Highway, Street, and Bridge Construction (U.S.)

NAICS 2022 code 23731 — an investor's primer (industry rollup)

Short page — single-child pass-through. In the North American Industry Classification System (NAICS, the standard U.S. statistical agencies use to sort businesses), the five-digit industry 23731 contains exactly one six-digit national industry — 237310, Highway, Street, and Bridge Construction. The two codes describe the same set of businesses, so this level is effectively identical to its one child. This page gives the rollup's own ground-truth federal figures and the shape of the opportunity; for full detail — scope exclusions, the investable universe, how contracts and margins work, demand drivers, regulation, risks, and how to invest — read the [237310] primer.

1. Overview

This is the industry that builds and rebuilds America's roads, highways, interchanges, airport runways, and bridges. Its defining feature is that the customer is almost entirely the government: state departments of transportation (DOTs), counties, and cities finance and commission the work, while privately held contractors bid for it and earn revenue by executing projects. Owning the infrastructure (a public function) and building it (a private, competitive business) are two different things — this primer is about the builders. Their fortunes track public budgets and federal transportation law, not consumer spending or the housing cycle.[1]

Both kinds of investor can get exposure. A public-market investor can buy a small cluster of listed civil contractors, the larger listed materials producers (crushed stone, asphalt, ready-mix concrete) tied to the same demand, or engineering-design firms. A private investor more often owns a local paving-and-materials business, takes equity in toll-road and managed-lane concessions, or holds the municipal and state bonds that finance the work.

2. What's inside — and why this level equals its one child

At the five-digit level, NAICS 23731 has only one national industry beneath it:

Because there is a single child, this rollup adds no aggregation: 23731 and 237310 cover the same establishments, the same receipts, and the same firms. NAICS creates a six-digit code even when it exactly duplicates the five-digit industry, so the extra digit here is a formality, not a narrowing. Everything in the child primer — the scope (highways, streets, roads, runways, sidewalks, causeways, bridges; new build, reconstruction, rehabilitation, repair, and the specialty paving/guardrail/striping trades) and the exclusions (water/sewer 237110, oil-and-gas pipelines 237120, power/communication lines 237130, tunnels 237990, highway lighting and signals 238210, bridge painting 238320, road removal 238910, parking lots and private driveways 238990) — applies unchanged to this level.[1] See [237310] for that full breakdown.

3. How big it is (this level's rollup figures)

These are our federal ground-truth figures for NAICS 23731, taken from stats-23731.md. Because 23731 equals 237310, they match the child's figures exactly. They combine two vintages and two survey universes, so treat them as a profile of the industry, not a single-year market model.

Undercount caveat — read before quoting. The $160 billion receipts figure counts what private employer contractors bill; it is not what the public spends on roads. County Business Patterns (CBP) and the Economic Census concentration data both cover establishments with paid employees, so three gaps matter: (1) a large share of routine road work — patching, striping, snow-and-ice control, minor bridge maintenance — is done in-house by government crews (public payroll, not industry receipts, so it never appears); (2) related work scatters into the adjacent NAICS codes listed above; and (3) very small operators with no paid employees are largely excluded, and our source file carries no reliable nonemployer estimate, so none is added. For scale, total state-and-local highway-and-road spending was about $206 billion in 2021, roughly three-quarters from states and about a quarter from federal transfers.[6] The private contracting industry is a ~$160 billion business sitting inside a larger, mostly government-run road-spending system.

4. Where value concentrates (investable universe)

There is no large pure-play highway contractor and no separate investable universe at this level distinct from the child — the names below are the whole of it. The biggest builders are diversified civil contractors, and the biggest listed companies tied to this demand are the materials producers. Tickers and scale are context, not recommendations; full detail is in [237310].

