Caterpillar Inc., the bulldozer manufacturer President Barack Obama used to help push his $787 billion stimulus plan, is calling the program disappointing and less effective than measures approved by China.
“The infrastructure portion of the stimulus package was disappointing in that it was less aggressive than other countries and missed an opportunity to correct past underinvestment in U.S. infrastructure,” Caterpillar said in economic commentary with Tuesday’s first-quarter earnings report.
Chief Executive Officer Jim Owens, 63, is a member of the president’s Economic Recovery Advisory Board. Obama visited Caterpillar’s Illinois headquarters on Feb. 12, the final day of his campaign to press for Congressional passage.
The company on Tuesday reported its first net loss in 16 years as a global credit crunch and recession reduced demand from builders and miners. Its Nashville-based equipment financing unit saw its profits fall 60 percent from a year ago.
“You can measure America’s bottom line by looking at Caterpillar’s bottom line,” Obama said during the February visit. “What’s happening at this company tells us a larger story about what’s happening in the American economy.”
White House press secretary Robert Gibbs said the spending represents “the single greatest infrastructure investment in this country” since President Dwight Eisenhower started the interstate highway system in the 1950s. Obama agrees “infrastructure needs have been neglected,” Gibbs said.
The stimulus bill had to be balanced between infrastructure projects and other measure to boost the economy, Gibbs said. The president and Congress will address additional spending on such projects when the next highway bill comes up.
Caterpillar said the U.S. may disburse as much as $70 billion this year to build infrastructure, about 6.5 percent of last year’s total construction spending and not enough to offset the drop in private projects. The company is the world’s largest maker of construction equipment.
Caterpillar said it expects some benefit this year from China, which enacted a stimulus package and cut its central bank interest rates to match the 2004 low, accelerating monetary growth. The actions will let China’s economy grow at a rate of more than 7.5 percent this year.
“We think China has it right,” Chief Financial Officer Dave Burritt said in an interview. “The majority of their package of their package is on infrastructure spending. We are seeing life there. We are seeing the turnaround. We would like to see a more robust infrastructure package in the United States.”
United Technologies Corp., Eaton Corp. and DuPont Co. are among other U.S. industrial companies that said they have seen results from China’s plan. This week all three reported first-quarter sales declines ranging from 12 percent to 20 percent.
United Technologies’ fire and security division “is seeing some benefits from the stimulus already in terms of the dollars which are flowing through to infrastructure,” Akhil Johri, the company’s head of investor relations, said Tuesday. The Connecticut-based company is the maker of Otis elevators, Carrier air-conditioners and Pratt & Whitney engines.