Race for U.S. Stimulus $$$

By Paul Carton and Andy Golub

Where will President Obama’s economic stimulus dollars flow in the race to upgrade America’s infrastructure? Perhaps more importantly, which sectors and companies will reap the biggest rewards?

To find out, we surveyed 409 members of the ChangeWave Research Network who work in companies that are involved in infrastructure projects.

The March 12-17 survey focused primarily on the Transportation and Electricity/Smart Grid sectors – and the results provide an early roadmap on where infrastructure stimulus dollars are most likely to be spent and the firms that will win and lose as a result.

This is a benchmark survey of industry infrastructure trends – the first in a series of ChangeWave surveys tracking the impact of federal stimulus spending.

The Race for Federal Infrastructure Dollars

Industry respondents were asked which infrastructure areas they think will benefit most from the economic stimulus package over the next 12 months.



Transportation infrastructure (62%) was by far the biggest winner, followed by Alternative Energy (44%), Electricity/Smart Grid (29%) and Water infrastructure (11%).

Note that ChangeWave recently conducted surveys on the Alternative Energy Industry (Jan 2009) and Water Industry (Oct 2008), and these sectors were not a core focus of the current survey.

Infrastructure Projects Set for Greatest Growth

First, respondents were asked to identify the key project areas they think will experience the most growth over the next 12 months within certain key industries:

Which of the following U.S. Infrastructure projects do you think will see the most/least growth in spending over the next 12 months?



Next, we took a closer look at infrastructure winners and losers within each of these industries, beginning with Transportation.

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Transportation Projects

A series of questions were posed to 168 respondents working for companies involved in U.S. transportation infrastructure projects.  Below are the infrastructure areas that industry respondents think will see the most and least growth in spending over the next 12 months:



Automotive Infrastructure (e.g., roads and bridges) is the clear winner here, with 63% of industry respondents believing it will experience the most growth and only 4% the least growth (Net Difference Score = +59).

Of course, a key reason for this is that many road and bridge projects have been in the works for years and are currently “shovel-ready,” even as they wait for funding.

Mass-Transit Infrastructure (e.g., Buses, Metro-Rail) came in a distant second.

On the downside, Railway infrastructure (e.g., High Speed Rail, AMTRAK) and Aviation infrastructure (e.g., Airports, Runways) trailed far behind. Note that this survey was conducted prior to President Obama's latest announcement detailing plans to build a nationwide system of high-speed rail lines.

Key Transportation Barriers. We also asked respondents about the biggest roadblocks currently facing U.S. transportation infrastructure projects.

Bureaucratic Issues (61%) were the top barrier identified – likely due to the multiple layers of decision makers that are normally involved in the approval process.

Not Enough Funding (52%) was also a key barrier. Note that the American Association of State Highway and Transportation Officials (AASHTO) has identified 5,148 transportation projects that are “ready to go” right now in the U.S., worth more than $64 billion.

Transportation Companies to Watch

We also asked industry respondents for their opinion on which companies involved in transportation infrastructure will benefit most over the next 12-24 months.  Based on their feedback, here are four key companies to watch:

Caterpillar (CAT): “Caterpillar represents American ingenuity and has established itself as a decently run company that manages its international dealings quite well,” writes one respondent.  Another calls it the “foundation of any infrastructure build.”   

CEMEX (CX): Building materials producer CEMEX is seen as well positioned as a supplier of cement, concrete and other material for upgrading roads and bridges. “They supply significant material for all constructions projects and their fuel costs have dropped,” writes one respondent.

Granite Construction (GVA): Construction services and materials producer Granite Construction, while a smaller company, was cited for its primary focus on transportation infrastructure projects – including roads and highways and the production of construction materials. As one California-based industry respondent puts it, Granite should “get most of the local highway projects that will be hitting the streets in California over the next six months.”

Fluor (FLR): A global leader in engineering, procurement and construction – Fluor also ranks high on the list and is well-known for managing government funded projects.

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Electricity/Smart Grid Infrastructure Projects

A series of questions were also posed to 134 respondents working for companies involved in U.S. Electricity/Smart Grid infrastructure projects.

Power Lines (+26) are expected to see the strongest growth over the next 12 months. Control Systems (+13), including generators, switches and circuit breakers, also are seen as performing well.

Over the next 12 months, which of the following Electricity Grid Infrastructure sub-sectors do you think will see the most/least growth in spending?



In terms of the smart grid, Smart Meters and Meter Infrastructure (+36) are seen as experiencing the most growth over the next year – as seen in the chart below.



Key Barriers. Not-In-My-Back-Yard issues (NIMBY; 43%) are the number one barrier to upgrading the U.S. electricity grid, according to industry respondents. In other words, while the public wants an upgraded electricity delivery infrastructure, they don’t want power lines in their back yard.  Other barriers cited include Too Much Bureaucracy (41%), and Not Enough Funding (37%).

Electricity/Smart Grid Companies to Watch

General Electric (GE) and Siemens AG (SI) are of course integral suppliers for major energy infrastructure projects – and while a relatively small part of their sales involve the U.S. electricity grid, both companies should be big beneficiaries of federal stimulus funding, according to industry respondents.

ABB Ltd. (ABB) and EMCOR Group (EME) are two firms that are extremely active in electricity transmission and distribution projects, and both are expected to receive a significant boost from increased U.S. government spending in their areas.

ABB Ltd. (ABB): ABB focuses on transmitting and distributing electricity, and it’s "…a big beneficiary due to their large global presence and diversity of product offerings to utilities," one industry respondent points out. As an infrastructure client of ABB puts it, "ABB sells and does almost everything we want, where we want it, when we want it."

EMCOR Group (EME): EME was cited as a leader in mechanical and electrical construction, and energy infrastructure.  The company combines its expertise and services with a broad national footprint that should enable it to quickly mobilize for projects generated under the stimulus plan.   

Looking at the Smart Grid, Johnson Controls (JCI) and Itron (ITRI) appear best positioned according to respondents, with Itron having the added advantage that a major portion of its business focuses on Smart Meters and Smart Meter Infrastructure for electric utilities.

Note that we will be conducting surveys of the Alternative Energy industry and the Water industry in coming weeks, in order to track federal infrastructure spending within these sectors and identify the companies most likely to win in the race for federal stimulus dollars.

Click here to check out more of the latest ChangeWave research findings.

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The ChangeWave Alliance Research Network is a group of 20,000 highly qualified business, technology and medical professionals -- as well as early adopter consumers -- who work in leading companies of select industries. ChangeWave surveys its network members weekly on a range of business and consumer topics, and converts the information into a series of proprietary quantitative and qualitative reports.

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