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The Quick Fix - THE BARGAIN FOR THE U.S. AND INFRASTRUCTURE: PAY FOR IT OR FACE SECOND-RANK GLOBAL STATUS.
by Dennis Slater, Association of Equipment Manufacturers (AEM) President

“It is not enough that we do our best; sometimes we have to do what is required.” – Sir Winston Churchill

CHURCHILL was well known for his tenacity and leadership in the face of national crises. Here in the United States we need that same determination today to resolve our national infrastructure crisis. Our infrastructure – highways and roads, seaports, waterways, airports, railroads, the electrical grid, etc. – need serious investment. Without it, our economy will be surpassed by fierce global competitors who have been investing more heavily and wisely in infrastructure than we have.

All eyes were on our infrastructure problems on Aug. 1, 2007 when Bridge 9340, an eight-lane steel truss arch bridge on I-35 over the Mississippi River in Minneapolis, Minnesota, collapsed. This infrastructure failure claimed the lives of 13 people. Quickly, however, the news receded from general attention and for most of the country daily routines continued unbothered. Our transportation infrastructure has been highly beneficial and dependable to the point that we take it for granted. This is good – and bad. The attitude seems to be that it happened to people in Minneapolis but it probably won’t happen to me. Unfortunately it can, and without an adequate response from the federal government on funding, it will.

According to The Road Information Program (TRIP), the most recent data in the National Bridge Inventory reveals that 25.4 percent of bridges in the U.S. are “deficient or functionally obsolete.” The Reason Foundation estimates that at “our current rate of repair it will take 62 years for today's deficient bridges to be brought up to date.”

Although safety is paramount, infrastructure failings threaten our quality of life as well. The American Society of Civil Engineers (ASCE) estimates that the average commuter wastes 46 hours a year and 5.7 billion gallons of fuel sitting in traffic. Most of us would take drastic measures to gain an additional 46 hours a year or find better opportunity costs for the money we spend on gasoline.

The U.S. Department of Transportation (DOT) estimates that in 2004 commercial trucks, which we depend on to move the majority of our products to market, lost 243 million hours due to traffic delays. Additionally, a study by Cambridge Systematics found that each one of those hours cost $32.15 for a total cost to our economy of $7.8 billion. Those costs are not absorbed by suppliers, wholesalers or truckers – they are added to the price of products we purchase. In other words, we pay for infrastructure failures when we shop.

PILLARS OF A SUPERPOWER

Infrastructure is not just about economics, but about global stature. According to a 2008 report by the Urban Land Institute (ULI) and Ernst & Young, “during its ascendance to superpower status from 1910 to 1970, the United States invested massively in its infrastructure: expanding ports, building extensive road systems, leading in airport design, erecting dams, laying down power grids, and constructing water treatment facilities.”

Our international competitors have taken all this to heart and are advancing their own global standing while we watch. Emerging markets seem to show a greater sense of urgency about infrastructure improvement than we do. According to the ULI report, China invests 9 percent of its gross domestic product (GDP) in infrastructure versus our 0.93 percent of GDP investment. There has been so much construction in Russia in recent years it provoked the joke that Vladimir Putin didn’t know what the Moscow skyline would look like when he got out of bed in the morning.

The Association of Equipment Manufacturers (AEM) represents more than 800 companies globally that make equipment for agriculture, construction, forestry, mining and the utilities. Such companies have many considerations when siting or acquiring a new plant. It seems unfair to U.S. workers to see jobs go off shore because degraded infrastructure prevents companies from getting their product to market efficiently and cost effectively.

While the challenges ahead of us are great, the good news is that by doing what is required to rebuild our infrastructure we will create millions of good paying jobs. The latest study by the DOT estimates that for every $1 billion invested in infrastructure nearly 35,000 jobs are created. With unemployment now at 6.5 percent there is no time like the present to start rebuilding. Some argue that dollars invested in infrastructure take too long to create these jobs because of planning delays. However, earlier this year the American Association of State Highway and Transportation Officials surveyed its members and found that, given funding, more than 3,000 highway projects could begin construction within 60 to 90 days. Beyond the short-term stimulus that infrastructure investment can provide we must also remember the long-term gains our economy enjoys through increased efficiency and safety.

FIX IT

In the 1950s President Eisenhower had the vision to understand what infrastructure would mean to the nation. Since then the structure he put in place has been a key driving force behind the greatest economy in history. If we fail to once again share his vision we will be outstripped by a global market place that is increasingly interconnected and ever more competitive.

The solution to the infrastructure problem is easily stated: fix it all, as quickly as possible. The question of how we pay for it is the tough one. Certainly Congress and Barack Obama have to think about funding and fixing our infrastructure, but so do we all. Businesses and the public must tell the new Congress that infrastructure is a priority or Congress could move on to other issues and the condition of our infrastructure will continue to worsen. If we want the fix, we have to be willing to pay for it. Every funding option must be on the table: toll roads, user fees, public private partnerships, bonds, sales, property taxes, income taxes, etc.

Sir Winston Churchill is also credited with saying “We make a living by what we get; we make a life by what we give.” We have the opportunity to make our lives matter, at least to some extent, but leaving to our children the kind of infrastructure the President Eisenhower left us. It is not time to do just our best. It is time for Washington to do what’s required for our infrastructure.

(“The Quick Fix” article originally appeared in the December 2008 issue of Industry Today at www.industrytoday.com.)

Dennis Slater is President and Secretary of the Association of Equipment Manufacturers (AEM), whose role is to provide trade association services on a global basis for its member companies. Visit: www.aem.org.