CORRECT: Heavy Equipment Industry Wants More US Spending On Highways

 
 
   By Bob Tita 
   Of DOW JONES NEWSWIRES 
 

The equipment industry is targeting expanded transportation funding next year to boost demand for excavators, bulldozers, motor graders and other construction machinery.

"It's our life-line. It creates a lot of jobs within our industry," said Monty Boyd, who owns a Caterpillar Inc. (CAT) dealership in Louisville, Ky. "We've been hit hard by the economic downturn."

Boyd, president of Whayne Supply Co., said his dealership's revenue this year is down 35% from 2008 and his sales volume has plunged by more than 50%.

Backers of the industry's "Start Us Up USA!" campaign intend to plant 5,500 yellow flags on the National Mall to represent the 550,000 jobs that they say have been shed by U.S. equipment manufacturers and dealers since the end of 2006. Machinery industry unemployment is running at about 37%, according to a recent survey. The figure does not include unemployment in the construction contracting sector.

The equipment industry's biggest Congressional ally for additional spending is U.S. Rep. James Oberstar, (D, Minn.), chairman of the House Transportation and Infrastructure Committee. Oberstar has suggested raising transportation funding to at least $450 billion over six years, up from $286 billion in the expiring six-year transportation bill.

To generate the additional money, equipment industry representatives say they're prepared to lobby for an increase in the 18.4-cent-a-gallon federal motor fuel tax or another tax source. The fuel tax was last raised in 1993.

Any proposed tax increase, though, is certain to attract stiff opposition in Congress from members who are reluctant to raise taxes at a time when Americans' incomes are falling and the unemployment rate is at its highest level in a generation.

"We know it's going to be politically difficult, but we think it's doable," said Toby Mack, president of the Associated Equipment Distributors Inc., an Illinois-based trade group for machinery dealers. "There really is no other way to finance our immediate needs."

Chief executives for equipment manufacturers have complained repeatedly in recent months that the nearly $780-billion economic stimulus legislation approved by Congress early this year did not provide enough money for infrastructure work to boost demand for construction equipment or significantly address the U.S.'s deteriorating public infrastructure.

Mack said the stimulus bill authorized about $27 billion for highways and bridges.

"People who buy and use construction machinery aren't going to invest in that kind of asset until they see" more money available, he said.

-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com