momentum in 2018 and the policy challenges on the horizon, construction firms need to adopt strategic approaches that position them for continued success regardless of federal funding fluctuations. The growth seen this year should not be taken for granted, and proactive planning is essential.

Diversifying Project Portfolios

Contractors who rely too heavily on a single market segment are vulnerable to sector-specific downturns. The contrasting performance of bridge construction (down 8 percent) and airport construction (up 64 percent) in 2018 illustrates the importance of diversification. Firms that can pivot between highway, bridge, airport, and private-sector work are better positioned to weather market volatility.

Engaging with State and Local Markets

With 39 states actively pursuing transportation funding legislation, the state-level market is where much of the action will be. Contractors should consider:

• Building relationships with state DOT procurement offices in multiple states
• Tracking state-level ballot measures to anticipate where new funding will become available
• Developing pre-qualification credentials for multiple state highway programs
• Partnering with local subcontractors who have established state-level connections

Investing in Technology and Efficiency

As margins tighten and competition intensifies, the contractors who thrive will be those who leverage technology to improve productivity. Investments in construction management software, automated machine guidance, and advanced materials can provide meaningful competitive advantages. These technologies also help firms deliver projects faster and with higher quality, which strengthens their position when bidding for both public and private work.

The construction industry stands at a crossroads. The growth evident in 2018 demonstrates the strong underlying demand for infrastructure improvements, but the funding mechanisms needed to sustain this momentum remain uncertain. By understanding the market dynamics at play from state-level initiatives to federal policy debates and by adopting strategic approaches to diversification and efficiency, construction firms can position themselves to succeed regardless of what the next policy cycle brings. For a broader perspective on adapting to shifting market conditions, the analysis of embracing change in construction through innovation and improvement provides actionable insights for forward-looking contractors.