RSM US Middle Market Business Index 2021 Infrastructure Special Report
After decades of watching America’s infrastructure decline, senior executives at middle market businesses are pushing to fix the nation’s basic systems, according to a recent survey of senior executives in middle market businesses conducted by RSM US LLP.
In a striking shift in outlook captured by the proprietary RSM US Middle Market Business Index survey, these executives agree that the state of the nation’s infrastructure is hampering economic growth, not only at the national and the local levels, but also within their own organizations.
KEY TAKEAWAYS
Here are some key takeaways of what executives told RSM in the survey, which was conducted from April 7 to April 28:
The state of the nation’s infrastructure is hampering economic growth
63% told RSM that the nation’s ailing infrastructure restricted growth of the national economy.
61% said it restricted growth of their local economies.
54% said it hurt their own businesses.
Lawmakers will, at long last, address the issue
64% believe that meaningful action will take place in the next three years that will result in tangible infrastructure enhancements.
Infrastructure improvements will benefit the day-to-day operations of individual businesses
At least 63% of executives, when asked about 21 individual initiatives like improving roads and communications networks, said that the improvements would benefit their companies’ operations.
Businesses want to participate
51% overall responded that they were likely to participate in the vendor selection process for businesses.
Climate change is part of the equation
63% said they had already reduced their carbon footprint to zero, were working to get there, or were acting to reduce their carbon footprint, even if it’s not to zero.
A call to action in the UK
In a parallel survey conducted in the UK, middle market executives showed a similar interest in shoring up their nation’s infrastructure.
68% said that it was restricting the growth of their nation’s economy.
63% said it was hurting the growth of their local economies.
64% said that infrastructure was restricting the growth of their businesses.
If the failure of the electrical grid in Texas this past winter showed anything, it’s the deficiency of the nation’s infrastructure and what can happen when a nation fails to invest in it. Even though executives expressed confidence in the ability to bounce back from such grid failures, that resiliency cannot mask the long-term decline in the state of the nation’s infrastructure. As executives are telling RSM, there is an urgent need to shore up what makes the American economy tick. And many middle market executives aren’t waiting. That change, they told RSM, starts by looking in the mirror.
The state of the nation’s infrastructure is hampering economic growth
For decades, lawmakers and policymakers have lamented the state of America’s infrastructure, unable to agree on ways to improve what is widely acknowledged to be an aging and broken system. From the electrical grid to telecommunications systems to bridges, highways and ports, there has long been a sense that things just don’t work as they should. And it is hurting the economy.
All the while, executives at the nation’s middle market businesses—America’s real economy—have watched in frustration as their companies have paid the price for this increasingly outdated infrastructure.
Now the executives are pushing for action, according to a recent survey of senior executives in middle market businesses conducted by RSM US LLP.
In a striking shift in outlook captured by the proprietary RSM US Middle Market Business Index survey conducted April 7 to April 28, these executives agree that the state of the nation’s infrastructure is hampering economic growth, not only at the national and the local levels, but also within their own organizations.
Nearly two-thirds, or 63%, of the 404 executives who participated told RSM that the nation’s ailing infrastructure restricted growth of the national economy, while 61% said it restricted growth of their local economies. A majority, or 54%, said it hurt their own businesses.
“The commercial community has cried out for years for this to be addressed,” said Joe Brusuelas, RSM’s chief economist. “We’re at a point where it can be addressed.”
Consider the failure of the Texas energy grid in February 2021. It showed in stark terms the risks of not maintaining the basic systems that American communities and businesses depend on. State officials estimated that at least 151 people died during the storm, and early estimates of the economic cost in Texas alone have put it at greater than $130 billion—the costliest weather event in the state’s history.
Yet there is a sense that things are about to change: Middle market executives expressed confidence that lawmakers will, at long last, address the issue. Almost two-thirds, or 64%, believe that meaningful action will take place in the next three years that will result in tangible infrastructure enhancements.
The results of the survey send a clear message to lawmakers and policymakers as Congress negotiates the Biden administration’s infrastructure plan: Middle market businesses are ready to invest, and want to participate in the rebuilding of America’s infrastructure. And in many cases, they are acting on their own to shore up their systems.
“Our nation must launch a massive investment program to modernize America’s infrastructure,” said Ed Mortimer, vice president, transportation and infrastructure, at the U.S. Chamber of Commerce. “Rebuilding our nation’s infrastructure is not only one of the fastest and most direct ways to create new jobs and spur economic growth now, but also it will sustain our modern economy and improve the quality of life for every American. Infrastructure is not a partisan issue—there is strong bipartisan support to invest in our nation’s future and we now need our elected leaders to come together and show the American people they can enact fundamental, good policy.”
It’s not just a matter of improving the overall economy. The middle market believes that infrastructure improvements will benefit the day-to-day operations of their individual businesses as well. In fact, when asked about specific initiatives, and what opportunities they would represent for their organizations, every initiative elicited a significantly more positive response than was observed to a similar question in 2017.
And they didn’t stop there. Executives were similarly buoyed by the prospect of participating in the vendor selection process for those projects that present a significant opportunity for their business.
To the executives, time has run out, and they need to act. Consider these two responses:
73% said they would make capital investments to expand their infrastructure in the next three years.
63% are currently taking active steps to reduce their carbon footprint.
The strength of both responses would have been hard to imagine even four years ago, Brusuelas said.
The middle market believes that infrastructure improvements will benefit the day-to-day operations of their individual businesses.
“The public is racing out ahead of what’s actually happening in terms of policy,” Brusuelas said. “These changes are not going to stop.”
Read the full report here: https://rsmus.com/economics/rsm-middle-market-business-index-mmbi/infrastructure-special-report-web.html#state
Details
July 7, 2021
RSM US LLP
Name: Jennifer Van Cleave
Phone: 2108286281
Email: Jennifer.VanCleave@rsmus.com