Profit Opportunities Along the Border Wall
“I will build a great wall—and nobody builds walls better than me, believe me—and I’ll build them very inexpensively. I will build a great, great wall on our southern border, and I will make Mexico pay for that wall. Mark my words.”
But we didn’t have to mark his words. Donald Trump has been constantly mentioning his proposed border wall since the quote above, uttered at a campaign rally on June 16, 2015.
Since his induction into office, the elements of the border wall have changed. It may even be a fence, as President Trump discussed in an interview with Lesley Stahl on 60 Minutes the week following his election.
Stahl: “You’re, you know, they are talking about a fence in the Republican congress, would you accept a fence?”
Trump: “For certain areas I would, but certain areas, a wall is more appropriate. I’m very good at this, it’s called construction… there could be some fencing.”
We’ve all at some point imagined what this wall is going to look like. We’ve heard everything from 30 feet of reinforced concrete to a 16-foot wooden fence. Trump-hating leftists may picture a rock wall festooned with graffiti, topped with barbed wire and armed guards a la Berlin Wall. His supporters may imagine some sort of marble fortress palisade, a testament to mankind’s ingenuity and American security.
There are currently 650 miles of existing barriers, erected during the Obama and Bush administrations. Trump wants a 1,000-mile wall constructed, and we’re starting to see segments of that wall being constructed. It’s a far cry from those two extremes I just mentioned.
This February, six new miles of wall will be constructed in Hidalgo County, Texas. The newly contracted barrier, which will total 35 miles in Texas and California, is something between a wall and a fence. It’s made up of 18-foot steel beams, called “bollards,” and topped with corrugated metal sheets reminiscent of the shantytowns of a South American favela.
Now, the cost of this wall has been a hot topic of debate. Trump’s $5 billion ask for border security, mainly focused on the construction of this wall, created the longest government shutdown in American history. The ultimate cost of the wall is estimated to be closer to $10 to $21 billion. Many argue that this is a costly and unnecessary expense, as the majority of illegal immigration occurs in our port cities or merely from citizens arriving legally and then illegally overstaying their visas. It seems to be far too high a price to construct a barrier that is mostly symbolic.
But the wall’s construction is already creating profit opportunities for American businesses.
Sullivan Land Services, more commonly referred to as SLSCO, has been contracted to build that 35-mile Hidalgo County section of the wall. SLSCO was founded in 1995 by John, Todd, and Billy Sullivan, three brothers from Galveston, Texas. In a brief interview with Forbes magazine, John Sullivan was quick to assert that their decision to build the wall has nothing to do with politics.
And why should it? SLSCO has been making killings off government contracts — so much so that it created a separate branch of the company for it. Its disaster recovery sector, DRC Emergency Services, made $35 million hauling flooding debris in Louisiana. After Hurricane Harvey, it made another $40 million shuttling debris out of Houston.
This led to a $290 million contract to rebuild homes in New York after Hurricane Sandy, followed by a $375 million FEMA contract to do the same thing in Puerto Rico after Hurricane Maria.
The Sullivan brothers seem to have acquired a taste, if not an expertise, for disaster relief. If it weren’t for the whopping profits made on these undertakings, they might be labeled humanitarians. But the brothers claim to be devoid of agenda — it’s just good business. And business has been good. It’s estimated that SLSCO made $1 billion in revenue from government contracts in recent years, and that easily translates to around $50 million in profit.
So, the Sullivan brothers begin construction on Trump’s border wall with that same mantra. It’s not about the politics; it’s about the business opportunity. And there will be many more opportunities as the wall progresses.
Even at the low end of the estimated cost of the wall, let’s say $10 billion, that still leaves around $500 million in profits for opportunistic contractors like the Sullivan brothers. And as those 1,000 miles of wall are built, who knows what impacts, positive or negative, American businesses and property owners may encounter?
That’s all for now.
Until next time,
John Peterson
Pro Trader Today