Virtual Stringline: Where Did the Infrastructure Money Go?
by Harry O. Ward , PE
May 1, 2009
In late March I met with my state delegate to discuss the Obama stimulus plan and its projected effects on my home state of Virginia. What I learned from him was bittersweet.
The stimulus money allocated to Virginia was split into thirds: a third for infrastructure, a third for state purposes and a third for education. That sounded reasonable to me, but the delegate’s the next comment caught me off guard. He told me that if you don’t have the stimulus money in your hand right now, you aren’t going to get any of it.
Most of the infrastructure money went to fix 20 bridges in Virginia while the rest of it went to add 1.5 miles of an additional lane on I-66. That is it—that is the extent of the infrastructure money for Virginia. There are no new projects, and certainly none that are on scale with the Depression-era public works projects. This means that engineers, surveyors, planners and the real estate community get nothing.
The second third of the stimulus money went to keeping the state government workers employed through the end of 2009. Apparently the state was essentially bankrupt and about to commence massive layoffs. This was abated by the stimulus money; the potential layoffs were simply postponed until 2010 when there is no lifeline left.
This shocked me because such spending should have been paid for with the taxes we have been paying all along. When we build a bridge, we tax-paying citizens expect that it will be maintained. When we employ government workers, we expect them to be hired based on allotted funding. But now it appears that bridge repairs and state government employment are only possible due to the stimulus money.
I was initially encouraged by the funds for education because I believe this nation is in dire need of re-educating its citizens as they are cast out of dying careers. We cannot artificially support the milkmen, TV repairmen and others when their industries are dying or dead. People must move on, forge ahead and invent something new—perhaps something society needs like the ShamWow or the Snuggie. (Of course, I’m kidding—or am I?)
However, all of my grand plans fell flat when the delegate told me that Virginia was not likely to accept the education portion of the stimulus money. There are strings attached to the spending that the state can little afford. Since it is a six-year program, the federal government pays for the first two years and requires the state to pay for the remaining four years of that person’s education. Many in the legislature feel that Virginia cannot afford to take the money because there is no funding for the remaining years of education and little likelihood of obtaining it.
After meeting with my delegate, I decided that the moral of the story is that you cannot depend on the government—you must depend on yourself. So instead of waiting and wondering where your part of the infrastructure money has gone, here are a few tips for getting through the “Great Recession” on your own.
As crass as it sounds, you have no choice in business but to take advantage of others’ woes. But that isn’t always as bad as it sounds. Rather, if you need a new piece of equipment, check with your colleagues and your competitors. A lot of good equipment is sitting in a closet these days.
The reason is that many firms purchased a lot of equipment over the past few years when cash was flowing and credit was available and inexpensive. Now those same firms have laid off 50% of their staff and that same good equipment is not getting any use. Perhaps you can purchase it from them if they don’t need it for the foreseeable future. That way you get a bargain and they get some desperately needed cash flow. So it is a win-win situation to some degree.
Another avenue for acquisition is to pay close attention to the new equipment market. Dealers and manufacturers may begin to deeply cut their prices.
If you are lucky enough to be among those who have projects, you might find that you can pick up some excellent staff members. Look for someone who is highly trained, very competent and experienced. Many people will consider leaving long-term stints at a shaky firm and move to another for job security.
On the flip side, pay close attention to the performance level of your current team. In my role as a consultant for many organizations, I have observed that many employees will milk the job they currently have in order to stay employed. Work that would have gone out three years ago can be slowed down so they can keep billing to something. This is a normal survival technique; however, it is a bad business move for the company. Management must apply pressure to keep production high even at the risk of completing the job. Your current clients should be well taken care of—not taken advantage of.
As unpleasant as it may sound, make yourself available as a subcontractor to your competitors. They have also probably laid off much of their staff. The majority of firms have exhibited a brain drain and voids now exist. If your competitors have work, you might be able to fill the holes in their capabilities.
Another area to consider is how you might be able to re-apply your specialized skills. You could actually sell the equipment you have been specifying for years. For example, if you are an expert in lift station design and you know the lift pump market very well, you can query a manufacturer to see if it would entertain you selling its products. You could gain another source of income, and your customers would be able to buy from someone who actually knows what they are talking about.
Internal transfers offer another way to continue employment. I discussed this with some of my large clients recently, and they said they were amazed that more internal transfers weren’t occurring. The infrastructure portion of their firm is booming with more work than it can handle, but many employees faced with layoff or transfers to these divisions are choosing layoff. I realize that many factors play into this, but the irony is that an unemployed individual might regret passing up this opportunity as his bills start running late. Yes, you may need to move to a new location to get the transfer. Yes, you may need to learn an entirely new software system. Yes, you will need to learn a new set of codes and requirements. Yet in spite of all this, an internal transfer is an excellent option in the current job market.
There are still pockets of good news. A large firm that I work for is now seeing its land development pick up a little for the first time in more than a year. This interest is coming because the price of housing and availability of commercial property has now hit bottom. Developers have retooled their offerings to match the price of existing properties and houses. Combine that with a purchaser’s inherent desire to have a brand-new property, and you can see that this slants toward the developer. If the average price of an existing house (including those in foreclosure) is $200,000, many on the purchasing side would prefer a new house if the developer can match this price. The developers are now saying that the ratio of an existing or foreclosed house is about what a new sale would go for. This 1:1 ratio is what developers have been watching for because it signals a green light for new development.
Keep watching for more green lights, and keep your fingers crossed. America is strong, resilient and full of imaginative people. Our future is right before our eyes, but it will not be the same as it was. There will be a new world order, and we need to see how we can guide it or fit within it.
Harry O. Ward , PE
hward@harken-reidar.com
Harry O. Ward, PE, is a registered professional engineer, a state licensed contractor and certified in machine control. He is president of Harken-Reidar, a new infrastructure solutions company. He has been a member of the engineering faculty at George Mason University since 1997.
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