Tag Archive for 'construction industry'

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Wells Fargo Reports: Infrastructure Spending and the Fiscal Multiplier

Wells_Fargo_Securities_logoInfrastructure spending is widely known to boost economic activity. However, the fiscal multiplier tends to be much larger during recessions, suggesting the late-cycle lift could be less than originally anticipated.

Infrastructure Fiscal Multiplier Low During Expansions

President-elect Donald Trump has proposed an infrastructure program of $1 trillion over the next 10 years (the Trump transition website notes $550 billion.) The American Society of Civil Indicator Title Engineers (ASCE) reports that the nation’s infrastructure is in “poor” condition and would require an estimated $3.6 trillion by 2020 to maintain a state of “good” repair, with only about half the needed funds committed (top chart).

Although details of the infrastructure program have yet to be published, two of Trump’s advisers provided a proposal in October (Ross, Wilbur and Navarro, Peter, “Trump Versus Clinton on Infrastructure,” Oct. 27, 2016). The plan includes $167 billion in equity investment, which is almost 17 percent of the total package. The equity portion would be supported by a tax credit equal to 82 percent of the equity. The remainder of the plan would be financed by debt. Based on the structure, critics of the plan suggest that investors will have little “skin in the game.” There is also recent talk about an infrastructure bank, which was included in the

While we await the details, discussion has also been centered on the impact to overall economic growth. Academic research finds that infrastructure spending, especially highway funding, has a positive effect on real GDP growth, which can be seen in the first two years and then a larger second- round effect after six to eight years (Leduc and Wilson, 2012). In fact, based on Congressional Budget Office (CBO) estimates, the multiplier for infrastructure spending for the American Recovery Indicator Titleand Reinvestment Act was larger than most other forms of government spending (middle chart). Literature also highlights the correlation between infrastructure spending and productivity growth in the U.S. and suggests that periods of weak public investment explains a good portion of the slow productivity growth (Aschauer, 1988) (bottom chart). These anticipated results are very promising, especially given slow productivity growth and low growth in potential output. However, the direct effect of infrastructure spending will be subject to long lags and will depend on the size of the fiscal multiplier.

A fiscal multiplier is the ratio of how much economic activity will increase for a unit of government spending. Studies show a wide array of multipliers based on a host of factors, with values ranging from 0.5 to 3.5 (Whalen and Reichling, 2015). The multiplier can also vary over the cycle. Research estimates a peak multiplier of 2.5 during recessions and 0.6 in expansions, with the gap due to stimulus crowding out private spending during multiplier for infrastructure spending is slightly less than two over a 10 year period (Leduc and Wilson, 2012), suggesting a $1.00 increase in spending raises output by roughly $2.00. That said, the infrastructure multiplier may be smaller during an expansion.

Source: ASCE, CBO, U.S. Department of Commerce and Wells Fargo Securities

1 Auerbach, Alan and Gorodnichenko, Yuriy. 2012a. “Measuring the Output Responses to Fiscal Policy.” American Economic JournalIndicator Title

ARTBA Foundation Announces 2016Transportation Development Hall of Fame Honorees

36c7fbed-30d0-432b-8904-e2b650dedefdThe 34th President of the United States, one of the “fathers” of the Interstate Highway System, and the iconic founders of Caterpillar Inc., have been selected into the 2016 American Road & Transportation Builders Association (ARTBA) Foundation’s “Hall of Fame.”

Launched in 2010, the “Transportation Development Hall of Fame” honors individuals or families from the public and private sectors who have made extraordinary contributions to U.S. transportation development during their careers. A committee of judges comprised of construction industry journalists annually reviews nominees in two categories:

Transportation Design & Construction Industry Innovators: Honors the men and women who discovered or created a “game changing” product or process that significantly advanced transportation design, construction and/or safety. It seeks to honor the original innovator.
     Benjamin Leroy Holt & Clarence Leo “C.L.” Best

Transportation Design & Construction Industry Leaders (Individuals or Families): Recognizes men, women and families who have made significant contributions—beyond just having successful businesses or careers—that have notably helped advance the interests and image of the transportation design, construction and safety industry.

