A giant US construction firm has admitted its white industries collapsed because it had been “too busy to invest in the right areas”.
The collapse in the value of its industrial pipes has been described as “the biggest financial setback for a US construction company”.
The construction giant, Robert Space Industries, has admitted it had spent more than $50 billion over the last 20 years in investments in infrastructure but failed to invest enough to keep up with the surge in demand for its pipe-making equipment.
Its US subsidiary, American Pipe & Products, had spent $10bn to build a pipeline from the US West Coast to the Gulf of Mexico.
The pipe-maker had spent nearly $10 billion to expand its business in the US over the same period, but the $5.5bn expansion was stalled because the US economy was still recovering from the financial crisis.
The company’s CEO, Joe Sperling, said the pipe-blowing machines were too busy to focus on upgrading the infrastructure to keep pace with demand for their machines.
“It’s one of those things where we’re too busy,” he said in an interview with ABC News.
“We need to invest more in our infrastructure.”
The collapse of the pipe industry, which makes pipes for the US and other major industries, was blamed for a spike in construction costs for the last decade, and a decline in demand.
It was a result of a series of investments that the company made between 1999 and 2008, including an expansion to the US.
A report in March by the US Government Accountability Office (GAO) said the expansion cost $12bn and was partly due to a “failure to allocate resources for investments in the supply chain”.
It said Robert Space was also a victim of a global economic downturn that began in 2007 and lasted for the first three quarters of 2010.
The US economy grew at a faster rate during that period, and in the first six months of 2011, US GDP increased by 1.6 per cent.
However, Mr Sperles told the New York Times that the economic downturn was “the largest financial setback” for the company.
“When I was at the company, we were at the top of the list for pipe projects, with pipe being the second largest industry,” he told the newspaper.
“Our business was booming, we had a $20 billion business and we had the infrastructure that we needed to grow that business.”
Robert Space said it was “grateful for the opportunity” to work with the US Federal Government to improve its infrastructure.
“Robert Space has been an American industry leader for decades, and our commitment to American manufacturing has been central to our business and our success over the years,” Mr Sberling said in a statement.