The negative perception some have of the stimulus package may be grounded in part in truth, says Adam Fein of Pembroke Consulting. But there are positives to be found in the American Recovery and Reinvestment Act of 2009 (ARRA). Fein presented his review of the opportunities and impacts of the bill for distributors in a recent MDM Webcast.
While the economic stimulus package may not be perfect, Adam Fein saw a potentially damaging level of pessimism in some of the responses to a survey conducted the week the bill passed. About one-fifth of executives indicated they would decrease their focus on growth initiatives because of the stimulus bill, Fein says.
Fein recommends distributors turn their heads from the bad, and instead consider areas where they can benefit from new initiatives. He identified more than $200 billion with potential in the package. You need to understand the facts – the good, the bad and the ugly – about what is actually in the bill, Fein says.
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Much of the $787 billion in the ARRA falls into categories with little impact on distributors, Fein says. These include government investment in social programs, such as Medicaid, or to individual tax cuts.
About $65 billion will be spent directly by the federal government on goods and services, many of which may be provided by distributors. For example, the Department of Defense is receiving $7.4 billion for renovation, repair and construction of facilities in the U.S. and U.S. territories, while the Department of Energy has been given $4.5 billion to modernize the electrical grid. “If this is a place where you already do business with the government, or are considering doing business, I view this as a hunting license,” Fein says. “This is a place where a substantial amount of money will be spent.”
The package also allocates funds to states for localized projects. Nearly $60 billion has been set aside for infrastructure development in states, and an additional $78.6 billion is earmarked for non-infrastructure state projects. New highway construction, bridge repairs, new schools – these are the types of projects included in these categories. If your business is involved at all in these sectors, even providing safety equipment, for example, contacting the local and state governments now can give your company an advantage in the bid process, Fein says.
The time to look for projects is now. Because of provisions included in the ARRA, the funding of any project must be done transparently. State governments and municipalities must provide lists of planned projects that have been approved. Money that is not placed into obligation for specific projects by March 5, 2010, will go back into the federal treasury. This means that distributors and contractors will be able to review the plans soon.
In fact, Fein says that many organizations are already providing lists of projects. The Department of Defense has published a document detailing how the money allocated to them will be used. A good starting point is the official Web site: www.recovery.gov. The site includes milestones related to the stimulus funds and links to individual state and agency pages that will be managing the projects in the areas previously listed.
“A major element of this bill is the move to green,” Fein says. “The programs are all across the board – alternative energy, energy efficiency, school, smart grid, R&D, and so on.” State energy programs already in place will receive a funding increase of about 70 percent over 2008 to $3.1 billion. Right now, those programs are asking for suggestions for projects, meaning now is the time for distributors to get a jump on building out proposals.
In addition to increased funding for existing plans, new programs are being implemented in areas like energy efficiency and conservation. Grants will be provided to improve everything from insulation to rewiring, with about 68 percent of funds allocated by local governments.
If green hasn’t been a big part of your business, now is the time to consider it, Fein says. “It’s not just putting in new insulation; it’s supporting the people who are putting in the new insulation,” he says.