Obama's Infrastructure Proposal: Stimulus Package to Nowhere?

Remember when you got a check earlier this year thanks to the stimulus package that gave everyone an automatic tax rebate? That was cool, but that was before the economy fell off the face of the earth.

You might be thinking: Since things are even worse, don’t we deserve some more money? Well, now there’s talk of another stimulus package, only it might not be as exciting as the first.

While there’s still a chance we’ll all just get another round of checks, some politicians are taking a broader view.

Obama’s most recent proposal would increase infrastructure spending—that’s all our highways, bridges, and other public works. It would be the largest spending program in half a century. This would be a sort of multi-pronged attack on the lagging economy: theoretically, this plan would create jobs, put more money into the economy, and improve a crumbling infrastructure.

Even a Nobel prize winner thinks it’s a good idea. I mean, do we really need more bridge-collapsing tragedies to drive this point home?

Democrats have pushed the idea of a faux stimulus by investing in infrastructure projects that have been approved and are simply awaiting funding. And there are around $18 billion worth of projects like that on the table—that’s a whole lotta spending, especially in this economy.

So who could come out ahead if an infrastructure stimulus gets done?

• Cemex (CX): You need cement to build just about anything, and Mexico-based CEMEX is one of the world’s biggest cement companies. Bring on those trucks with the spinny things on the back!
• Chicago Bridge & Iron Company (CBI): This engineering and construction company also builds power plants and offshore platforms.
• Matrix Service Co (MTRX): Matrix constructs stuff like storage tanks and other special constructions for energy-related companies. They’re also into maintenance projects.
• Caterpillar (CAT): You probably know this Illinois-based company more for its diesel engines and industrial gas turbines, but Caterpillar also makes tractors, pipe layers, and other construction equipment.

If this so-called “stimulus” package is approved, a whole lot of players in the construction industry are likely to see an uptick in business. Let’s just hope they don’t start building bridges to nowhere.

Disclosure: no positions

Comments

[Catguy:]

Caterpillar is the world's largest maker of constructruction and mining equipment. Caterpillar also makes diesel engines and industrial gas turbines. Caterpillar does not manufacture lawn mowers.

2008 Dec 10 06:05 AM

[fran:]

your credibility[lack of] is showing!!

CBI HAS NO INVOLVEMENT WITH "BRIDGE BUILDING"

2008 Dec 10 09:08 AM

[Carlos Port...:]

I stand corrected Fran. It should've read "doesn't actually build bridges." As for Caterpillar, I had Toro on my mind for some reason. Total brain fart on my part.

2008 Dec 10 09:41 AM

[mediocris:]

On Dec 10 09:41 AM Carlos Portocarrero wrote:

> I stand corrected Fran. It should've read "doesn't actually build
> bridges." As for Caterpillar, I had Toro on my mind for some reason.
> Total brain fart on my part.




You might have been thinking of Deere. They make "crawlers" for construction as well as lawnmowers. They should also benefit from Obama's stimulus, although their primary niche is agricultural.

2008 Dec 10 12:54 PM

[cy1854:]

fran and carlos to correct you both cb&i had alot do do with bridge building and construction in its early years,thought you would like to know,

2008 Dec 13 11:51 PM

[diogeron:]

Can somebody explain to me the rational connection between the thesis implicit in the headline and the actual content of the post? It makes no sense at all.

2008 Dec 14 09:17 PM

[Carlos Port...:]

I think the title is asking if this will work as a stimulus package or not. In other words, will it pump up the economy or not. It might and it might not. Just saw that Jim Jubak mentioned Flowserve (FLS) in his Top Stocks for 2009 column. Why? 'Cause it's all about the infrastructure.

2008 Dec 16 04:19 PM

[Carlos Port...:]

Wired has a great article on the perils of infrastructure spending. It looks like a lot of work needs to be done, so that's good news in terms of job creation. Corruption, on the other hand, is a little scary.

2008 Dec 18 09:59 AM

[Carlos Port...:]

And Yahoo had yet another article yesterday on five stocks that could get a boost from Obama's spending plan. They mention ITRI, PWR, FLR, WTR, and CSCO.

2008 Dec 30 09:56 AM