DeFeo says US stimulus package has failed

Talking on CNBC television in the US, Terex chairman and CEO Ron DeFeo has said the American Recovery and Reinvestment Act has failed to deliver over the past six months.

"We're sitting here with an industry that's in a world of hurt. Sales of many of our product categories are down between -70 and -80% and unemployment is increasing," he said.

"The top ten largest companies in our industry have lost US$ 25 billion in the first six months of 2009 compared to the same period last year, which is a lot of sales to go down. There's also been a decline of over US$ 8 billion of operating income," he said.

Talking of the issues facing Terex and the US construction industry as a whole, Mr DeFeo said, "Planning does need to start in advance and we don't do a very good job with planning here in the US. However, I think it's more fundamental than that. I think you have a situation where we thought a lot of money was going to be put into the system, but it's been substituted.

"I think there's only 6% of the stimulus money allocated for roads and bridges, which is about US$ 47 billion. Of that, only US$ 15.9 billion has even been obligated so far. It's only committed, not spent so this is not a stimulus bill," he said.

Mr DeFeo also expressed concern regards uncertainty over the US highway bill. "The basic highway bill is being pushed to the future, which means that it adds to the uncertainty in our industry. Without it being reauthorised this fall (autumn), it could be 18 months according to the administration before it gets approval, which is just too long.

"With only US$ 47 billion of the US$ 787 billion so far allocated for roads and bridges, I just don't see the money. It's just not there."

Of the bill detailing US$ 500 billion over six years that Chairman Oberstar wants to put through the system Mr DeFeo questioned its validity. "This bill is only about twice as much as has been spent historically, and will only help maintain our roads. It's really not a major change," he said.

"You have a great opportunity here to put people to work. You've an opportunity to increase GDP by helping the country do better and put safety back into our system, but it's not been acted upon," stated Mr deFeo.

"I think there are a lot of other priorities, but we have to remember that we cannot pay for those other priorities unless we have wealth in our economy, and we're not going to have wealth unless you have a system to move goods and services around. That's modern."

Mr DeFeo urged the authorities to address the confidence issue that's causing pain across the industry , "I think the focus now needs to be on reauthorisation and certainty. There's uncertainty in our industry and that's what we need addressed," he said.