Heavy Equipment Industry Wants More US Spending On Highways
October 27 2009 - 8:14PM
Dow Jones News
Two dozen flat-bed trailers with construction equipment are
expected to snake through Washington D.C. Wednesday as equipment
manufacturers and dealers try to drum up support for increased
federal spending on roads and bridges.
The equipment industry is targeting expanded transportation
funding next year to boost demand for excavators, bulldozers, motor
graders and other construction machinery.
"It's our life-line. It creates a lot of jobs within our
industry," said Monty Boyd, who owns a Caterpillar Inc. (CAT)
dealership in Louisville, Ky. "We've been hit hard by the economic
downturn."
Boyd, president of Whayne Supply Co., said his dealership's
revenue this year is down 35% from 2008 and his sales volume has
plunged by more than 50%.
Backers of the industry's "Start Us Up USA!" campaign intend to
plant 5,500 yellow flags on the National Mall to represent the
550,000 jobs that they say have been shed by U.S. equipment
manufacturers and dealers since the end of 2006. Machinery industry
unemployment is running at about 37%, according to a recent survey.
The figure does not include unemployment in the construction
contracting sector.
The equipment industry's biggest Congressional ally for
additional spending is U.S. Rep. James Oberstar, (D, Minn.),
chairman of the House Transportation and Infrastructure Committee.
Oberstar has suggested raising transportation funding to at least
$450 billion over six years, up from $286 billion in the expiring
six-year transportation bill.
To generate the additional money, equipment industry
representatives say they're prepared to lobby for an increase in
the 18.4-cent-a-gallon federal motor fuel tax or another tax
source. The fuel tax was last raised in 1993.
Any proposed tax increase, though, is certain to attract stiff
opposition in Congress from members who are reluctant to raise
taxes at a time when Americans' incomes are falling and the
unemployment rate is at its highest level in a generation.
"We know it's going to be politically difficult, but we think
it's doable," said Toby Mack, president of the Associated Equipment
Distributors Inc., an Illinois-based trade group for machinery
dealers. "There really is no other way to finance our immediate
needs."
Chief executives for equipment manufacturers have complained
repeatedly in recent months that the nearly $880-billion economic
stimulus legislation approved by Congress early this year did not
provide enough money for infrastructure work to boost demand for
construction equipment or significantly address the U.S.'s
deteriorating public infrastructure.
Mack said the stimulus bill authorized about $27 billion for
highways and bridges.
"People who buy and use construction machinery aren't going to
invest in that kind of asset until they see" more money available,
he said.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com