It’s too early to know exactly how the funds in President Barack Obama’s American Recovery and Reinvestment Act will be doled out. It’s also too early to know the impact the stimulus plan will have on the U.S. economy. Will the plan prevent another Great Depression? Is the plan too large? Is it too small? Is it a complete waste of money? Only time will provide the answers to those questions.
Obama contends the $787 billion stimulus plan will preserve or create 3.5 million jobs.
It is becoming increasingly clear to many local business, educational and civic leaders that the plan, if implemented smartly, could help drive southeastern Wisconsin into the 21st century.
Wisconsin Gov. Doyle said Wisconsin’s share of the stimulus plan should total about $3.5 billion, including:
- $2 billion for Medicaid and for the “state stabilization fund,” some of which will go to local school districts and local governments.
- $550 million for roads and bridges.
- $90 million in education incentive grants (for schools).
- $150 million to weatherize and improve energy efficiency of low and moderate-income homes.
Wisconsin also will receive funds for high-speed rail, improving university facilities, clean water, flood control, environmental restoration and alternative energy.
Ultimately, the stimulus could help southeastern Wisconsin fund a regional transit authority, launch the Kenosha-Racine-Milwaukee (KRM) high-speed railroad service and provide a spark to the initiative to help build Milwaukee as America’s “Fresh Coast” for the freshwater science and industry.
The state of Wisconsin’s list of potential stimulus projects transcends a vast variety of industries and projects, including transportation, education, green alternative energy and health care.
Other money is set aside to assist in the health care industry’s transition to electronic medical records, dam repair, flood control reconstruction and the Great Lakes Clean Water Fund.
In addition, Wisconsin’s wish list includes $993.3 million for green alternative energy projects, including upgrading state vehicles to alternative fuel, state-owned power plant conversions from coal and investments in UW facility research efforts in alternative energy sources.
The following article accounts for how some of Wisconsin industries and companies may stand to gain from the federal stimulus plan.
Transportation
If road projects such as highways, bridges and city streets are funded with the federal stimulus dollars, they will have some of the most significant effects on the economy, said Pat Goss, executive director of the Wisconsin Transportation Builder’s Association.
“We’ve got a record number of people on unemployment who have been laid off and let go. I am confident this will accomplish what they want, and the long-term benefit of this will put people back to work,” Goss said.
Mike Sikma, vice president of Musson Bros. Inc., a Brookfield-based contractor that serves road and highway construction, storm and sanitary sewers and other projects, agreed. The state of Wisconsin and its municipalities also have a large number of projects that have been deferred over the years and could quickly be started with federal stimulus dollars, he said.
“I think that municipalities have some projects they always would have liked to get done and weren’t able to do,” Sikma said. “The DOT is probably in a similar fashion. Inflation did hold off on a few projects.”
Because of the slowdown in residential-related development, more companies will be interested in aggressively bidding for stimulus-related projects, Sikma said.
“You’re going to see more people getting into municipal work,” he said. “There will be more companies (looking for) the opportunity to pick up work lost over the last few years.”
Construction
Like transportation projects, building construction projects could help stimulate the economy because of their high wages and the large network of suppliers that support the industry, said Mike Fabishak, chief executive officer of Associated General Contractors of Greater Milwaukee. While many construction companies are still busy with projects under construction, their pipelines are drying up, leading to projections for a slower late 2009 and 2010. A federal stimulus, if it includes money to either repair or construct new municipal buildings or schools, could help maintain the industry, he said.
“The concern is that much of the deterioration will probably manifest itself from the middle of this year out,” he said. “There is some work going on now, but we are seeing some layoffs in most of the crafts, particularly the basic trades like carpentry, bricklayers and cement. This is not only from my perspective, but from all of the (AGC) chapters around the country, we’re all thinking that this could be a viable stimulus to our industry at a time when we need it.”
John Hunzinger, president of Brookfield-based Hunzinger Construction Co., agreed.
“Even if (there is stimulus money) not in construction, it’s just about trying to get the tide to come in,” he said. “There is a lot for infrastructure, which will indirectly have some effect on shoring up construction costs to some degree. We’re hoping for some opportunities for some (construction) support and some building opportunities.”
Large contractors winning projects also will provide work for subcontractors in the region.
Manufacturing
Manufacturers that serve the transportation and construction industries could indirectly benefit from the federal economic stimulus package because of their customers ordering new machinery or equipment.
