Tuesday, September 21, 2010

"A Stimulus Project Gets All Caulked Up"

Back in January 2009 we posted "Stimulus: Tips on Trading the Caulk/Putty/Grout Complex":
I got nuthin'.
The largest caulk manufacturers are privately held.
The largest caulk gun manufacturer is a family business.
The largest silicone supplier is Momentive Performance Materials Inc.(formerly GE Silicone) controlled by an affiliate of Apollo Management.
Their slogan is "Changing the way you think about caulk".
They seem to be hurting. Here's the last 10Q.
One possibility is Johns-Manville. Unfortunately it's owned by Berkshire Hathaway so it's not exactly a pure play.
From the Wall Street Journal:
The Motor City has lots of drafty houses and tens of thousands of unemployed people. So when Congress proposed spending $5 billion to insulate homes as part of the stimulus bill, Detroit got excited. The director of the city agency managing the program advertised for construction companies before the legislation even passed.

But on the same day in March 2009 that Shenetta Coleman picked up applications from 46 companies, she received an email from the Michigan Department of Human Services telling her she couldn't award work to anyone.

The problem: Ms. Coleman hadn't met requirements for her advertisement. Those included specifying the precise wages that contractors would have to pay, and posting the advertisement on a specific website. There were other rules—federal, state and local—for grant and contract-award processes, historic preservation and labor standards.

The bureaucratic obstacles Ms. Coleman hit took more than a year to clear. Some were mandated by the stimulus bill, the same legislation that was supposed to rapidly create jobs. For example, there is a union-backed provision that requires that weatherization workers receive the prevailing wages in the area.
Eighteen months after the bill was signed into law, Michigan has weatherized 10,194 homes with stimulus dollars. It has 23,216 more to go before it meets its target.

Michigan says it is on track to finish the homes on its list by March 2012, the deadline set by the U.S. Department of Energy. Many states are at a similar stage.

But when Obama administration officials were selling the idea of a huge federal stimulus program to buoy the U.S. economy, they talked about a plan that would get money into the economy quickly. Instead, spending stimulus dollars fast has turned out to be surprisingly hard.
The stimulus package, which has a current estimated price-tag of $814 billion, had three components. One was tax breaks for individuals and companies. Another was aid to states to fund unemployment benefits, Medicaid and schools. Nearly all this money has been spent.

The third element was around $230 billion in funding for infrastructure projects ranging from road repaving to modernizing the electric grid. This was to be the most visible element of the job creation effort. Federal agencies have designated recipients for around 80% of the funds, but paid out only about a third of them to date.

The result is that the Obama administration is struggling to convince skeptical voters that the stimulus was effective. Among respondents to a Wall Street Journal/ NBC News poll in August, 30% thought the plan had "made things better," 30% thought it had "made things worse" and 40% said it was "too soon to tell" or had no opinion.

The nonpartisan Congressional Budget Office estimates that the stimulus lowered the jobless rate by between 0.7 percentage point and 1.8 percentage points during the second quarter of 2010, compared with what the rate otherwise would have been. But for voters, those figures are being dwarfed by the actual jobless rate of 9.6% in August.

Things are very different from the 1930s, when Franklin Delano Roosevelt was able to create the Civil Works Administration in a lunchtime meeting and watch four million people go to work in the next four months on roads, schools, parks and airports.

Weatherization isn't the only stimulus infrastructure project slowed by bureaucracy. Awards worth $8 billion for high-speed rail connections were announced in January, but the Federal Railroad Administration has only distributed 7% of the funds to date. Much of the money is being held up as state and railroad officials struggle to hammer out partnership deals with railroad companies. Few recipients of awards to expand the nation's broadband network have actually started laying cables; the rest are performing work such as environmental assessments and getting local approvals to attach fiber to utility poles....MUCH MORE