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What an Aging Infrastructure Means for Businesses in the United States

(Photo: Hurricane Harvey on August 24, 2017. Credit: NASA Goddard Space Flight Center)

Modernizing the country’s aging infrastructure has been at the top of the American to-do list for years. At the same time, the US government only spends about 3% of GDP on this area.

This month the White House released a sweeping plan to rebuild roads and bridges nationwide: “Legislative Outline for Rebuilding Infrastructure in America.” But shortly afterward, President Trump told officials in Washington, “If you want it badly, you’re going to get it,” then added, “And if you don’t want it, that’s OK with me, too,” the Associated Press reported. He reiterated a focus on tax cuts, military spending, and regulation.

The Pressure Is On

Unsurprisingly, rebuilding infrastructure has widespread support among manufacturers and business groups. Mary Andringa, chair of the board for Vermeer Corp., told the US House Transportation and Infrastructure Committee last year that China spends more on infrastructure annually than North America and Western Europe combined. She added that private financing cannot replace the role of public funding, but should be pursued as a tool.

Achieving national infrastructure upgrades is likely to cost $3.6 trillion, according to a 2017 report by Veolia North America and the Wharton School’s Initiative for Global Environmental Leadership. They went on to detail how public-private partnerships could provide successful solutions to infrastructure needs.

Infrastructure is only going to become a more pressing issue as US-based corporations pursue bigger renewable energy targets. “With the phase-out of federal tax incentives and the continued need for additional transmission build-out, renewables will face challenges in the years ahead,” Sam Arons, senior lead of energy and infrastructure at Google, told Environmental Leader last fall.

Natural disasters also lay the problem bare. “As extreme weather hits metropolitan cities, like Hurricane Sandy in New York or Hurricane Harvey in Houston, issues caused from aging infrastructure are magnified,” Cameron Manners, CTO at the San Diego-based water and gas infrastructure firm Aquam, told Environmental Leader recently. “We see examples of this all around, from roof drains in residential communities, plumbing issues in commercial properties to inoperable pumps failing public transit.”

The Domino Effect

Take New York City as an example of a deteriorating infrastructure rife with corrosion put to the test. Hurricane Sandy caused flooding, massive water damage to the subway system, and closed transportation hubs for extended periods of time.

“Closure at these stations prevents thousands of people from working and traveling, costing millions of dollars in lost revenue for businesses near these stops,” Manners says. Employees lost wages. Tourists didn’t come. “Plainly, water damage and sewer overflows have a devastating economic impact on businesses as well as on the environment.”

Manners points to a water main break that flooded a baggage claim at JFK International Airport in January. CNN reported that water flowed into Terminal 4, soaking luggage, and forcing a partial evacuation of the terminal, where international travelers normally arrive. Dozens of flights were canceled and about 200 were delayed.

That likely cost the airport, airlines, and businesses millions of dollars, Manners says. “Lost revenue is a domino effect.”

Andringa’s testimony last year framed the effect from a manufacturing perspective. “If ports are clogged, trucks are delayed, power is down, or the internet has a lapse, productivity and customer service are impacted,” she said. “This is not just my story. Across the manufacturing sector, transportation logistics matter, and congestion — whether at a port or on a crowded highway — is waste that drives the consumer’s cost up like a hidden tax.”

Modernizing the Response

Outdated repair methods compound the problems, Manners argues. He says Aquam recently worked with a major retailer on replacing a couple hundred feet of sewer line that runs through the middle of the department store. Previously that would have involved jack hammers, saws cutting concrete, and a full dig potentially jeopardizing weeks of revenue.

Instead, Manners says Aquam used its unobtrusive technology to renew and rehab the pipes over the course of three nights, allowing business operations to continue as normal during the day.

“Buildings are constructed to stand for 100 years and infrastructure is designed to last only 25 years, creating a massive gap,” he says. “As society has changed and higher values are put on real estate values, the cost to re-pipe and replace increase.” In New York State alone, the conservative cost for rehabilitating the water infrastructure is $38.7 billion over the next 20 years.

Despite all the daunting challenges and soaring price tags, addressing the infrastructure represents an enormous opportunities. The Washington, DC-based consulting firm CG/LA Infrastructure released its 11th annual Strategic 100 Global Infrastructure Report this month, which features 100 infrastructure projects in development worldwide, representing over $644 billion in expected investment.

“All are expected to move forward and offer business opportunities in the next three to 12 months,” the firm says. “Regionally, North America topped the list with $231.2 billion in project opportunities.”

The 3rd Annual Environmental Leader & Energy Manager Conference takes place May 15 – 17, 2018 in Denver. Learn more here.

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