Experts Speculate on Impact of Stimulus Package on Pump Industry


Written by:
Michelle Segrest

Editor's Note: The information presented here is based on reliable insight from experts within the pump industry and relevant association leaders. At press time, details on the new U.S. presidential administration's stimulus package had not been finalized. However, we asked valid sources to speculate on the impact of the package. The Pumps & Systems editorial staff offers no opinions on the matter. We only report forecasts from these reliable sources. This will be an ongoing story that Pumps & Systems will follow throughout the year.

Facing perhaps the most desolate financial outlook since World War II, U.S. President Barack Obama is expected to unveil an economic-recovery package that could include large investments in energy, education, infrastructure and health care. The amount of stimulus and how it affects the pump industry is yet to be determined.

"As of this time, it is anyone's guess how big the stimulus package will be, but it will likely be of historic proportion from all the chatter we are hearing on Capitol Hill and in the press-anywhere in the range of $500 billion up to a trillion," says Dawn Kristof Champney, president of the Water & Wastewater Equipment Manufacturers Association, Inc. (WWEMA). "The only real number I have heard to date is from Congressman James Oberstar who heads the House Transportation and Infrastructure Committee. He is recommending that $9 to $12 billion be included for water and wastewater infrastructure projects."

Some sources report the package could be upward of $775 billion.

The amount considered for water and wastewater infrastructure projects is a large sum by comparison for the industry, but a mere pittance that may be included for financing of all infrastructure projects recommended in the final package, Champney explains. "Obviously, pump manufacturers would be among the beneficiaries of any additional investments being made to rebuild our nation's water and wastewater infrastructure."

The funds will likely be distributed to various community projects through the existing Clean Water and Drinking Water State Revolving Fund programs in the form of loans and grants and will target those "ready-to-go" projects that can begin construction within 120 days of receipt of funds. Tim Williams, managing director for government affairs for the Water Environment Federation (WEF), says there is some discussion that this mentality will change and Obama's forces may break away from the "shovel ready" projects and include some money that can be spent within two years.

"This would change things dramatically," Williams explains. "For example, the drinking water folks presented about $10 billion in ‘shovel ready' projects. If the criteria are changed from 12 to 24 months, the projects included could be three to five times that amount."

Champney suspects most of the funds would more than likely be earmarked for collection and distribution systems (underground pipes) instead of treatment systems, simply because they would require less design and engineering work upfront and would be the easiest projects to move forward most expeditiously.  "Certainly there will be other aspects of the infrastructure investment package that will look toward more long-term investments, but they will likely focus more on alternative energy related projects than conventional water related projects," she says.

Williams says a big issue looming is whether the money will be given as grants or loans. "Some city and municipal advocates are concerned that the states will not be able to spend the money fast enough and are hoping for direct grants," he explains. "There is also a concern that the Drinking Water Revolving Fund program is primarily designed to benefit smaller communities, and they may have trouble meeting the compliance requirements."

Regardless of how funds are dispersed and the amount, Williams says one thing is clear. "Everyone agrees that it is a certainty that money will be given for water and wastewater infrastructure," he says. "The amount will be truly historic. At the height of the Clean Water Act in the 1970s, $5 to $6 billion per year was granted and the numbers that are being discussed here are gigantic by comparison. This is great news for municipalities and equipment manufacturers who support the municipal water sector. It is also great news for those involved with clean water. There are multiple economic benefits in terms of the jobs created and spending on pumps."

Williams adds there are also many environmental benefits since a large portion of the stimulus should go toward improving wastewater treatment facilities.

As for the timing, Congress's stimulus package is not expected be delivered to the President until mid-February, and discussion continues about the size of the infrastructure-based portion of the bill and the degree to which it will include water and wastewater infrastructure, says Ken Kirk, executive director of the National Association of Clean Water Agencies (NACWA), the leading organization advocating on behalf of the nation's public wastewater treatment agencies.

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