Dive Brief:
- Steel and metal manufacturer Commercial Metals Company has seen an increased demand for its products as federal funding spurs domestic investment in infrastructure projects.
- To meet the new demand, Irving, Texas-based CMC plans to invest between $550 million and $600 million to fund growth projects and mergers and acquisitions, SVP and CFO Paul Lawrence said on a March 23 earnings call.
- In March, CMC acquired a metals recycling company, as well as a post-tensioning solutions producer, which Lawrence said will enhance CMC’s offerings in the market.
Dive Insight:
Commercial Metals Co. expects a strong spring and summer construction season in North America, Smith said.
The Bipartisan Infrastructure Law in particular increased the amount of federal funding available to states and local governments to support highway construction, Smith said.
"The combination of increased federal funding and rising state budgets should support a strong highway market for several years to come," he said.
The company estimates that federal funding through the Infrastructure Law and other legislation will increase by 65% compared to funds through the Fixing America's Surface Transportation Act, a law that allocates long-term funds toward surface transportation infrastructure planning and investment.
Smith said those funds would also create 1.5 million tons of incremental rebar demand.
Other manufacturers are also relying on funding from recent federal laws to expand their operations.
Smith brought up Texas-based Texas Instruments' $11 billion plans to expand its semiconductor wafer fabrication plant in Lehi, Utah in February as an example of "positive developments in the area of supply chain hardening and reshoring of critical manufacturing capability."
"All of these facilities include multiple phases, are massive in size and consume large amounts of rebar," Smith said on the call. "They also require extreme structural rigidity and extensive site logistics development, which makes them attractive targets for our Tensar product line."
Additionally, expenditures in fiscal 2023 will go toward completing the construction of its second mill facility in Arizona, upgrading projects at two U.S. steel mills, as well as initial investments related to Steel West Virginia, Lawrence said
Commercial Metals Company isn't the only manufacturer taking advantage of the incoming federal and state-funded projects. Nucor CFO and EVP Steve Laxton said the company remains optimistic for 2023's earnings despite economic uncertainty.
"Overall, non-residential construction spending continues to be robust, federal support for infrastructure and energy projects will begin to show impacts on demand in 2023," Laxton said in an earnings call in January. "Other positive drivers of demand include reshoring of manufacturing, energy infrastructure demand, clean energy and storage projects, EV factories and semiconductor plants.
