Eaton CEO: US Economy Needed More Infrastructure Spending In '09
11 Novembre 2010 - 10:54PM
Dow Jones News
Delays last year in spending money designated for infrastructure
construction undermined the effectiveness of the massive U.S.
economic stimulus legislation, Eaton Corp. (ETN) Chairman and Chief
Executive Alexander Cutler said.
Cutler said front-loading the $787 billion program with tax
breaks and other aid with limited employment-growth potential was a
critical error in the implementation of the stimulus program.
"The infrastructure money really didn't start rolling until
2010," Cutler said in an interview Wednesday with Dow Jones
Newswires. "If this would have occurred a year ago, it could have
saved a lot more jobs. The biggest loss of employment for Americans
occurred all through '09."
Government planners anticipated spending about 87% of the money
designated for road and bridge repairs, water plants, energy
conservation projects and other infrastructure work in 2010 and
2011. But Cutler said this spending timeframe recently has been
stretched into 2012 and 2013, further diminishing much-needed
benefits for a still-weak U.S. economy.
Eaton, a Cleveland-based industrial conglomerate specializing in
electrical equipment, automotive and truck components and aerospace
systems, has received about $450 million in revenue so far this
year from stimulus-funded projects. The company anticipates the
stimulus program accounting for an additional $500 million in
revenue next year.
Cutler acknowledges that Eaton has been a "big beneficiary" of
stimulus spending, particularly on water projects where the company
supplies pumps and filters.
"The area where the spending has gone the fastest on the
infrastructure side is on water and waste water treatment plants,"
he said.
Eaton draws about half of its annual revenue from overseas
customers. Cutler said government-sponsored stimulus programs in
China and Brazil were more effective than the U.S.'s at quickly
channeling money to industrial sectors hit hard by the economic
recession.
"The lesson of (government responses to the) recession is to
move fast, move sudden and move big," he said. "The difference we
saw in other countries was the money was invested in programs that
created jobs right away and the money got to the street quite
quickly."
Cutler added, though, that the pace of the recovery for the U.S.
economy is bound to be slower than elsewhere because consumers
remain saddled with large amounts of debt that discourage spending.
Moreover, access to credit for small business continues to be
constrained, holding down investments in equipment and additional
employees.
"When you look at the emerging nations, they have the lowest
debt levels of any of the countries and as a result have the
healthiest economies," he said.
Eaton predicts that it will reach a record profit level in 2012.
But the company has raised its outlook significantly this year,
prompting some analysts to conclude the company will reach its goal
much sooner than 2012.
Cutler declined to comment on a report from earlier this week
that Eaton is pursuing the purchase of BAE Systems PLC's (BA.LN)
aerospace business.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com
(Anjali Cordeiro contributed to this report)
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