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  • WWW.IBISWORLD.COM Road & Highway Maintenance in the US October 2013 1

    IBISWorld Industry Report 23411bRoad & Highway Maintenance in the USOctober 2013 Maksim Soshkin

    Speeding up: Industry demand will rise, supported by state and local outlays

    2 About this Industry2 Industry Definition

    2 Main Activities

    2 Similar Industries

    3 Additional Resources

    4 Industry at a Glance

    5 Industry Performance5 Executive Summary

    5 Key External Drivers

    6 Current Performance

    8 Industry Outlook

    11 Industry Life Cycle

    13 Products & Markets13 Supply Chain

    13 Products & Services

    15 Demand Determinants

    16 Major Markets

    17 International Trade

    18 Business Locations

    20 Competitive Landscape20 Market Share Concentration

    20 Key Success Factors

    20 Cost Structure Benchmarks

    22 Basis of Competition

    23 Barriers to Entry

    24 Industry Globalization

    25 Major Companies

    27 Operating Conditions27 Capital Intensity

    28 Technology & Systems

    28 Revenue Volatility

    29 Regulation & Policy

    30 Industry Assistance

    31 Key Statistics31 Industry Data

    31 Annual Change

    31 Key Ratios

    32 Jargon & Glossary

    www.ibisworld.com | 1-800-330-3772 | info@ibisworld.com

  • WWW.IBISWORLD.COM Road & Highway Maintenance in the US October 2013 2

    This industry comprises contractors involved in the maintenance, repair or renovation of existing highways or streets; construction management operations; and those that operate as special trade contractors engaged in

    performing subcontract work in the maintenance of highways and streets (e.g. surface repair, road clearing, guardrail repair, drainage repair). The industry does not include services from government establishments.

    The primary activities of this industry are

    Highway and street maintenance

    De-icing and snow clearing highways and streets

    Sweeping and cleaning highways and streets

    Road pavement repairs (including potholes)

    Road signage repair and replacement

    Road markings repair/repainting

    Landscape maintenance

    23412 Bridge & Tunnel Construction in the USEstablishments in this industry are primarily engaged in constructing bridges, tunnels, pedestrian bridges, and elevated highways.

    23832 Painters in the USEstablishments in this industry are involved in traffic lane painting.

    23811 Concrete Contractors in the USEstablishments in this industry are engage in constructing private driveways and private sidewalks.

    23411a Road & Highway Construction in the USEstablishments in this industry are primarily engaged in constructing new highways and streets.

    23411c Road & Highway Services in the USEstablishments in this industry are primarily engaged in the provision of specialist highway and street construction services for new construction, maintenance, and renovation.

    Industry Definition

    Main Activities

    Similar Industries

    About this Industry

    The major products and services in this industry are

    Litter control

    Maintenance to road fixtures

    Pavement management

    Seasonal maintenance

    Vegetation management

  • WWW.IBISWORLD.COM Road & Highway Maintenance in the US October 2013 3

    About this Industry

    For additional information on this industry

    www.transportation.org American Association of State Highway and Transportation Officials

    www.enr.com Engineering News Record

    www.fhwa.dot.gov Federal Highway Administration

    www.reedconstructiondata.com Reed Construction Group

    www.artba.org The American Road and Transportation Builders Association

    Additional Resources

    IBISWorld writes over 700 US industry reports, which are updated up to four times a year. To see all reports, go to www.ibisworld.com

  • WWW.IBISWORLD.COM Road & Highway Maintenance in the US October 2013 4

    % c

    hang

    e

    8

    2

    0

    2

    4

    6

    1806 08 10 12 14 16Year

    Government funding for highways

    SOURCE: WWW.IBISWORLD.COM

    % c

    hang

    e

    12

    6

    3

    0

    3

    6

    9

    1905 07 09 11 13 15 17Year

    Revenue Employment

    Revenue vs. employment growth

    Products and services segmentation (2013)

