NUCA: Economic Act Stimulating, but Not a Solution

When times are really tough, like in today’s economic environment, you need
a little help from your friends. So when the government announced the
Economic Stimulus Act, it appeared that help was on the way.

While the Economic Stimulus Act (ESA) of 2008 has helped motivate equipment
purchasing around the United States this year, the housing downturn and
other economic factors are still causing many contractors to forego
buying new machines, according to the results of a national survey of
utility contractors released by the Associated Equipment Distributors
(AED) and the National Utility Contractors Association (NUCA).

The report strongly suggests that Congress and President Bush could give
the economy and construction industry an immediate shot by increasing
water infrastructure investment. The study also shows that extending
the ESA’s capital investment incentives would have a positive impact on
equipment purchasing next year and demonstrates the direct impact that
water infrastructure spending has on the equipment industry.

Contractors have been hit hard by the downturn in the housing market. Ninety
percent of survey respondents said that the downturn in the housing
market has had an impact on their companies, with 64 percent saying
that the impact of the downturn has been major. The housing downturn
was cited by survey respondents as the major reason that contractors
had not bought equipment this year.

Water utility work is equipment-intensive and a significant portion of the
average water project bid is attributable to equipment costs. Survey
respondents report that, on average, when preparing a bid on a water
utility project, at least 12 percent of the bid is attributable to the
purchase, rental and leasing of construction equipment and to the cost
of dealer-performed equipment repairs.

“While the ESA has clearly had some positive impact, this study also shows
that contractors aren’t going to buy equipment if there’s no work to
do, no matter what the incentives,” NUCA CEO Bill Hillman said. “The
housing downturn has taken a big toll on our members and we’re hopeful
that the housing stimulus bill recently approved by Congress will help.
But it shouldn’t end there.”

To learn more about NUCA, visit www.nuca.com.