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Now that the Democrats have control of the House, will congressional leaders and President Donald Trump get to work on a plan to rebuild the nation’s infrastructure?
US Concrete CEO Bill Sandbrook hopes so. CNN Business spoke with Sandbrook twice in late 2016 after Trump was elected and once more in early 2017 after the inauguration.
Sandbrook voted for Trump. And at the time, he was optimistic that the President would make getting an infrastructure bill through Congress a priority. Nearly two years later and we’re still waiting.
And that’s hurt the stock of US Concrete (USCR), which initially went from about $50 a share right before Election Day 2016 to a high of more than $85 a little more than a year later. Shares have since tumbled to around $35.
Democrats controlling House may boost chances of infrastructure bill
But Sandbrook said he’s feeling good again, adding that people within the Trump administration and both Democrats and Republicans in Congress think infrastructure will be a hot topic in the coming months.
“I am encouraged by what I am hearing so far from the administration, Nancy Pelosi and other Democrats as well as Republican leaders in the Senate like Mitch McConnell,” Sandbrook recently told CNN Business.
“I’m more optimistic now than I would have been with a Republican House,” he added.
Still, the lack of a big splashy infrastructure deal so far has hurt shares of many construction companies that were expected to be big winners of any legislation that led to more spending on fixing bridges, tunnels and highways.
US Concrete CEO Bill Sandbrook is optimistic that Democrats and Republicans will work together on an infrastructure bill.
US Concrete
After all, both President Trump and his challenger Hillary Clinton talked on the campaign trail about the need for more infrastructure investments.
That’s a big reason why shares of Martin Marietta (MLM), Vulcan Materials (VMC) and Eagle Materials (EXP) have experienced similar sharp runups and drops as US Concrete.
Sandbrook said he’s hopeful though that now that President Trump has cut taxes, he might be looking to move on to tackling an infrastructure bill. Of course, the key question is how to fund it.
Sandbrook thinks Republicans would likely balk at any possible Democratic plans to roll back some of the tax cuts on more affluent Americans. But he thinks the two parties could find a common ground with a gas tax, for example.
And he added that the recent wildfires in California, which some suspect may have been started by electrical power failures, are yet another example of why the United States must spend more on infrastructure beyond roads and bridges.
Infrastructure isn’t just roads and bridges
Even if Congress and President Trump are unable to make headway on an infrastructure bill between now and the 2020 general election, Sandbrook is still hopeful that there will be a lot of demand for concrete and other building supplies.
He said that less than 20% of his company’s overall sales are tied to infrastructure spending. The remainder is dedicated to things like office buildings, apartments and corporate data centers.
San Francisco is one of the company’s biggest markets and the company spends a lot on making earthquake-resistant concrete.
And Sandbrook is even optimistic that it can get a boost from Amazon’s (AMZN) plans to build new headquarters in New York and outside Washington.
“Tech companies are spending so much money,” he said. “And now we have the wind at our back because of Amazon’s Long Island City and Crystal City plans. Both are surrounded by US Concrete plants. It couldn’t be any better for us.”
When will the market start to agree with that assessment though? That remains to be seen. But Sandbrook remains confident.
“investors were too optimistic in 2016 but they are too bearish now,” he said. “Sentiment about a pullback is overdone. Our backlogs are strong. We’re not seeing a slowdown in 2019.’
