Editor’s View: Why Infrastructure Matters

he $787 billion economic stimulus package signed into law in February does a lot of things. Stimulating the economy isn’t one of them, if its seven-month track record is any indication. But it does make available new funding for some important purposes, such as cultivating renewable energy production and fortifying the national infrastructure. I’m focusing here on the latter, because you will find in this issue much attention paid to infrastructure projects in the U.S. and globally. The “Bridges to the World” cover story and Top Utilities feature are two examples.

      Whether new bridges and high-speed rail corridors actually matter to executives at multinationals is the topic of a report issued by KPMG International earlier this year called “Bridging the Global Infrastructure Gap: Views From the Executive Suite.” The report is based on research conducted by the Economist Intelligence Unit. EIU surveyed 328 C-level executives from 21 countries – nearly half are CEOs and a third are from companies with more than $1 billion in annual revenues.

      “Availability of infrastructure impacts operating costs and is therefore a major factor in strategic planning and decision making,” the report maintains. “In the survey, 90 percent of executives agreed that the availability and quality of infrastructure affects where they locate and expand their business, a finding that was remarkably consistent across all geographies.”

      Specific findings should serve as a wake-up call for regions and nations serious about attracting capital investment:

• Only 14 percent of respondents think existing infrastructure is “completely adequate” in supporting their business;
• Infrastructure will become more important over the next five years, and 77 percent fear there will not be enough of it to support their long-term growth;
• 68 percent are “very concerned” that governmental effectiveness will prohibit the necessary investment in infrastructure for their businesses’ long-term growth;
• Two-thirds say existing infrastructure increases greatly the costs of operating their organizations;
• 40 percent say it increases greatly their ability to attract qualified employees;
• Just 36 percent say existing infra-structure increases their ability to expand their organizations; and
• 35 percent says it increases their competitiveness.

      To the extent federal stimulus funds are applied to infrastructure investment going forward, these numbers might well improve in the coming years in the United States. Most respondents – 69 percent – already view infrastructure in North America as “generally positive.” The bottom line is this: If the private sector is to benefit meaningfully from the infrastructure components of the stimulus package, it will be largely in the intangible ways listed above. So, miss no opportunity to weigh in on how infrastructure is planned in your area. Your company’s competitiveness in the future depends on it.

      Till next time,

      

      Mark Arend