President Dwight D. Eisenhower
 Francis C. Turner

Innovators:

Benjamin Leroy Holt (1849-1920) & Clarence Leo “C.L.” Best (1878-1951)

Benjamin Leroy Holt built his first combined harvester in Stockton, California, in 1886, using flexible chain belts rather than gears to transmit power from the ground wheels to the working mechanism, thus reducing breakage and down time. He built his first steam traction engine tractor in 1890, which could burn wood, coal or oil as fuel and carry 675 gallons of water. Holt incorporated the Holt Manufacturing Company with his brothers in 1892.

Meanwhile, Clarence Leo “C.L.” Best began his career in 1891, at the age of 13, working for his father Daniel Best. Best established the C.L. Best Gas Traction Co. in 1910, the same year Holt Manufacturing registered “Caterpillar” as a trademark. The two companies merged to form the Caterpillar Tractor Co., in 1925. Its first product line consisted of five tractors. In 1936, the company’s track-type tractors helped complete the construction of the Hoover Dam, and one year later Caterpillar machines helped complete the Golden Gate Bridge. Best was chairman of the board of Caterpillar Tractor Company from its founding until his death in 1951.

Whether supporting Allied Troops during World Wars I and II, widening the Panama Canal or helping to construct the Three Gorges Dam in China, “Caterpillar Yellow” machines are known as the standard for the industry. The company, whose current product line consists of more than 300 machines, helped transform the way both the private and public sector transportation construction market completes projects.

Leaders:

     President Dwight D. Eisenhower (1890-1969)

His views about the need for a network of Interstate highways were shaped by a 62-day, 3,000-mile cross country trek over dirt, mud and sand roads in 1919 as a young army officer, and also by seeing first-hand the efficiency and strategic value of Germany’s Autobahn during World War II.

Later, as president, Dwight David Eisenhower worked doggedly to build a similar superhighway in the U.S., not only for military transport and evacuation of cities, but also to help reduce road fatalities and connect communities.

On June 29, 1956, President Eisenhower signed the law authorizing construction of the Interstate Highway System and creating the Highway Trust Fund to pay for it. It was the most notable domestic achievement of his presidency, and has been called one of the greatest achievements of the federal government during the second half of the 20th century.

The 47,000-mile road network became the thread that connects the fabric of America. Today, it continues to serve as the lifeblood of the U.S. economy, and provides an unprecedented level of mobility and safety for all Americans.

     Francis C. Turner (1908-1999)

In 1994, American Heritage magazine named him one of 10 people who, although unknown to the general public, had changed life for all in America. Others called him one of the “fathers” of the U.S. Interstate Highway System.

Much of his 50-year career in public service focused on big projects and big ideas, and his work produced big results.

Frank Turner first joined the federal Bureau of Public Roads in 1929. In 1943, he was chosen to expedite completion of the Alaska Highway. In 1950, he was named coordinator of the Inter-American highway and projects in other countries.

When President Eisenhower appointed the Clay Committee to plan the Interstates, Turner became the body’s executive secretary. He helped lead the committee’s work and was the liaison between the Bureau and Congress as it wrote the 1956 law authorizing the Interstate system.

With Interstate construction underway, Turner worked from 1957-69 as deputy commissioner of public roads, chief engineer and director of public roads to resolve disputes and keep the program moving forward. In 1969, he was appointed Federal Highway Administrator, the only holder of that position to come up through the ranks. He held the post until his retirement in June 1972.

For more than 30 years, the ARTBA Foundation, a 501(c)(3) tax-exempt entity, has supported an array of initiatives to “promote research, education and public awareness.” Its efforts include educational scholarships, awards, executive education seminars, roadway work zone safety and training programs, special economic reports and a national exhibition on transportation at the Smithsonian’s National Museum of American History.

AEM Announces ‘I Make America’ Award Winners

imageThe Association of Equipment Manufacturers (AEM) announces the 2016 recipients of its I Make America advocacy awards.

