19 January 2009

'No lack of projects' for infrastructure spending

The following article is excerpted from the 19 January 2009 edition of “globeandmail.com”.

As the countdown to massive government stimulus packages accelerates, famed money manager Bill Gross has some practical advice: "Shake hands with the government."

"Make them your partner, by acknowledging that their chequebook represents the largest and most potent source of buying power in 2009 and beyond," said Mr. Gross, chief investment officer of Pacific Investment Management Co. (Pimco), the world's biggest fixed-income fund manager, in a newsletter last week.

It is advice that companies and investors throughout North America are already taking to heart, as governments prepare to inject huge amounts of money into the beleaguered economy in the coming months. The new Obama administration, which assumes office tomorrow, has proposed an $825-billion (U.S.) package. Canada's government will present a budget next week that is expected to offer tens of billions for stimulus initiatives.

Infrastructure projects - covering a gamut that includes roads and bridges, hospitals and schools, airports and public transit, water systems and even broadband Internet - are poised to receive the bulk of the hefty government dole-outs on both sides of the border. While that will most directly benefit construction-related companies, many other sectors - from retail and health care to technology and environmental services - are looking to the combination of government spending and anticipated tax cuts to breathe some life into their struggling businesses.

"There is no lack of projects that can proceed immediately that will put people to work at all levels, from engineers to contractors," said Tony Franceschini, president and chief executive officer of Edmonton-based Stantec Inc., a leading North American engineering and consulting firm….

Companies who export their products and expertise beyond Canada's borders may be in the strongest position to cash in, as governments the world over are jumping on the spending bandwagon in a bid to rescue the global economy.

"[Canada's] stimulus is going to be peanuts compared with what other countries are going to do," said Don Drummond, chief economist at Toronto-Dominion Bank. "Anyone who is in the export market is going to benefit beyond Canada."…

… [N]ervous, cash-strapped consumers are more likely to focus on modest spending increases on day-to-day essentials than splurges on non-essential items….