• Listed contractors (build the roads): Granite Construction (NYSE: GVA), Tutor Perini (NYSE: TPC), Construction Partners (Nasdaq: ROAD), Sterling Infrastructure (Nasdaq: STRL), and — with roads a minor slice — MasTec (NYSE: MTZ).[8][9][10][11][12]
• Listed materials producers (sell the aggregates, asphalt, concrete): Vulcan Materials (NYSE: VMC, the largest U.S. aggregates producer), Martin Marietta (NYSE: MLM, aggregates ~70% of sales), and Knife River (NYSE: KNF). These are the higher-margin, more consistent way to own road demand.[13][14][15]
• Engineering/design: AECOM (NYSE: ACM), which benefits earlier in the project cycle.[16]
• Major private / other owners: Kiewit (employee-owned), The Walsh Group (family-owned), Bechtel, FlatironDragados (ACS/HOCHTIEF), and Lane Construction / Ferrovial's Webber.[17][18][5]

Below these sit thousands of small regional contractors — the bulk of the 8,901 firms.

5. How the money works (in brief)

The revenue engine is the public contract: an agency defines and funds a project, contractors prequalify and bid or submit best-value proposals, the winner performs the work, and revenue is recognized as work progresses. Margins are genuinely thin — even a best-in-class contractor runs a mid-teens construction gross margin, with industry net margins in the low-to-mid single digits — so this is a volume-and-execution business.[8] Backlog (watch book-to-bill and reported committed/awarded work) is the key operating metric. The real profit pool is materials and vertical integration: aggregates are cheap per ton but expensive to haul, so pricing is local, and a permitted quarry near a growing metro is a durable moat regulators rarely let competitors replicate.[8][13][14] See [237310] §5 for contract families, cost drivers, seasonality, bonding, and retainage.

6. What drives demand (in brief)

Federal transportation law is the single biggest driver. The Infrastructure Investment and Jobs Act (IIJA, 2021; also called the Bipartisan Infrastructure Law) authorized roughly $550 billion in new federal infrastructure investment for fiscal years 2022–2026, of which about $350 billion went to federal highway programs; 2026 is the final year of that authorization.[20][21] Beneath it sit the Highway Trust Fund (HTF, funded by fuel taxes of 18.4¢/gallon gasoline and 24.4¢/gallon diesel, unchanged since 1993 and running structural deficits since 2008)[26], dedicated bridge money, a large repair backlog (the 2025 National Bridge Inventory counts 624,193 bridges, 41,685 rated poor)[24], state and local funding, and population/freight growth. Full detail in [237310] §6.

7. Regulation (in brief)

Federal money comes with strings that shape costs and who can bid: Davis-Bacon prevailing wages on federal-aid work over $2,000[21]; Build America, Buy America (BABA) domestic-content rules[22]; Disadvantaged Business Enterprise (DBE) participation goals; and environmental review under the National Environmental Policy Act (NEPA) plus stormwater permitting under the EPA's National Pollutant Discharge Elimination System (NPDES).[23][24] The Federal Highway Administration (FHWA) oversees federal-aid work; state DOTs run prequalification, bonding, and licensing. Regulation raises compliance costs but also creates barriers to entry that favor larger firms. Full detail in [237310] §7.

8. Consolidation

By the federal numbers this is one of the most fragmented industries in the economy. The top four firms hold just 5.4% of receipts (CR4), the top eight 9.0% (CR8), the top twenty 16.9% (CR20), the top fifty 26.8% (CR50), and the Herfindahl-Hirschman Index (HHI, where 10,000 is a monopoly) is only 19.6 — essentially "no concentration."[2] The cause is physics and geography: asphalt and ready-mix perish or set within a short haul, and aggregates are too heavy to ship far, so competition is local. Consolidation is happening mostly on the materials side — rolling up local aggregates and paving into regional platforms — but local execution stays decisive, so a national oligopoly is unlikely.[10][15][8][17] Full detail in [237310] §8.

9. Risks (in brief)

• Funding cliff / reauthorization risk. IIJA authority expires September 30, 2026; a five-year successor bill starting in FY2027 faces a projected $166 billion HTF revenue-versus-outlay gap, and how it is closed (fuel taxes, EV/mileage fees, or general-fund transfers) is the industry's central uncertainty (forward-looking).[25]
• Execution and input-cost risk. Fixed-price work means the contractor eats overruns in asphalt, cement, steel, diesel, and labor; claims and change orders drive earnings swings.[8]
• Political/budget cycles, labor shortages, cash-flow/bonding/leverage strain, customer concentration, and weather/seasonality.
• Long-term fuel-tax erosion as vehicles get more efficient and EV adoption grows (forward-looking).[26]
• Data risk. Employer-based federal statistics do not capture the full public-sector or nonemployer footprint (Section 3).

