On Nov. 15, President Biden signed a $1.2 trillion infrastructure package—The Infrastructure Investment and Jobs Act—that provides historic funding levels to improve public works, including roads, bridges, highways, internet access and the power grid, as well as to mitigate the effects of climate change. The bill does not include funding for social policy, which is covered under separate legislation known as “Build Back Better.”
This is one in our series of industry-focused outlooks analyzing the impact of the infrastructure legislation.
What the $1.2 trillion Infrastructure Investment and Jobs Act means for consumer products companies
This groundbreaking and long overdue legislation will provide critical improvements to the supply chain. The pandemic highlighted deficiencies in our roads, bridges, railways, ports and airports. Consumers quickly moved to digital shopping, ordering and delivery, placing additional strain on broadband, logistics, transportation, supply chain management and more. This bill will provide the backbone that America will need to stay competitive in the global marketplace.
In the short term
The large amount of funding is significant and goes to both existing programs to fill shortfalls and creates new programs, particularly in broadband distribution and cybersecurity, to address gaps in technology, privacy and accessibility. As consumers continue to embrace omnichannel shopping, middle market consumer products companies pivoted quickly to meet consumer demand. The speed in digital transformation has left many companies susceptible to cyberattacks or with limited ability to reach their customers. Funding these areas will be a welcome improvement.
Sustainability and transparency are also top of mind for consumers, becoming more of a requirement than a luxury. The increased focus in environmental monitoring with funding for natural resources-related infrastructure, wildfire management, clean water and ecosystem restoration will support consumer products companies’ initiatives to produce and deliver environmentally friendly products.
Finally, the biggest benefit from the legislation is the funding for roads and ports to reduce the strained supply chain that has plagued many industries, including consumer products.
The big picture
Hopefully this package should not be viewed as just a capital injection, but rather a long-term improvement plan to ensure consumers have efficient, affordable and safe access to all types of consumer goods. As for consumer products businesses, including those in the middle market, the hope is for them to strengthen operations, supply chain and more for a profitable future.
Questions that frame the path forward
- How could the Build Back Better bill look? Depending on changes the Senate makes to the bill that was passed by the House, there could be additional funding to further strengthen infrastructure.
- How could the funds be distributed? Funds have been broadly earmarked and time will tell how the money is distributed. For businesses it will be important for them to stay updated on legislative updates, while also planning now for possible business improvements.
- Money is one thing, but are there enough talent resources and processes in place to get these projects completed? A tight labor market will continue to be a hurdle and will require longer-term strategies.
Get additional insights about this topic here. Check out the tax implications of The Infrastructure Investment and Jobs Act here. And for more information on tax policy changes, see RSM’s Tax Policy Resource Center.
