Industry Waiting for Stimulus To Begin
With all due respect to the lawmakers in Washington, D.C., the American Recovery and Reinvestment Act of 2009 (ARRA) came in with a bang, and has since fizzled.
By James Board
With all due respect to the lawmakers in Washington, D.C., the American Recovery and Reinvestment Act of 2009 (ARRA) came in with a bang, and has since fizzled. With all of the hoopla surrounding the Congressional passage of a $787 billion stimulus package back in February 2009, the actual results felt (or not) by the wastewater industries have been the exact opposite of what the package was intended to do.
In addition to what was supposed to happen with all of this injection of cash into the industry, the Federal Reserve has reportedly made provisions to purchase the required municipal bonds from the municipalities if they are unable to sell them in their local economies. The US government has virtually provided the front end and back end financing vehicles to promote the rebuilding of the wastewater infrastructure, but there is still a gridlock.
Notwithstanding the unwanted effects of the “buy American” clause in the package, many municipalities put projects that were ready to go out for bids on hold in order to re-evaluate their chances of getting some of the money from the government. When you add to this the fact that an on-going debate regarding the true meaning and effect of the “buy American” clause has yet to be truly resolved, the flow of project money in the wastewater industry has decreased to a trickle.
The effect of all of this re-evaluation will be costly and time-consuming. There is one town in Oklahoma where the local residents will be forced to pay 60% more in utilities taxes in order to take advantage of the “free” stimulus money given to them by the US government. What was originally slated to be a $5.26M project transformed into a $7.2M project in order to get $1.5M in stimulus money. Do the math. Does this make sense? As a condition to accepting the ARRA funding, the town had to comply with a number of federal requirements which increased the total cost of the project by 25%!
Underpinning this whole slowdown on municipal projects is the “Buy American” clause inserted into the ARRA in the final couple of weeks before Congressional passage. When one reads the clause, the intent is clearly stated: the bill is designed to infuse money into the economy and provide jobs to Americans. However, this emotional appeal of “buy American” is lost in the actual translation because it is an outdated concept. Many types of American made equipment are built from components made in other countries. Some types of equipment used in the wastewater industry are only made elsewhere in the world and must be imported for use in our plants.
Any company that performs its fiscal responsibilities to its owners and stakeholders must look for the best available technology at the lowest possible price. Our own EPA regulations have driven many foundries and steel mills from the USA and either forced them out of business or forced them to relocate to other countries. Now we are saying that we will only buy castings and steel items made in America.
The government has stated that there would be an automatic waiver of this clause for those countries for which the US has international trade agreements. However, they failed to realize that these agreements do not cover the local jurisdictions that disburse the funds.
In recent days, there have been several equipment waivers given to specific equipment that cannot be sourced in sufficient quantities or quality in the US. However, even the waiver process is full of red tape and bureaucratic processes that further slow down the bidding and building process.
In the next 60-80 days, some Canadian jurisdictions will enact a ban on the purchase of any goods from any country that imposes trade restrictions on Canada. This could have a very negative economic impact on those US manufacturers that sell into the Canadian markets, as Canadian manufactured goods are currently precluded from being sold for projects funded by the ARRA.
It is time that the United States Congress admits that they made a mistake, passes amendments to the ARRA that eliminates the “buy American” clause, and takes out all of the red tape required to get this money actually infused into the economy. The wastewater industry is literally thirsty for this infusion and will not reap the benefits of the ARRA without having the means to streamline the process and get the money working on rebuilding the infrastructure and creating real jobs. WW
About the author:
James Board is president / managing director of Weir Specialty Pumps, based in Salt Lake City, Utah. He serves on the Board of Directors of the Water and Wastewater Equipment Manufacturers Association.