2021 State of the Road Building Industry: Infrastructure Investment at a Crossroads

The road building industry entered 2021 at a crossroads shaped by the unprecedented challenges of 2020. The COVID-19 pandemic forced project cancellations, layoffs, and sweeping safety protocol changes across the construction sector. Yet as the nation looked toward economic recovery, a bipartisan consensus emerged: America’s crumbling infrastructure could no longer wait. This article examines the state of the road building industry heading into 2021, drawing on expert analysis from industry leaders on funding, workforce, technology, and sustainability. For a closer look at the machinery driving these projects, see our report on Highway and Bridge Construction Equipment Specialized Machinery for road building and infrastructure development.

The Push for a Multi-Year Highway Bill

The most pressing issue facing the road building industry in 2021 was the expiration of the Fixing America’s Surface Transportation (FAST) Act, which was extended for only one year with an additional $13.6 billion infusion into the Highway Trust Fund. Industry experts across the board agreed that this stopgap approach was insufficient for the long-term health of the nation’s transportation network.

Why a Multi-Year Bill Matters

Audrey Copeland, president and CEO of the National Asphalt Pavement Association (NAPA), emphasized that a multi-year highway bill is essential to maintain and improve highway infrastructure, avoid project delays, and provide proper investment for Highway Trust Fund solvency. Without long-term funding certainty, state departments of transportation cannot commit to major capital projects that require years of planning and execution.

Ed Mortimer, vice president of Transportation Infrastructure at the U.S. Chamber of Commerce, noted that while the one-year extension prevented an interruption in federal highway and transit funding, it did nothing to address the underlying revenue shortfall. The Chamber launched its “Build by the Fourth of July” campaign, urging Congress to enact a long-term, sustainably funded infrastructure package.

State-Level Impacts of Funding Uncertainty

Alison Premo-Black, chief economist at the American Road and Transportation Builders Association (ARTBA), pointed to the real consequences of federal uncertainty. States have reported project delays or cancellations totaling nearly $12 billion across at least 18 states and 25 transportation authorities. Federal investment accounts for an average of 50 percent of state transportation program capital outlays, which include construction work, right-of-way purchases, and planning activities.

Bob Huitt of the Asphalt Emulsion Manufacturers Association and Larry Tomkins of the International Slurry Surfacing Association warned that the one-year extension meant states would not be ambitious with large, long-term infrastructure projects given the uncertainty of future funding beyond the next year.

Funding Mechanisms: Beyond the Gas Tax

One of the central debates in the road building industry revolves around how to sustainably fund infrastructure. The federal gas tax, which has not been raised since 1993, has lost purchasing power to inflation, while more fuel-efficient and electric vehicles further erode the revenue base. Industry experts offered several pathways forward as discussed in our article on the Road to Management Excellence Building a Stronger approach to construction operations.

Short-Term Solutions

1. Gas tax adjustment: The Chamber of Commerce advocated for a five-cent-per-year increase over five years, which would generate $400 billion over a decade for highway, bridge, and transit investment.
2. General fund transfers: Congress has been patching the Highway Trust Fund shortfall with general fund revenue transfers, though this is not a sustainable long-term solution.
3. COVID-19 relief funding: NAPA and other industry groups pushed for emergency funding to state DOTs to offset pandemic-related revenue losses from suppressed gas tax collections.

Long-Term Revenue Strategies

Anirban Basu, chief economist for Associated Builders and Contractors and owner of Sage Policy Group, argued that Congress must engage in a multi-pronged approach, both raising the gas tax and finding new mechanisms to finance infrastructure upgrades. These can range from user fees to a federal retail tax that would not only raise more for capital expenditures but also induce more Americans to save for retirement.

Vehicle Miles Traveled (VMT) Fees

Both Copeland and Mortimer highlighted Vehicle Miles Traveled (VMT) fees as a promising long-term replacement for the gas tax. Mortimer noted that the Chamber is following VMT pilot programs in over 10 states and believes the mechanism could be ready at the federal level within 10 years. A VMT system would maintain the user-based funding concept while ensuring that electric and alternative-fuel vehicles also contribute to the Highway Trust Fund.

State-Level Innovation

Premo-Black observed that over the last decade, states have taken significant steps to diversify their revenue streams beyond the gas tax. Key innovations include:

• Motor vehicle registration and licensing fee increases
• Alternative vehicle fees for electric and hybrid cars
• Rental car fees and occupancy taxes
• Variable gas tax rate components now adopted by 22 states, where rates automatically adjust based on inflation or wholesale gasoline prices

These variable-rate mechanisms help states protect the purchasing power of their motor fuel tax revenue without requiring frequent legislative action.

Workforce Development and Skills Training

The construction industry’s chronic labor shortage was exacerbated but not created by the pandemic. Basu noted that construction had lost nearly 300,000 jobs on a year-over-year basis, and past experience suggested many of those workers would retire or find opportunities in other industries including e-commerce. However, the pandemic also created an unexpected opportunity: with unemployment elevated, more young people might consider the skilled trades as a viable career path. For strategies on building resilient operations, see Building a Strong Management Infrastructure for Your Home building business.

