AED Launches Equipment Industry Recovery Effort - Washington Insider
Construction Equipment Distribution magazine is published by the Associated Equipment Distributors, a nonprofit trade association founded in 1919, whose membership is primarily comprised of the leading equipment dealerships and rental companies in the U.S. and Canada. AED membership also includes equipment manufacturers and industry-service firms. CED magazine has been published continuously since 1920. Associated Equipment Distributors
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AED Launches Equipment Industry Recovery Effort

By Christian Klein

Article Date: 10-01-2009
Copyright(C) 2009 Associated Equipment Distributors. All Rights Reserved.


Halting and reversing the construction industry depression is Priority No. 1.

While other sectors of the U.S. economy appear to be recovering from the recent recession, the construction industry remains mired in a deep depression.

During the first seven months of 2009, construction spending fell more than 10 percent below the anemic level of spending during the same period last year. The downturn has taken a significant toll on construction workers. The economy has lost an average of 117,000 construction jobs per month over the last six months and employment in the construction industry has contracted by 1.4 million since the onset of the recession. The construction industry unemployment rate in August was more than 16 percent, twice what it was a year ago and nearly twice that of the economy as a whole. The sharp drop in construction activities and production of construction materials (e.g., asphalt, cement, and aggregates) have led to a sharp decline in equipment purchases. This, in turn, has resulted in layoffs at equipment distribution and manufacturing companies.

Without significant congressional action, the construction industry economic crisis will continue for the foreseeable future and prevent recovery in the broader economy. That’s why AED and the Association of Equipment Manufacturers launched an aggressive campaign to tell the industry’s story on Capitol Hill and enact legislation to turn things around. Here’s what AED is telling Congress to do:

1.) Invest in critical infrastructure by swiftly passing multi-year reauthorization bills that increase investment in the nation’s highways, public transportation, bridges, sewers, drinking water systems, and airports.
Congress’ failure to reauthorize the federal highway program in a timely manner is adding to historic uncertainty in the construction markets and causing contractors to forego new equipment purchases. In addition to long-term economic, public safety, and environmental benefits, increasing investment in critical infrastructure would create new equipment market opportunity, stop job losses at equipment distribution and manufacturing companies, and put idle construction workers back on the job.

2.) Enact tax legislation that encourages new equipment purchases, including creating new investment tax credits for clean diesel equipment purchases and engine retrofit and extending the American Recovery and Reinvestment Act’s (ARRA) depreciation bonus and increased Sec. 179 expensing levels.
Clean diesel tax credits would encourage contractors to buy newer, cleaner, safer equipment and upgrade existing fleets. Extending ARRA’s capital investment incentives would encourage new business purchasing in the construction industry, while giving the broader economy a lift.

3.) Extend and expand Net Operating Loss carry back rules.
This will free up cash to help struggling construction equipment companies meet payroll.

4.) Sustain long-term recovery in the residential real estate market by extending and expanding the home purchase tax credit.
Since Congress expanded the temporary home purchase tax credit in the ARRA, existing home sales have increased for four consecutive months for the first time in five years. Congress should extend the tax credit for an additional year and eliminate income eligibility and first-time homebuyer requirements to enhance the credit’s effect and help the real estate market continue to recover.

5.) Improve access to credit for equipment purchasers, distributors and manufacturers, and for commercial and residential developers.
Congress and the Obama administration must pursue policies to improve access to capital and ensure that (1.) contractors are able to buy equipment, (2.) distributors and manufacturers have the resources they need to run their companies, and (3.) developers are able to secure financing for new construction projects.

To help make the case and cut through the noise, we’ve retained one of Washington’s most prominent contract lobbying firms and a highly respected public relations firm. In addition to special outreach to the Obama administration and Democratic congressional leaders, we’re planning a high profile construction equipment industry event on Capitol Hill to draw additional attention to our industry economic conditions.

All this won’t be cheap. AED’s share of the cost of the recovery initiative is being financed entirely by special contributions from equipment distribution companies. We hope you’ll step up to the plate and invest in AED’s efforts to turn business conditions around for your company.
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