    70%Pavement

    management

    10%Maintenance

    to road fixtures

    10%Seasonal

    maintenance

    5%Litter control

    5%Vegetation

    management

    SOURCE: WWW.IBISWORLD.COM

    Key Statistics Snapshot

    Industry at a GlanceRoad & Highway Maintenance in 2013

    Industry Structure Life Cycle Stage MatureRevenue Volatility Medium

    Capital Intensity High

    Industry Assistance Medium

    Concentration Level Low

    Regulation Level Medium

    Technology Change Medium

    Barriers to Entry Low

    Industry Globalization Low

    Competition Level Medium

    Revenue

    $42.5bnProfit

    $2.8bnWages

    $5.0bnBusinesses

    9,224

    Annual Growth 13-18

    1.8%Annual Growth 08-13

    -0.1%

    Key External DriversGovernment funding for highwaysLocal and state government investmentTotal vehicle milesYield on 10-year Treasury note

    Market ShareThere are no Major Players in this industry

    p. 25

    p. 5

    FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 31

    SOURCE: WWW.IBISWORLD.COM

  • WWW.IBISWORLD.COM Road & Highway Maintenance in the US October 2013 5

    Key External Drivers Government funding for highwaysFederal, state and local government authorities contribute the vast majority of funding for road and highway maintenance; therefore, this industry is particularly sensitive to cyclical fluctuations in government budgetary finances and allocations to road infrastructure. This driver is expected to increase during 2014, representing a potential opportunity for the industry.

    Local and state government investmentLocal and state governments are major investors in fixed assets such as structures, equipment and software. Part of this investment is allocated to road network maintenance, which means that climbing investment shows that governments have the resources to fund road maintenance. Local and state government investment is expected to remain stagnant in 2014, representing a potential threat to the industry.

    Executive Summary

    The Road and Highway Maintenance industry had a bumpy ride in the five years to 2013. Road network owners (primarily federal, state and local governments) hire firms in this industry to provide maintenance services, such as pothole repair, rubbish removal and snow clearing, for their roads and highways. During the recession, budgets on all levels of government came under pressure and funding for road maintenance, and thus demand for industry services, dwindled. However, massive stimulus spending by the

    federal government and other funding programs provided enough support for road maintenance to temporarily offset industry revenue losses. Therefore, over the five years to 2013, IBISWorld expects industry revenue to decline at an annualized 0.1% to $42.5 billion, with a 1.4% decline in 2013 as stimulus spending wears off.

    During the recession, falling incomes and a housing downturn caused state and municipal tax receipts to decline. As governments at this level have cut spending to balance their budgets, local

    and state government investment has fallen every year since 2008. Road network maintenance was one of the expenses cut, which caused demand for industry services to drop. In response to the recession, Congress passed a stimulus package that provided enough funding for maintenance to boost industry revenue by 7.9% in 2009. However, federal spending was a temporary measure and spending on road maintenance eventually started to decline. Facing lower demand and tougher competition, industry firms cut wages and began to mechanize their operations, causing wages to decline at an annualized 0.5% to $5.0 billion over the five years to 2013.

    Over the five years to 2018, industry revenue is forecast to climb at an annualized 1.8% to $46.6 billion. Growth will be led by increased use of roads, which causes wear and tear, causing further subcontracting of government maintenance responsibilities and rising demand from private sector road owners. Nevertheless, while government spending on roads and highways will climb, continued budget pressure on the local and state level and uncertainty surrounding future federal spending on infrastructure will greatly diminish revenue growth.

    Industry PerformanceExecutive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage

    Increasing use of roads and highways will eventually push demand

  • WWW.IBISWORLD.COM Road & Highway Maintenance in the US October 2013 6

    Industry Performance

    Current Performance

    The five years to 2013 have been rocky for the Road and Highway Maintenance industry. Firms in this industry carry out road maintenance work such as pavement repairs, signage replacement and rubbish removal. Because the public sector controls most road networks, it is the primary buyer of industry services. Consequently, the industry was exposed to stagnant government funding for highways, as the public sector dealt with the recession and widening budget deficits. In particular, local and state government

    investment plummeted as governments at this level attempted to balance their budgets. However, the federal government was able to partially fill in the funding gap through temporary stimulus spending and other programs. Therefore, in the five years t

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