6
THE INFRASTRUCTURE MARKET
A recurring theme in Industrials sector analysis is the importance of government spending, specifically as it relates to infrastructure-related industries. This chapter examines more closely Industrials’ role in infrastructure and how investors can profit. Infrastructure literally provides the highways and byways for an economy and society to function and grow—whether it’s power plants, roads, phone lines, and so on. These structures can create powerful primary and secondary benefits to its users and society as a whole. For example, a new road facilitates the transport of goods. But with road construction also comes many important secondary benefits like increases in productivity associated with quicker travel times, reduced emissions, and increased gas savings.
These roads, power plants, and phone lines provide the necessary foundations for economic growth to occur. Ronald M. DeFeo, Terex chairman and chief executive officer, captured it correctly when he said, “Fundamentally, infrastructure investment equals economic prosperity, they are attached at the hip.”1
Infrastructure crosses many industries but can be broken down into five main categories:
1. Energy. Electric power generation, transmission, and distribution, and natural gas transmission and distribution.
2. Social. Universities, schools, hospitals, prisons, sports stadiums, public housing, and community facilities.
3. Telecommunications. Fixed and mobile phone lines, Internet, cable networks, ...
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