Obama-nomics: What’s in It for You?

Thomas G. Dolan

February 2009

The one thing on which everyone can agree is that President Barack Obama settled into the Oval Office during a poor economy.

Beyond that, opinions begin to quickly diverge. Does the huge financial crisis mean we are on the way to another Great Depression of the 1930s? Are things really bad all over, or is it just certain industries that will be hit hardest?

And what about Obama? Is he the wrong man for the job? Can he bring about positive change?

We spoke with three AWCI member contractors, a consultant and a manufacturer to find out what they think about the new administration. Interestingly enough, all five said that, though business generally was bad all over, their particular businesses were still doing fine.

Gerald Roach, owner/president of Forks Lath & Plaster, Inc., Mekinock, N.D., believes that what is happening in this country is simply a symptom of the world economy. "The way the global economy has been going, there had to be a downturn, or correction,” Roach says.

Roach says, "I wanted McCain because his presidency would have meant more construction, which would have been good for us. In my opinion, the president is just a figurehead. It’s the staff around him that is the deciding factor.”

With his main work being with the military schools, hospital and commercial, Roach says, "The economy is good, but it’s starting to slow. For this season coming up, we’re seeing some real changes. Very few new jobs are coming up. We’re doing OK. We have work, but not as much as we would like. We have work for one and a half years or so, though not solidly booked.”

Roach says his main point is, "My hope is that after two years the economy will pick up. We’re just going through a natural cycle, and with a natural cycle there’s not much you can change.”

Taxes Are Taxing
Jerry Reicks Jr. of JARCO Builders, Ltd. In Sioux City, Iowa, says, "I personally voted for McCain. His policies were favorable for the business person. He would have improved the business climate.”

About Obama, Reicks doesn’t have much good to say.

"I think the capital gains tax will disappear, and that will hurt us tremendously. On the equipment we buy we get quick write-offs, and sometimes double write-offs. That makes a big difference for us; that’s why we buy new equipment,” Reicks says. "I see some neg¬ative ramifications as the Obama Administration moves forward with its health care plans. They don’t have anywhere to get money for them except from corporate pockets, which they feel we can then pass on to the consumer. And, on the state side, most states are hurting for revenue. Iowa is among those that will have a considerable shortfall this year—that can mean more taxes.”

When asked if Obama’s plan to rebuild the infrastructure to gen¬erate jobs would help, Reicks replies, "Possibly, but it’s not been determined where the money is going to come from, especially when he’s done with the first bailout, and then the second. I’m not sure where he’s going to come up with the capital.”

And he doesn’t think Obama’s plan to spread the wealth will help, either. Reicks says, "He’s not just taking from the wealthy, he’s taking from the middle class. His $250,000 tax base encompasses a lot of Sub S corporations such as ours, which means the taxes for this type of corporation could be catastrophic.”

Yet, though Reicks sees Obama as bringing only negatives, he says, "‘Iowa is not doing too badly. We had to spread out another 60 miles to new cities we hadn’t previously been in. It’s been our good fortune to get into the Omaha market where we’ve never been before. There are not as many jobs to bid, but schools and hospitals are still going strong, and that helps us a lot. And, fortunately, our general economy is good. Two years ago the stock of Terra Industries was terrible, now it’s in great shape. Our general economy is agriculture, and farmers have had a record-breaking harvest.”

Obama Has the Power
Roger Barrett, president of South Valley Drywall, Inc. in Little¬ton, Colo., has some negatives about Obama. "In dealing with all of the foreclosures, I don’t believe trying to prop up the banks will mend the problem. I disagree with most bailouts. I don’t think it’s right to put government money into the private sector.”

Barrett doesn’t believe that Obama’s plan to rebuild the infra¬structure will help the residential sector, but he does say that this same effort "will be a godsend to the commercial sector. As part of the stimulus to build new roads and bridges will come new office buildings. This will really help our industry.”

The party in power has the ability to effect change, Barrett continues, and the fact that Obama has a democratic Senate and House behind him means that he really has the power to effect change.

