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US: Will the Economic-Recovery Package Save the Construction Industry?

Post Time:Feb 13,2009Classify:Industry NewsView:407

The Senate and the House of Representatives reached a compromise yesterday on the $789.5 billion economic-recovery package designed to give tax relief for individuals and businesses and also rebound the nation's construction industry, from schools and other public buildings to the nation's infrastructure systems. The House could take the bill up as early as today and the Senate possibly by tomorrow. Some highlights of the bill include:

  • Thirty-five percent of the bill would be for tax cuts; 65 percent would be for spending;
  • $6 billion to $9 billion for modernizing and repairing schools; and
  • A provision requiring materials purchased with funds from the bill to be U.S. made.

In recent weeks several construction industry groups and associatons with ties to the glazing industry, including the Finishing Contractors Association (FCA), have been outspoken about the proposed bill in hopes that the nation's building construction segment would not be overlooked in the plan.

"Our association represents [many finishing contractor groups including] union glaziers. Our members, and certainly our glaziers, understand the power of building projects to stimulate the economy, create jobs and sustain and build communities," Stuart Binstock, FCA chief executive officer, told USGNN.com. "Our members would like to see the stimulus package cover 'infrastructure' in its broadest sense. This means the building of schools, government buildings, public projects-all of which benefit the community and the economy."

Eugene Negrin, president of Galaxy Glass and Stone, a contract glazier located in Fairfield, N.J., is hopeful that the stimulus package will help get the economy-and construction-moving again.

"Given the dizzying amount of money that will be pumped into the economy, I cannot see how it will not effect positive movement and provide work for the construction sector," Negrin says. "Initially, I foresee enormous spending on infrastructure such as schools, roads, bridges and tunnels, but if the stimulus program is successful in moving banks to lend to creditworthy businesses we will then see movement in the commercial office/institutional sector."

In the meantime, Negrin says his company is staying busy working on a backlog of projects and other jobs that have already been funded and not cancelled, but adds that yes, they are seeing and feeling a softness in the marketplace.

"Some of the projects that are still moving forward have been scaled back significantly in their scopes," he says. "We are anticipating a slowdown in the luxury sector, which for us runs the spectrum of commercial, hospitality, retail, residential and institutional by the end of the first quarter/beginning of the second quarter due to the significant layoffs in the architectural and design community. If they are not drawing projects we will surely feel the effect of this dearth of projects not happening within the next three to six months."

Not everyone, though, is as encouraged by the bill. Russ Ebeid, president of Guardian Industries' Glass Group, says he doesn't see anything substantial in the bill that will help the construction industry in the short term-this year or next.

"There are incentives [tax credits] for homebuyers, but I think that's mainly to clean up the existing stock of houses and until that's cleaned up I think new construction will still be down," says Ebeid. "On the commercial building side, people are not shopping so there is no need to build more shopping centers and strip malls and with businesses being down why build new office buildings? So I just don't see any immediate help for the construction industry. The bill may just help us reach our bottom faster."

He does point out, however, that there are some aspects of the bill that could be positives for the industry in the shorter term. One element of the bill, for instance, encourages renewable office buildings, which could mean the use of more energy-efficient materials, including glass. "I also understand the bill includes alternative energy and that, too could be positive for the glass industry," Ebeid adds.

Source: USGNN.comAuthor: shangyi

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