Caterpillar CEO Wants More US Spending on Construction
April 29 2009 - 1:56PM
Dow Jones News
Caterpillar Inc. (CAT) Chief Executive James Owens said
Wednesday additional spending on U.S. infrastructure projects is
needed because the current economic stimulus program isn't
sufficient to jump-start the slumping construction industry.
Owens, a member of the Obama administration's Economic Recovery
Advisory Board, said the $70 billion allocated for construction
projects in the $787 billion stimulus legislation isn't enough to
offset the steep reduction in private sector spending on
construction.
"We need a bigger and sustained stimulus," Owens said to
reporters after participating in a panel discussion on the global
economy organized by the Chicago Council on Global Affairs.
"There's a lot of the excess [construction] capacity that could be
put to work."
The collapse of the U.S. housing market, plunging prices for
mined commodities and tightening credit conditions have choked off
demand for Caterpillar's bulldozers, excavators and other
machinery.
The Illinois company expects 2009 sales to fall at least 30%
from 2008. In recent months, Caterpillar has shed about 25,000
employees, closed assembly plants and cut executive compensation to
align expenses and production to reduced sales.
Owens said he has asked Caterpillar managers to assemble a list
of large infrastructure projects in the U.S. that are planned but
not funded. He intends to present the projects to the economic
recovery panel to illustrate the shortcomings of the stimulus bill
as it relates to highways, bridges, railroads, energy transmission
and other infrastructure.
"Now would be a meritorious time to pull those projects
forward," said Owens, who predicted high levels of unemployment
will persist even after U.S. economic growth resumes at a tepid 2%
rate in 2010. "I think unemployment grows next year."
Owens also warned against protectionist trade legislation as a
reaction to the recession. He said the "buy American" provisions in
the stimulus bill undermines the economic recovery by triggering
similar restrictions in other countries.
Caterpillar is a major exporter of U.S.-built machinery and has
lobbied in recent years for U.S. free trade agreements with other
countries that eliminate tariffs.
"Protectionism will dramatically worsen this recession and
continue it," he said.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com