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Nickelless
Administrator
USA
5580 Posts |
 Posted - 02/12/2009 : 23:02:21
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The Associated Press
WASHINGTON – The $789 billion stimulus package aims to jump start parts of the U.S. economy that are hurting the most ? the nation's factories and builders that are rapidly shedding jobs. But despite the plan's big spending and tax cuts, some industries will likely come up short of the help they want.
Companies that build bridges, make concrete, manufacture wind turbines, and assemble backhoes for construction are likely to emerge as big winners from the roughly $150 billion in infrastructure spending under the stimulus, expected to come up for a vote by the House and Senate by Saturday.
But economists and industry groups say the effect on areas like housing and commercial construction, automakers and the overall manufacturing industry may be muted. And while the spending may slow job losses in construction and manufacturing, it is unclear if the plan will reverse the swelling ranks of the unemployed, even in sectors that appear to benefit the most.
"It is not going to be this big panacea that everybody anticipates in terms of tremendous growth," said Tom Runiewicz, an economist at IHS Global Insight.
Manufacturers and construction companies have suffered mightily during the recession, battered by a combination of depressed demand for factory goods, a crumbling auto industry, weak home building and tight credit that has stifled expensive construction projects. The two major components of the U.S. economy cut 318,000 jobs in January alone.
These moribund sectors will see more money to upgrade the nation's electrical grid, renovate aging schools, and improve public transit. The plan also includes an expansion of high-speed Internet connections to rural areas. President Barack Obama estimates the entire stimulus will create or preserve 3.5 million jobs, many of them the direct result of infrastructure work.
That includes $27 billion to repair highways and bridges, spending which would likely directly affect companies that make building materials like concrete, steel and gravel. It could also lead to higher demand for tractors and backhoes made by Caterpillar Inc.
But Caterpillar Chief Executive Jim Owens on Thursday said the heavy equipment maker will probably have to lay off more employees before it starts thinking about rehiring.
Speaking after a town hall meeting with President Barack Obama in a Caterpillar factory in East Peoria, Ill., Owens said that even if a stimulus plan passes immediately, it won't have an effect on the economy until late this year or early 2010.
That seemed to back away from the immediacy of a statement Obama made minutes earlier.
The president said Owens told him if the stimulus passes, he'll rehire some of the more than 20,000 workers the manufacturer plans to lay off.
Vulcan Materials Co., a Birmingham, Ala. firm that makes crushed stone, gravel and sand used in road beds, laid off about 1,000 of its 9,000 workers in 2008 because of the construction slowdown. Company spokesman John English said the company and its workers have lobbied Congress hard to include significant road spending in the spending package.
"We are optimistic that it will drive some volume increase that will let us put some people back to work," he said.
The bills include about $7 billion in grants and credits for the build-out of high-speed Internet connections to underserved communities. It would be the first time the federal government would pay to spread broadband to homes on a large scale. Big beneficiaries could be major phone and cable companies like AT&T Inc., Verizon Communications and Comcast Corp. But rural phone providers like Embarq Corp. and Frontier Communications Co. could benefit the most relative to their size.
"You can be sure that there is some upside for us," said Ed Mueller, chief executive of Qwest Communications International Inc., on Tuesday. Qwest provides phone and Internet service in 14 states.
Provisions on renewable energy include tax incentives for wind power. That could mean new business for companies like General Electric Co., which makes wind turbines. Company spokesman Peter O'Toole said industry estimates are that 20 jobs in installation and maintenance are created for every megawatt of wind energy. Last year, GE sold a couple thousand of the turbines, which translates to "a lot of jobs," O'Toole said.
Other businesses, however, may not benefit as much from the stimulus.
Tax benefits for car buyers, meant to revive auto sales, were watered down, according to Thomas J. Duesterberg, president of the Manufacturers Alliance/MAPI, an industry group. A more generous Senate proposal of a $15,000 tax credit for home buyers was eliminated, leaving a credit of up to $8,000 for first time home buyers that was well short of what the housing industry wanted.
Brian Burgett, president of Kokosing Construction Co., said the stimulus spending would likely help his Frederickstown, Ohio, company that works on highway construction, commercial buildings and water treatment facilities.
Several projects have been pulled in recent months as the economy worsened. But while he said the federal spending would help preserve jobs, money for projects like highways probably wasn't big enough for job growth in those areas.
"I don't see significant new jobs being created for us in Ohio," Burgett said.
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Stimulus creates business winners and losers
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