GenMet, a Mequon-based steel fabricator that serves original equipment manufacturers related to the paving and construction industry, believes it could see increases as those customers begin work on stimulus-funded projects. GenMet, formerly known as General Metal Works, has facilities in Mequon and Slinger and employs 75 workers.
“We hope that it would trickle down and impact us with sales revenue,” said Mary Isbister, president of the company. “It will also help us because as the infrastructure improves we will more readily get supplies when we buy from our vendors out of state and when we want to sell out of state.”
According to Isbister, the stimulus package might also enable manufacturers to increase their research and development budgets.
“If there was money to help with those things, we could more comfortably invest it and hire people to assist us with (R&D),” she said. “It would allow me to put some good people to work.”
Milwaukee-based Super Steel Products Corp., which manufactures rail cars and other rail industry products, would benefit from a stimulus package, but its effects would take two to three years to take hold, said Jim Schmelzer, president and CEO.
“The unfortunate thing is that the length of time it takes when money is approved to when a passenger rail project is approved is fairly long,” he said. “It’s not immediate. But over a two- to three-year period, it will have a substantial impact as we work with a lot of rail general contractors.”
In early 2008, Super Steel closed its manufacturing facility in Schenectady, New York. It has since shifted production to Milwaukee, where it employs about 400 workers, Schmelzer said. If several projects the company is bidding on are won, Super Steel anticipates growing employment in Milwaukee to more than 500 within 18 months. If the federal stimulus package is approved, its jobs prospects will improve further, Schmelzer said.
The stimulus plan also includes tax incentives for consumers who purchase motorcycles, which would provide a boost for Milwaukee-based Harley-Davidson Inc.
Other infrastructure
Non-transportation infrastructure projects such as sewers, power transmission and metering could also see some stimulus money. Some companies will see funding directly, while others could indirectly benefit from the stimulus package.
“Most of (the stimulus money for infrastructure) is for roads and bridges, but there is a piece for water infrastructure,” said Rich Meeusen, chairman, president and CEO of Milwaukee-based Badger Meter Inc. “From Badger Meter’s point of view, if municipalities receive money for water mains and infrastructure, it will free up money for the purchase and upgrade of water meters. We will indirectly benefit.”
Other infrastructure-related projects also could benefit from federal stimulus dollars.
Earlier this month, ITC Holdings Corp. announced its plans to build a network of power transmission lines in Midwestern states, including Wisconsin. The network will connect wind power-producing areas such as the Dakotas to highly populated areas such as southern Wisconsin, Chicago and Minneapolis.
The project will install about 3,000 miles of high-voltage transmission lines and will cost $10 billion to $12 billion.
Higher education
The University of Wisconsin system has a significant number of building improvement and new construction projects on its statewide list that are ready for construction, which could begin with short notice if there is funding in the economic stimulus package, said Carlos Santiago, chancellor of UW-Milwaukee.
“There are projects across the system – some are residence halls, some are academic facilities and some are student facilities like unions. The stimulus money could have tremendous value to the non-Madison campuses, because we don’t have the same leverage in terms of raising private dollars,” Santiago said.
UWM has requested about $90 million in federal stimulus funds, but expects to receive less, Santiago said. Much of the money it receives will go toward adding classroom and research space to its Great Lakes Water Institute at 600 E. Greenfield Ave., Milwaukee. UWM also wants to commission a new $15 million research vessel to replace its approximate 55-year-old vessel named the Neeskay.
“The first priority on that list is the research vessel,” Santiago said. “We’ve got the specs, and design work is underway. All we’ve got to do is go to one of the shipbuilders in Wisconsin and say, ‘Build this.'”
UWM also plans to build a new headquarters for its School of Freshwater Sciences on the site of the former Pieces of Eight restaurant located across the street from Discovery World at Pier Wisconsin. A group of donors is now in negotiations to purchase the property, which would be leased back to the university, Santiago said.
The facility would be approximately 50,000 square feet and cost about $25 million, Santiago said. If built, it will also serve as headquarters for the Milwaukee 7’s Water Council, UWM’s Water Institute and would have room for offices for water conversation and advocacy groups. The building would be open to the public.
Solar/alternative energy
Wisconsin has positioned itself over the last few years very well in terms of alternative energy programs already in place and could capitalize on alternative energy elements of the stimulus package.