Winners are AEM member companies that have achieved the highest level of support in AEM’s signature program to build grassroots support and advocate for pro-manufacturing policies that create and sustain jobs across America.

AEM honored 32 companies during its recent annual conference for achieving Gold status, and 6 of these companies also received recognition as Legacy supporters after maintaining Gold status for five consecutive years.

I Make America activities can include significant employee involvement; outreach to state, local and federal legislators; and promoting campaign sign-ups at trade shows and with allied trade associations.

“I Make America’s success depends on the strong support of member companies and their employees to help our elected officials understand the critical importance of the off-road equipment industry and manufacturing to economic prosperity and quality of life across America,” said AEM President Dennis Slater. “We appreciate their hard work and are pleased to publicly acknowledge their outstanding commitment and efforts.”

‘Legacy’ Award Salutes Continuous Service  

The 2016 I Make America Legacy award winners are:

CLAAS of America Inc.
CNH Industrial
General Kinematics
Kondex Corporation
Volvo Construction Equipment
Wolf Robotics LLC

2016 ‘Pillar of the Industry’ Award Winners

A total of 32 companies received Pillar of the Industry awards for achieving or maintaining I Make America Gold status during the year.

For more information about and to join in I Make America, visit www.imakeamerica.com.

The 2016 Pillar of the Industry Award winners are:

  • AGCO Corporation
  • Astec Mobile Screens
  • Blount International/Woods Equipment
  • Calder Brothers Corporation
  • Carlson Paving Products
  • Caterpillar Inc.
  • CLAAS of America Inc.
  • CNH Industrial
  • Custom Products of Litchfield Inc.
  • Deere & Company
  • Doosan Bobcat
  • General Kinematics
  • Gradall Industries
  • HUSCO International Inc.
  • InQuest Marketing LLC
  • JCB Inc.
  • Johnson Crushers International
  • Ken Cook Co.
  • Kobelco Construction Machinery USA
  • Kolberg Pioneer Inc.
  • Kondex Corporation
  • Mahindra USA
  • Manitou Americas Inc.
  • Morbark LLC
  • Sioux Corporation
  • Stellar Industries Inc.
  • Terex Corporation
  • Topcon Positioning Systems Inc.
  • Vermeer Corporation
  • Volvo Construction Equipment
  • Weiler
  • Wolf Robotics LLC

 

AEM is the North American-based international trade group providing innovative business development resources to advance the off-road equipment manufacturing industry in the global marketplace. AEM membership comprises more than 900 companies and more than 200 product lines in the agriculture, construction, forestry, mining and utility sectors worldwide. AEM is headquartered in Milwaukee, Wisconsin, with offices in the world capitals of Washington, D.C.; Ottawa, Canada; and Beijing, China.

Visit www.aem.org for more information.

Rick Rodier Named Vice President of Toro’s Sitework Systems Business

vcsprasset_521302_84610_a0d18d36-611e-4b05-9f5e-7bb7fd656cde_0Proven track record of success key to Rodier’s appointment

The Toro Company has named Rick Rodier vice president of Toro’s Sitework Systems Business, after previously serving as general manager.

In his new position, Rodier will continue to manage the day-to-day operations of the Sitework Systems Business, in addition to taking a more active role in strategic planning for The Toro Company as part of the executive management team.

rick_rodier“Rick continues to be an excellent leader with the Sitework business, and we are excited to recognize him in this expanded opportunity,” says Rick Olson, president and CEO of The Toro Company. “Rick’s knowledge of the construction and rental markets has been key to Toro’s success and beneficial to the industry as a whole. We look forward to working with Rick in his new position to further grow our position in the construction and rental spaces.”

Rodier has been with Toro since 1987 and has held a variety of operational, marketing and business management roles. He was named general manager of Toro’s Landscape Contractor Business in 2004 and then appointed to head up Toro’s new Sitework Systems Business in 2009. During his tenure at Toro, he has been instrumental in a number of key company initiatives that have driven growth for the Sitework Business and the company.