Moreover, Barrett adds, the gloom of depression is not every¬where. "There’s always opportunity in every market, and some industries and some parts of the country are getting along better than others,” he says. "The healthcare sector is doing well, and there’s a booming new industry of companies cleaning out houses that have foreclosed. Obviously, the folks who have lost their homes are not doing well, but others are seeing an opportunity there.”

In terms of his own business, Barrett says, "Our residential market is down about 50 percent. I’ve had to cut back on manpower and spending, and personally have had to lay off two people who have been with me for 15 years. But our commercial division is still moving along and is healthy. But we’ll also see that start to slow down. Commercial follows residential by a year or so.”

In terms of the general economy in his area, Barrett says, "My understanding is that Colorado is better off than Michigan. Last quarter there was a 1.3 percent job growth rate here. Nothing to brag about, but much better than it is in Detroit.”

As a consultant, Alan Wickstrom, CEO/president, BuildingOnline Inc., Dana Point, Calif., has been helping companies build Web sites for the past 14 years. His customers in the wall and ceiling as well as general building trade encompass the entire country.

"My customers tell me these are the worst times they’ve ever seen,” Wickstrom says.

"Obama comes in with a new economic style,” he continues. "But he’s no different from any other president, except that he has un¬precedented challenges. He uses the word hope. Well, I hope he does it. I think most of 2009 will be pretty dismal, with things not picking up until the last quarter and first quarter of 2010. Meanwhile, there will be more of the same, more consolidation, more people being laid off. Some of my best contacts, whom I have worked with for years, have been laid off. That’s the hardest thing, watching good people lose their jobs.”

Wickstrom says that in his own business cash flow has definitely become an issue, with prior payments coming in from 30 to 60 days now being extended to 90 days. On the other hand, with more and more companies turning to the Internet, Wickstrom says, "We’ve been very busy. We were fortunate to be well positioned, and we count our blessings.”

In terms of Obama’s promise to rebuild the infrastructure, Wickstrom says, "Any infrastructure improvements will be helpful. And I am very pleased with Obama’s green building initiatives. New technologies are spurring the green buildings That’s a growth area right now. Insurance companies and electric companies are getting into it. So large commercial structures will want to become certified. Whether it’s saving energy or slowing the carbon footprint, these green initiatives will drive new technologies that will really benefit the building industry.”

Suppliers Feel It, Too
Carol Kimmel Schary, president, Nathan Kimmel Company, LLC, Los Angeles, agrees that "Obama’s public work projects will be very helpful toward ending the recession. And Obama’s green build¬ing initiatives, with tax credits for owners preserving energy and preventing waste are going to lead to new opportunities for people to engage in these projects and make a profit.”

Schary, who provides equipment, parts and supplies to the construction industry and has customers all over the United States, says, "The opening of every conversation now is how are you, and how’s business?” She relates she recently spoke to one of her reps from a fireproofing manufacturing company, and "he reported completing a big waterproofing job for Atlanta’s airport and another big air barrier project in Mississippi.”

About her own business, Schary says, "We’re doing fine.” She adds, however, that much of her equipment has gone to companies that have been involved in projects budgeted for three to four years. "Now, however, a lot of projects are being put on hold, and there are a lot of things down the pike to build that are receiving a ‘let’s wait and see’ attitude,” she says.

One area that is not being put on hold by her customers is education. She mentions several school projects from elementary through college that are going up. "A lot of school bonds were passed in California and are selling like hotcakes,” she says. "But there’s a question of where this money is coming from. The governor is cutting back on these projects. Money was supposed to be set aside, but now people are not getting paid. I recently read of a courthouse that was 70 percent built, and then stopped because there wasn’t the money. How ludicrous.”

Schary then looks at the larger picture. "I never thought that living in the United States, the strongest country in the world, I’d see it come to this state of affairs. All of these supposedly brilliant people who ran the government, the banks, the auto companies—how could they do this, how could they have gotten away with what they did with no checks and balances?”

So you think your job is tough, especially in this financial climate? It could be worse: You could be going to work in the Oval Office every day. When you look at it in that light, things don’t seem quite so bad now, do they?