“If there is money made available to the state, Wisconsin should do quite well because we already have a well-organized marketplace,” said Michael Vickerman, executive director of Renew Wisconsin.
Wisconsin has more full-service solar installers and more biogas programs than any other Midwestern state, he said. The stimulus plan also could result in more wind turbines being built in the state.
Racine-based Ruud Lighting Inc. has already begun marketing and shipping its energy-efficient LEDway product, a street light that uses LED bulbs, which are far more energy efficient than traditional bulbs.
“We align quite nicely with the intent of the president’s stimulus package,” said Chris Ruud, the company’s executive vice president. “If some of the stimulus money is invested into LEDway streetlight projects, more manufacturing jobs will be created in Wisconsin, because we outsource all of the component manufactured parts.”
Seventy-seven percent of the LEDway streetlight components are manufactured in Wisconsin. The remainder is manufactured by other U.S.-based companies, Ruud said.
According to Ruud, for every $50 million of stimulus money, BetaLED and its local suppliers would create 192 full-time, permanent jobs within the state of Wisconsin and an additional 35 jobs throughout the United States.
Other Wisconsin companies, such as Johnson Controls Inc., stand to gain from alternative energy or efficiency components of the stimulus package. Johnson Controls recently won a contract to develop the complete battery system for Ford Motor Co.’s first series of production of plug-in hybrid electric vehicles.
“Right now, we are putting together our plans for how we think we need to operate to take advantage of federal, state, and local assistance where appropriate,” said Michael Andrew, director of government relations for Johnson Controls. “This stimulus would create jobs, ensure a balance of payments and help ensure long term competitiveness on the advanced technology side, so we are definitely interested in taking advantage of that funding where we can.”
Architecture/design
Architects and design professionals, who have seen significant layoffs in the economic downturn, could benefit from the economic stimulus if it contains incentives for new buildings or upgrades to existing structures.
Milwaukee-based Kahler Slater is working to learn as much as it can about the initiatives associated with the stimulus package to better assist clients in obtaining funding, said Jill Morin, executive officer.
“We really view ourselves as a partner with our clients, so we want to help them make the case that they should be a beneficiary of any money that might come their way,” she said. “We are watching the planning very carefully to make ourselves more knowledgeable.”
If school-related projects are funded, they could provide a source of new work for architectural firms like Plunkett Raysich Architects.
“Several of our projects have gone on hold in the last year, and are really ready to go if they could get funding, particularly school and government type projects which are targets of this stimulus,” said David Raysich, managing partner.
If the projects come to fruition, Raysich is hopeful his company can hire more architects.
“We need to design it before the construction team can build it and get it back into the economy,” Raysich said. “I think what is touted as a quick fix to the country’s problems is going to take some time after the money is released but this is definitely the first step. We are all hoping that the stimulus package can get us back to a normal or above-normal status revenue.”
Health care
Most large health care systems have already made the transition to electronic medical records, but small groups and private practice doctors could be encouraged to adopt them through the stimulus package, said Alison Barnes, Marquette University law professor and expert on health care law.
“This is something that is inevitable; it is useful for good patient care when you really need it,” she said. “It is a great way to store records and it is already encouraged in the health care system, it has gotten good enough and cheap enough to expect it to be widespread.”
Michael Repka, executive director and chief executive officer of the Independent Physicians Network in Milwaukee, agreed.
“From an independent physician standpoint, (the stimulus package) is a good thing,” he said. “Any potential help in covering the cost for something like that would be very helpful.”
The average cost for a single physician office to install an electronic medical record system is $30,000 to $40,000.
“That’s a lot of overhead for a small office, so any potential government funding or grant money to help offset those costs would ultimately encourage independent physicians to move in the direction of electronic medical records,” he said.
Consulting/legal
The stimulus package also will create opportunities for law firms and consultants who will offer services steering clients toward stimulus dollars and programs.
Last week, the Milwaukee-based law firm of Davis & Kuelthau S.C. formed a team of attorneys to assist public and private clients in finding opportunities related to the stimulus package.
“The billions of dollars in targeted spending currently proposed in the bill will have a considerable impact on municipalities, school districts, contractors and suppliers in Wisconsin,” said Ann Rieger, president of the firm. “The rapid deployment of these funds and the ‘shovel ready’ requirement of the projects will require many hours of manpower to comply with the sheer volume of projects that will be funded. We are pleased to provide the necessary support as clients navigate their way through the requirements of this complex and comprehensive initiative.”
