Few subjects are more important to the future economic health of this country than infrastructure investment. There is near-unanimous consent in Washington on this point, but the amount of rhetoric pertaining to infrastructure investment in the U.S. seems to have waned a bit in recent weeks. I will use this temporary lull in the politically motivated noise as an opportunity to offer a brief analysis on why greater investment in infrastructure is good for the economy and good for the plastics industry.
Plastic is not typically considered to be an "infrastructure" material in the same way steel, aluminum, copper and concrete are. However, there are instances in which infrastructure-type products made from plastics (e.g. pipe for water or gas distribution) are gradually replacing products made from traditional materials, and this process may accelerate if the prices for traditional materials are pushed high enough due to any new tariffs. I do not expect the tariffs to become a significant, long-term factor for either our country or our industry, but I am not certain of this.
The issue with tariffs notwithstanding, an increase in spending for infrastructure projects will create greater demand for certain types of motor vehicles, safety equipment, hand tools and other sundry products that contain a large amount of plastics content. The volume of plastics products at worksites is steadily increasing — I always think of portable toilets for some reason — and the number of worksites will also rise substantially.
Most importantly, the biggest impact that increased infrastructure spending will have on the plastics industry comes from wage growth. Maybe not all construction projects will require the purchase of a lot of plastics products, but almost all construction workers live in households that will increase their consumption of plastics products if they get a raise in pay.
If done properly, rising wages will be the most powerful and widely felt benefit to the economy that comes from an increase in infrastructure spending. And this is not just true for construction workers. Investment in our nation's infrastructure will make all of us more productive in the long run. We will become less wasteful and less annoyed by roads, bridges and airports in an obvious state of decay.
What does the data tell us?