Training and Recruitment Initiatives

Industry leaders identified several promising approaches to address the workforce gap:

• School partnerships: The Asphalt Pavement Association of Indiana partnered with the Future Farmers of America to create Ag2Asphalt Day, where producers, paving companies, and suppliers participated in career fairs and offered hands-on experiences with construction simulators.
• Virtual training platforms: Some states launched virtual certification programs that eliminate travel costs and time, allowing personnel to become certified without traveling to courses offered only in a few locations.
• Apprenticeship expansion: Basu emphasized that construction firms must expand the scale and scope of apprenticeship programs while marketing the industry more effectively to young people.
• National support networks: Copeland called for creating programs with schools, technical colleges, and universities to raise the profile of industry opportunities beyond those already employed in the asphalt pavement industry.

Making Construction “Cooler”

Basu offered a candid assessment: the industry needs to appear cooler to attract younger workers. This involves marketing to young people, expanding the use of cutting-edge technologies for both training and service delivery, and emphasizing the wages, benefits, and entrepreneurial opportunities that accompany the trades. Companies with robust training programs, Huitt and Tomkins noted, will create a long-term competitive advantage for attracting and retaining workers who create value.

Sustainability, Technology, and the Road Ahead

The road building industry faces transformational changes driven by sustainability imperatives and rapid technological adoption. The Biden administration’s focus on climate action, combined with pandemic-accelerated technology adoption, is reshaping how roads are designed, built, and maintained. Our piece on Building Smart Infrastructure explores how technology is enabling more resilient and efficient construction practices.

Sustainability and Carbon Reduction

Transportation vehicles are one of the largest sources of carbon emissions in the United States. With over 90 percent of America’s roads surfaced with asphalt, building and maintaining pavements in good condition plays a significant role in creating a low-carbon transportation network. Copeland noted that NAPA will work with the 117th Congress to reduce the carbon footprint of pavements through several approaches:

• Expanded use of proven technologies such as warm-mix asphalt and recycled materials
• Optimized design and construction practices
• Adequate funding to keep existing roads smooth through timely maintenance, rehabilitation, and reconstruction projects
• Research into plastics and recycling agents in asphalt mixtures through the National Center for Asphalt Technology (NCAT)

Technology Adoption Accelerated by the Pandemic

Basu observed that the pandemic would accelerate technology adoption, quoting Lenin’s famous line: “During some decades, nothing happens. And during certain weeks, decades happen.” The road building industry saw several technology trends accelerate significantly:

• E-ticketing: Digital ticketing for asphalt deliveries streamlined record-keeping and improved communication between contractors and owner agencies.
• Virtual certification: States began offering online training and certification programs that eliminated the travel burden associated with traditional in-person courses.
• Emerging training platforms: Virtual reality and simulation-based training emerged as tools to attract younger workers and improve skill development efficiency.

Political and Regulatory Outlook

The change in administration signaled both challenges and opportunities for the road building industry. Basu predicted a more expensive regulatory framework for oil, natural gas, and coal-related construction, but greater support for alternative energies including wind, solar, and battery technologies. Copeland noted that the Biden plan would push for expansions in union representation, collective bargaining, Davis-Bacon requirements, Project Labor Agreements, and Buy America provisions.

Despite political divisions, transportation remained one of the few genuinely bipartisan issues. Voters approved a record-high 94 percent of 335 state and local transportation funding measures across 18 states, including Arkansas, Michigan, Ohio, Texas, and Washington. This grassroots support, combined with industry advocacy and the September 30, 2021 FAST Act expiration deadline, created significant momentum for federal action on infrastructure.

Key Takeaways for Contractors

Industry experts offered practical advice for road building contractors preparing for the year ahead:

1. Stay involved in industry associations like NAPA that track news, provide resources, and offer direct access to subject matter experts who can help navigate changing specifications, funding, regulations, and technology.
2. Develop a vision for the future and fortify it with the right people and equipment. Network with non-competing companies focused on advancement.
3. Embrace technology adoption as a competitive differentiator, particularly in areas like e-ticketing, virtual training, and data-driven construction practices.
4. Invest in workforce development as a long-term competitive advantage. Companies with robust training programs will attract and retain workers more effectively.
5. Prepare for sustainability requirements by understanding emerging specifications for recycled materials, performance testing, and balanced mix design.

The road building industry enters 2021 with cautious optimism. The challenges of the past year have demonstrated the industry’s resilience and adaptability. With bipartisan support for infrastructure investment, a clear deadline for FAST Act reauthorization, and growing public demand for action, the conditions for meaningful progress on America’s infrastructure have rarely been more favorable. Contractors who prepare for these shifts will be best positioned to thrive in the years ahead.