The catastrophic collapse of a Minneapolis bridge this month that killed at least seven people is proving to be an unexpected boost to several local engineering and construction companies.
With government officials rushing to roll out contracts to shore up the nation's deteriorating infrastructure, companies ranging from engineering giant Jacobs Engineering Group Inc., to construction manager Aecom Technology Corp. to tiny Material Technologies Inc., which makes a cutting edge device to test metal fatigue in bridges, are expecting to get their share of a spending boom that could top $100 billion.
"Certainly there's been a renewed focus on the entire sector and it has pointed out the dire need for improved infrastructure in the United States," said Michael Burke, chief financial officer of Los Angeles-based Aecom. "Sad to say, the tragedy in Minneapolis just highlighted the need for some long overdue upkeep."
Indeed, Parsons Corp., the large Pasadena-based engineering firm, has already been included by the Minnesota Department of Transportation on the short list of firms for a contract that could be worth $350 million to replace the failed Interstate 35W Mississippi River bridge. Parsons is a member of a consortium that includes two construction companies and a construction management firm. Minnesota officials hope to award the contract by Labor Day.
But with the collapse highlighting the deficient state of the nation's bridges and other infrastructure, far more spending is almost certainly on the way.
Federal, state and local governments combined approved $265 billion in infrastructure funding in 2005, but that still falls well short of the $1.6 trillion the American Society of Civil Engineers estimates is needed to bring the country's roads and bridges into good condition.
Sen. Hillary Clinton, D-N.Y., last week called for emergency infrastructure funding of $10 billion to repair the country's bridges that have been deemed structurally deficient by the Federal Highway Administration.
In California alone, voters passed a $20 billon bond measure last November, of which $125 million is slated for seismic retrofitting of bridges. And Gov. Arnold Schwarzenegger has plans for additional infrastructure bonds that will surely be boosted by the collapse.
Wall Street has been far from oblivious to the implications to public companies in the sector. In the weeks following the tragedy, stocks of construction and engineering firms have soared both locally and nationally.
The Construction and Engineering Sector of the LABJ Index of 200 selected Los Angeles County stocks led all industries, surging 8.7 percent in the week ended Aug. 8. Among the winners: Shares of Jacobs rose 7.8 percent, while Aecom rose 6.9 percent.
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