Full detail in [237310] §9.

10. How to invest & outlook

Public-market routes. There is no pure highway ETF (exchange-traded fund), but exposure comes via (1) listed contractors (GVA, TPC, ROAD, STRL) — direct but lower-margin and project-lumpy; (2) listed materials producers (VMC, MLM, KNF) — the higher-margin, more consistent way to own road demand; (3) engineering/design (ACM), earlier in the cycle; and (4) broad U.S. infrastructure ETFs (for example the Global X U.S. Infrastructure Development ETF, ticker PAVE). Judge a contractor on backlog quality — expected margins, duration, contract type, cash conversion — not just size.

Private-market routes. Buy or build a local paving-and-materials business (the fragmentation that frustrates index investors is what makes roll-ups attractive); take equity in concessions (toll roads and managed lanes via public-private partnerships, treated as a distinct asset-ownership strategy); or hold the municipal and state debt that finances the work.

Near-term outlook (forward-looking). ARTBA projects the total U.S. transportation-construction market to grow about 3% to a record $209.1 billion in 2026, with public highway, street, bridge, and tunnel work at roughly $145.5 billion — near record levels in the final year of IIJA funding.[26] The swing factor is what comes after IIJA: a clean, well-funded reauthorization would extend the boom into the late 2020s, while a lapse into short-term extensions or a failure to fix the Highway Trust Fund would stall lettings and pressure the whole chain.

For the complete treatment of every section above, see the [237310] primer — this rollup is a pass-through of that single national industry.

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Sources

Drawn from the child primer (NAICS 237310); numbering preserved for cross-reference.

