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Date:
2
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25
/2010
Wake Up Call
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Move It
The equipment industry downturn has resulted in significant losses across the board. The answer? A highway bill – the sooner the better, argues AEM President Dennis J. Slater.
Following the special election last month in Massachusetts for the open Senate seat, Washington again turned its attention to jobs. One obvious way to create jobs needs more serious attention: a multi-year transportation infrastructure bill that would boost employment in the construction industry, including equipment manufacturers and dealers who sell the machinery and construction contractors who buy and use the machinery.
Construction equipment manufacturing is suffering tremendously. Unemployment in this sector is more than double the national average. Thousands and thousands of good-paying jobs have vanished, but the trend of losing U.S. jobs need not continue if Congress would fund a highway bill.
Unfortunately, Congress has “kicked the issue down the road” by passing two short-term extensions since the last bill expired in September 2009. The latest two-month extension expired on Feb. 28, 2010, and it appears the most likely Congressional action will be another extension, a move that does not create the market certainty to promote job growth or meaningful infrastructure improvement.
Many say we can’t find the money for such funding. But the country can’t afford not to find the funding. Naysayers also contend we can’t stand more taxes and more debt right now. The country doesn’t need more debt, but regardless of the source of highway funding, a real unconditional commitment to desperately needed infrastructure improvements in the U.S. will boost economic activity and in so doing, will return greater revenues to federal coffers.
Consider the nation’s reported unemployment rate. The December jobless report said all “50 states had an unemployment rate in December that was higher than a year earlier. Michigan again had the highest rate of unemployment at 14.6 percent.” New York had a 9 percent rate and California had a 12.4 percent rate. Because unemployment benefits expire, and some job-seekers just give up, it is often estimated that the “real” general unemployment is probably 17 percent, even though in the construction equipment manufacturing industry it’s more than double the “real” rate.
An information campaign called Start Us Up USA! has been underway since last fall and is being coordinated by the Association of Equipment Manufacturers (AEM) and the Associated Equipment Distributors (AED),the nation’s two leading construction equipment industry trade groups. The campaign is based on facts provided by IHS Global Insight. Since 2006 the U.S. equipment industry has lost 37 percent of its workforce and 40 percent of its economic output. And things are getting worse for manufacturers, dealers and contractors, not better.
As we learned during the Start Us Up USA! campaign, another large state, Texas, has lost more than $11 billion in economic activity because of the equipment industry downturn, the biggest loss of any state. And Texas is second only to California in equipment industry-related job losses, with more than 53,000 layoffs in three years.
The industry is not asking for the bailouts given to the auto industry or the financial services sector, but it is asking Congress to make highway reauthorization a priority. It seems reasonable that the Congressional delegations from states such as California, New York, Michigan and Texas would value the jobs that a highway bill could create.
Equipment dealers and contractors would also regain jobs from proper infrastructure funding. As things stand, thousands have been laid-off from highway construction jobs, and contractors are still reducing equipment fleets and their employment rolls.
The need for jobs is quite serious, but there is another matter we must pay attention to or pay a terrible price and become a second-rate economic power. A fully funded highway bill would provide the roads, bridges and other infrastructure improvements for long-term economic growth. Without infrastructure investment, the U.S. economy will fall prey to the swiftly developing economies of China and India.
This is a real and pressing competitive issue. “The Fortune at the Bottom of the Pyramid,” by C.K. Prahalad, offers some insight for us. The economies of China and India have an advantage now that we don’t – they do not need to replace old crumbling infrastructure, but only to build state-of-art infrastructure that will lure global business through new roads and new ports that provide manufacturers with superior transportation access to markets.
How does poor infrastructure make a difference? The Texas Transportation Institute (TTI) estimates that traffic congestion costs the country $87 billion per year in wasted time and fuel. How can we absorb these costs and stay competitive?
Infrastructure is also a matter of safety. A study last year by the Transportation Construction Coalition found that road conditions are a contributing factor in more than half – 52.7 percent – of the nearly 42,000 American deaths resulting from motor vehicle crashes each year.
There seem to be signs in Washington that our Start Us Up USA! campaign is getting through, but we don’t have a highway bill yet.
Although last year’s stimulus money was helpful, it hasn’t done the job. If Congress wants to put people to work and boost U.S. productivity for the next 50 years, a highway bill is the answer.
Washington needs to approve a multi-year reauthorization of the highway bill now, not just for job creation today but for the well-being of the nation 50 years from now.
Dennis J. Slater is president of the Association of Equipment Manufacturers, which provides trade association services on a global basis for companies that manufacture equipment worldwide in Agriculture, Construction, Forestry, Mining and Utility.
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