5 ways to invest in rebuilding the U.S.

By Michael Brush

When the Interstate 35W bridge collapsed in Minneapolis during the evening rush hour two weeks ago, there were two obvious reactions.

First, sympathy for the victims and their families. Second, this thought: "That could have been us."

Given the state of disrepair of our nation's infrastructure, the odds may be higher than you think. If you haven't been paying attention, just consider some of the horrible infrastructure mishaps that now occur on a regular basis:

• In late July, a steam pipe blast in the middle of New York City killed one person and injured several others.

• In March 2006, seven people were killed when a dam failed on Kauai, Hawaii, unleashing nearly 300 million gallons of water that swept away homes.

• In December 2005, a 120-ton concrete beam collapsed onto an interstate highway in Pennsylvania, barely missing motorists.

• The U.S. Department of Transportation says poor roadway conditions are a significant factor in about a third of the 40,000-plus traffic fatalities that occur each year.

• And, of course: Nearly 2,000 people lost their lives in August 2005 when Hurricane Katrina overwhelmed the levees that were supposed to protect New Orleans.

Too stingy

A big part of the problem is that we've underinvested in our infrastructure. "It's a sad state of affairs around the country. Just drive around and look at this stuff and you can tell," says William Dorey. He should know. As chief executive of the highway and infrastructure construction company Granite Construction (GVA, news, msgs), part of his job is to do precisely that sort of checking.

Last week, for example, Dorey visited a job site in Philadelphia where his company is working on the elevated portion of the city's mass transit system. "It's old. It's rusty. There are wires hanging around," says Dorey. "It looked like something I would wire at home behind my TV set, and I'm not an electrician."

Here's the bottom line: We have to spend $1.6 trillion over five years to bring our nation's infrastructure system up to "good" condition, estimates the American Society of Civil Engineers (ASCE). It gives our nation's roads, water systems, schools, dams and power grids a grade of "D," while bridges get a "C."

Capacity shortages

Poor repair is only part of the problem with our infrastructure. The other part is that we don't have enough of it. Anyone who waits too long in rush-hour traffic every day already knows this, of course. "It is a huge problem that affects people's lives and affects our economy," says Dorey. ASCE estimates that Americans spend more than 3.5 billion hours a year stuck in traffic, at a cost of $67.5 billion annually in lost productivity and wasted fuel.

• Video: Would privatizing America's infrastructure work?

It's easy to see how we got here. Between 1990 and 2005 the country's population grew by 19%, and highway traffic increased 39%. But new road mileage went up only 4%, according to TRIP, a transportation research group in Washington, D.C. There's a similar problem in the rail system, where chokepoints and delays are now much more common. It will only get worse, since freight rail tonnage will increase at least 50% by 2020, says ASCE.

Help on the way?

Are politicians waking up to the problem? The CEOs of construction companies remain hopeful. "With public concern about infrastructure at an all-time high, we expect that Congress will focus on the need for increased highway funding this year," said Martin Koffel, chief executive of URS Corp. (URS, news, msgs), on the engineering-company's recent quarterly conference call with investors. Sterling Construction (STRL, news, msgs) CEO Patrick Manning says bridge repair is now a "hot topic" in Texas, where his company operates.

Continued: Encouraging signs

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