Earlier this year, Rodier was named the 2017 chairperson for The International Construction and Utility Equipment Exposition (ICUEE), and also serves as a director on the Construction Equipment (CE) Sector Board of AEM. Rodier holds a Bachelor of Business Administration (B.B.A.) in Business and Economics from Hamline University and an MBA from The University of St. Thomas.

Rodier officially assumed his duties as vice president of the Sitework System Business on October 12, 2016.

About The Toro Company
The Toro Company (NYSE: TTC) is a leading worldwide provider of innovative solutions for the outdoor environment including turf, snow and ground engaging equipment, and irrigation and outdoor lighting solutions. With sales of $2.4 billion in fiscal 2015, Toro’s global presence extends to more than 90 countries. Through constant innovation and caring relationships built on trust and integrity, Toro and its family of brands have built a legacy of excellence by helping customers care for golf courses, landscapes, sports fields, public green spaces, commercial and residential properties and agricultural fields. For more information, visit www.toro.com.

AEM Market Update and Analysis: U.S. Construction Equipment Exports Down 25 Percent

imageExports of U.S.-made construction equipment fell 25 percent overall for the first three quarters of 2016 compared to 2015 January – September, for a total $8.2 billion shipped to global markets.

All world regions were in decline from single-digit drops for Europe and Central America to decreases in the 50-percent range for Africa and South America, according to the Association of Equipment Manufacturers (AEM), citing U.S. Department of Commerce data it uses in global market reports for members.

AEM is the North American-based international business group representing the off-road equipment manufacturing industry.

Exports by World Region

aem-ytd-sept-2016-exports-us-made-construction-equipment-copy

January-September 2016 U.S. construction equipment exports by major world regions compared to January-September 2015:

Canada dropped 21 percent, for a total $3.5 billion
Europe declined 6 percent, for a total $1.2 billion
Central America fell 9 percent, for a total $1.0 billion
Asia decreased 30 percent, for a total $972 million
South America declined 49 percent, for a total $733 million
Australia/Oceania fell 36 percent to $427 million
Africa declined 51 percent to $317 million
AEM Market Overview

AEM’s Benjamin Duyck, director of market intelligence, provides some insights:

“For the past 15 quarters U.S. exports of construction equipment declined year over year and in the third quarter of 2016, that trend remains unchanged. A key factor affecting the reduction in exports is most likely due to the strong dollar making U.S. manufacturers less competitive in the global marketplace. Of course, the strong currency is a problem that plagues all U.S. exports. Some international markets are still viable; exports are up year over year to Belgium and Germany, for example.

“Our expectations for the fourth quarter remain subdued as the U.S. dollar is experiencing its longest rally in 16 years. With the global economic malaise, the slowdown in emerging markets and the negative interest rates seen in several economies’ bond markets, investment is flowing to the U.S. and U.S. stocks, driving up demand for our dollar, inadvertently affecting our competitiveness abroad.”

Exports by Top 10 Countries

The top countries buying the most U.S.-made construction machinery during the first three quarters of 2016 (by dollar volume) were:

Canada – $3.5 billion, down 21 percent
Mexico – $831 million, down 9 percent
Australia – $392 million, down 38 percent
Belgium – $294 million, up 33 percent
Germany – $202 million, up 24 percent
China – $190 million, down 8 percent
Peru – $181 million, down 30 percent
Chile – $165 million, down 60 percent
Japan – $147 million, up 6 percent
Brazil – $145 million, down 61 percent
Economic Resources Available

AEM provides a variety of market macroeconomic and industry trend data for members as well as survey opportunities and custom research. Visit www.aem.org in the Market Data/Market Intelligence section. For more information, contact AEM’s Benjamin Duyck, director of market intelligence (bduyck@aem.org).

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About the Association of Equipment Manufacturers (AEM) – www.aem.org AEM is the North American-based international trade group providing innovative business development resources to advance the off-road equipment manufacturing industry in the global marketplace. AEM membership comprises more than 900 companies and more than 200 product lines in the agriculture, construction, forestry, mining and utility sectors worldwide. AEM is headquartered in Milwaukee, Wisconsin, with offices in the world capitals of Washington, D.C.; Ottawa, Canada; and Beijing, China.