It’s been one year since Donald Trump was elected President of the United States.
Even before he stepped foot in the Oval Office, it was clear a Trump administration would have significant implications for the construction industry. During his campaign, the then-candidate built part of his platform around tax reform and heavy infrastructure investment, while touting the need for significant regulatory rollbacks.
Industry leaders, energized by the real estate mogul’s ties to their base, hoped a Trump presidency would mean a new era for construction.
Early on in his term, the president was able to turn some legislative wheels, making good on his promises to cut through Obama-era red tape. Still, Trump’s unwillingness to hand down details on his proposed $1 trillion infrastructure plan has deflated some industry observers’ optimism in a near-term plan for such investment.
As the president closes out his first year in office, we take a look back at some of the industry expectations that followed Trump’s election last November to see what has changed and what may be still to come in the remainder of his term.
Rebuilding the nation’s public works
Since the early days of his campaign, infrastructure had been chief among the issues that would guide Trump’s eventual path to the White House.
Shortly before the election, Trump’s campaign announced its ambitious $1 trillion infrastructure plan. That plan, though light on specifics, initially was expected to be funded primarily through private investment. An initial budget proposal floated by the administration called for $200 billion of direct spending spread throughout a decade. The move, which would lift the cap on private activity bonds, was then expected to entice private investors to kick in the proposed $1 trillion worth of investments in revenue-generating projects like toll roads, airports and utilities.
Further details about the proposal have been slow in coming, offering little in the way of concrete answers since Trump took office in January. Industry observers caught a glimpse into the administration’s priorities for the massive spend when it released its list of 50 key “emergency and national security” infrastructure projects.
The list — valued at more than $137 billion — was part of an executive order that quickly gained industry support for its aim to streamline and expedite environmental reviews on those “high-priority” projects. On that list were projects including the troubled Boston Green Line light-rail extension, Maryland’s $5.6 billion Purple Line and the $2.1 billion Gordie Howe International Bridge, that were far enough along in the design and engineering phases to be “shovel ready” and that would be direct-job creators.
The president, however, walked his promise to use private dollars on public infrastructure in late September, calling public-private partnerships (P3s) “more trouble than they’re worth.”
While the president could still ultimately decide to use P3s to facilitate his big infrastructure plans, use of the delivery method will likely come with some growing pains, according to Lee Weintraub, chair of the public private partnership practice at Florida-based Becker & Poliakoff.
“What we’ve seen at the state level [with P3s] has been a big learning curve,” he said. “There’s a lot more education needed to ramp up those efforts.”
Brian Turmail, senior executive director of public affairs for the Associated General Contractors of America, agrees. “We’ve seen the administration go from saying they’ll fully use P3s [for infrastructure] to they won’t use P3s,” he said. “We’re working with the administration to help them understand that while P3s can be helpful, they’re not a panacea. We have yet to see a P3 generate that kind of revenue.”
Cutting the red tape
For years, many in the industry have cited strict regulatory standards as a burden on their ability to do business.
Trump played into those concerns with his campaign promise to slash regulations and give the construction industry a boost, particularly on the home building side. Last August, Trump told the National Association of Home Builders’ Board of Directors that he intended to eliminate any standards that “kill jobs,” decrease businesses’ income taxes to 15%, remove government officials who have implemented regulations that stunted job growth and appoint Supreme Court justices who would benefit the industry at-large.
In his first few months in office, Trump managed to uphold some of those promises. He has made moves or succeeded in cancelling 860 Obama-era rules and regulations.
“Some of the old regulations that were coming out the last year of the Obama administration that would have impacted a lot of our members have died on the vine before they’ve gone into effect,” according to Ben Brubeck, vice president of regulatory, labor and state affairs for the Associated Builders and Contractors.
Some, such as the administration’s plans to rescind contentious issues like overtime expansion and the persuader rule, in addition to the successful rollback of the “blacklisting” rule, have lifted confidence for those who had hoped to see the industry’s regulatory burden lightened.
Perhaps in one of his most ambitious moves so far, Trump signed an executive order in August to fast-track the infrastructure approvals process. The order, issued in a statement from his Trump Tower residence in New York City, aims to cut environmental reviews from 10 years to two for “new, major” infrastructure projects.
Although the industry has showed general enthusiasm toward the rule, Trump’s move isn’t the first to try finding a better solution to the often lengthy and involved process. Some question the order’s ability to stand up to the entrenched complexities of the permitting process.
While tax reform is still looming above the administration and the GOP-led Congress, Trump did also manage to secure the appointment of Supreme Court Justice Neil Gorsuch. Gorsuch, whose mother was the first woman to head up the EPA, was favored by NAHB leadership who expect the justice to come down favorably on upcoming land use decisions.
Since then, the president has said Mexico would pay for its construction — a claim the Mexican government has opposed adamantly — and pushed forward with the development of eight border wall prototypes at a testing site in San Diego. Those prototypes, now complete, form a row just steps from the U.S. border with Tijuana, Mexico.
In August, Caddell Construction, Montgomery, AL; Fisher Sand & Gravel/DBA Fisher Industries, in Tempe, AZ; Texas Sterling Construction, in Houston, TX; and W.G. Yates & Sons Construction, in Philadelphia, MS, were chosen from a pool of more than 200 companies to build the 30-foot-tall concrete wall segments. Less than two weeks later, Caddell and Yates, along with KWR Construction, in Sierra Vista, AZ, and ELTA North America, in Annapolis Junction, MD, were tapped to build the wall’s non-concrete prototypes.
Taken together, each prototype reportedly cost up to $500,000 in federal funds. While the figure is fairly steep, that number pales in comparison to estimates of what such a wall could cost.
The Department of Homeland Security has placed its estimates around $22 billion for the wall’s construction. The Trump administration, however, hasn’t laid a clear path for funding such a proposal, requesting only $1.6 billion for the project in its 2018 budget proposal — a significant drop from a $2.6 billion request made in March for border security.
In October, the House Homeland Security Committee authorized the Border Security for America Act, including $10 billion for the wall’s construction. While the bill marked the first official proposal to approach Trump’s promises to build a border wall, the Republican-driven measure still falls far short of DHS’ cost estimates. More still, the legislation will likely be unable to secure the 60 votes necessary to clear the Senate.
In the meantime, U.S. Customs and Border Patrol has said it will begin construction on a 3-mile section of the wall along the Rio Grande River, cutting through the Santa Ana National Wildlife Refuge.
The next three years
Although it’s unclear the extent to which Trump’s presidency will impact the industry in the months ahead, observers are certain there will be changes to come.
Infrastructure, however it’s financed, will likely be the administration’s next big goal following healthcare and tax reform — and companies already are planning for it. Earlier this year, global engineering and construction giant AECOM announced plans to hire 3,000 workers to back its North American infrastructure operations.
The initiative followed shortly after the company’s decision to a create a federal contracting division. AECOM representatives said the hiring spree came in response to the United States’ renewed focus on fixing its public assets, though it’s likely the move was also responding to Trump’s $1 trillion infrastructure spend.
The administration will also likely press forward with pending regulatory challenges, as some industry groups push back against proposed enforcement standards while others work to see those rules scrapped entirely.
Where the border wall stands is largely uncertain.
“For the contractors that have been selected to build the prototypes, they appreciate the vote of confidence,” Turmail said. “But we’re still a long way from this being a reality.”