1. U.S. Census Bureau / NAICS Association, "NAICS Code 237310 — Highway, Street, and Bridge Construction" (2022 definition and cross-references). https://www.naics.com/naics-code-description/?code=237310; Census profile: https://data.census.gov/profile/237310
2. U.S. Census Bureau, 2022 Economic Census — Concentration by Largest Firms (NAICS 237310: receipts $160.3B; 8,901 firms; CR4 5.4%, CR8 9.0%, CR20 16.9%, CR50 26.8%; HHI 19.6). https://data.census.gov/table/ECNSIZE2022.EC2200SIZECONCEN?codeset=naics~237310&y=2022
3. U.S. Census Bureau, County Business Patterns 2023 (NAICS 237310: 9,256 establishments; 314,940 employees; $31.0B annual payroll; $5.98B Q1 payroll). https://www.census.gov/programs-surveys/cbp.html
4. Engineering News-Record, "ENR Top Contractors" and Ferrovial/Webber and Lane/Webuild coverage (2025–2026). https://www.enr.com/keywords/2840-highway-construction
5. Urban Institute, "Highway and Road Expenditures" (state/local spending ~$206B in 2021; states ~three-quarters, federal ~one-quarter) (2024). https://www.urban.org/policy-centers/cross-center-initiatives/state-and-local-finance-initiative/state-and-local-backgrounders/highway-and-road-expenditures
6. Granite Construction — StockAnalysis "GVA Revenue" (FY2025 ~$4.4B) https://stockanalysis.com/stocks/gva/; Granite Q4 2025 slides (record backlog; construction gross margin ~15.7%; ENR #1 Highways). https://www.sec.gov/Archives/edgar/data/861459/000086145926000014/a2025annualreport.htm
7. Tutor Perini Corporation, "Full Year 2025 Results"; SEC 10-K. https://www.sec.gov/Archives/edgar/data/77543/000007754326000028/tpc-20251231.htm
8. Construction Partners, Inc., "Fiscal 2025 Full Year Results"; SEC 10-K. https://www.sec.gov/Archives/edgar/data/1718227/000162828026006228/road-20251231.htm
9. Sterling Infrastructure — CompaniesMarketCap "STRL Revenue"; SEC 10-K. https://www.sec.gov/Archives/edgar/data/874238/000087423826000024/strl-20251231.htm
10. MasTec — StockAnalysis "MTZ Revenue" (FY2025 ~$14.3B). https://stockanalysis.com/stocks/mtz/revenue/
11. Martin Marietta, "2025 Results" (aggregates ~70% of sales); SEC 10-K. https://www.sec.gov/Archives/edgar/data/916076/000119312526059193/mlm-20251231.htm
12. U.S. Securities and Exchange Commission, Vulcan Materials Co. Form 10-K FY2025 (largest U.S. aggregates producer). https://www.sec.gov/Archives/edgar/data/1396009/000162828026009546/vmc-20251231.htm
13. U.S. Securities and Exchange Commission, Knife River Corp. Form 10-K FY2025 (spun from MDU 2023). https://www.sec.gov/Archives/edgar/data/1955520/000195552026000003/knf-20251231.htm
14. U.S. Securities and Exchange Commission, AECOM Form 10-K FY2025 (transportation design and program management). https://www.sec.gov/Archives/edgar/data/868857/000086885725000013/acm-20250930.htm
15. HOCHTIEF, "Integration of Flatiron and Dragados North America Civil Construction Businesses" (61.8% ACS Group / 38.2% HOCHTIEF) (2024). https://www.hochtief.com/news-media/press-releases/press-release/integration-of-flatiron-and-dragados-north-america-civil-construction-businesses-to-create-value-for-hochtief-and-acs
16. Company pages — Kiewit https://www.kiewit.com/about-us/; The Walsh Group https://www.walshgroup.com/ourcompany.html; Bechtel https://www.bechtel.com/impact/financials/ (2024–2026).
17. Congressional Research Service, "Funding and Financing Highways and Public Transportation Under the IIJA" (R47573) (~$350B federal highway programs FY2022–2026; $118B HTF general-fund transfer) (2023). https://www.congress.gov/crs-product/R47573
18. Federal Highway Administration, "Infrastructure Investment and Jobs Act" overview (~$550B new federal infrastructure investment FY2022–2026) (2026). https://ops.fhwa.dot.gov/infrastructure-investment-and-jobs-act/
19. Federal Highway Administration, "2025 — Bridge Condition by Highway System," National Bridge Inventory (624,193 bridges; 41,685 rated poor) (2025). https://www.fhwa.dot.gov/bridge/nbi/no10/condition25.cfm
20. Wikipedia, "Highway Trust Fund" (fuel tax 18.4¢ gasoline / 24.4¢ diesel unchanged since 1993; outlays exceed revenues since 2008) (2025). https://en.wikipedia.org/wiki/Highway_Trust_Fund
21. Federal Highway Administration, "Davis-Bacon (Payment of Prevailing Wage Rates)" and U.S. DOL Fact Sheet #66 (prevailing wage on federal-aid contracts over $2,000) (2024). https://www.fhwa.dot.gov/construction/cqit/dbacon.cfm
22. Federal Highway Administration, "Build America, Buy America Act Q&As" (2025). https://www.fhwa.dot.gov/construction/contracts/buyam_qa_baba_post10232023.cfm
23. Federal Highway Administration, "Environmental Review Toolkit" (NEPA) (2026). https://www.environment.fhwa.dot.gov/about/about.aspx
24. U.S. Environmental Protection Agency, "Stormwater Discharges from Construction Activities" (NPDES permit coverage for disturbances ≥1 acre) (2026). https://www.epa.gov/npdes/stormwater-discharges-construction-activities
25. Bipartisan Policy Center, "How IIJA's Funding Structure Complicates Surface Transportation Reauthorization"; Akin, "Massive Multi-Year Federal Transportation Bills Slated for Committee Action" (IIJA expires Sept 30, 2026; ~$166B projected HTF gap for a five-year bill from FY2027) (2026). https://bipartisanpolicy.org/explainer/how-iijas-funding-structure-complicates-surface-transportation-reauthorization/
26. ARTBA, "Market Activity to Remain Healthy in 2026, ARTBA Outlook Shows" (total transportation-construction market ~$209.1B in 2026, +3%; public highway/street + bridge/tunnel ~$145.5B) (2026). https://www.artba.org/news/market-activity-to-remain-healthy-in-2026-artba-outlook-shows/