Few shareholders should be more happy with the stimulus package than those of Terex, a Fortune 500 company that manufactures heavy equipment for mining, refining and other big-ticket projects such as bridge and road construction. Yet, Terex stock TEX fell 31% on Thursday when the company reported a loss and said it will soon violate the contractual terms of a loan. CEO Ron DeFeo, 56, spoke to USA TODAY management reporter Del Jones about why the infrastructure portion of the $787 billion package is a good start but is only a tiny percentage of what is needed to make the country competitive. Following are excerpts, edited for clarity and space.
Q: The stimulus isn't enough to create jobs and steer the economy toward recovery?
A: I'm delighted that we have $150 billion for infrastructure. But it's a reaction, and we need a broader vision for the country's prosperity. We have spent so much effort on the information superhighway that we have forgotten that what we do on the information highway in large part still has to be moved on the real highway. We tolerate congestion. If you combine technology with the hardware of an economy, the ports, waterways, roads, energy infrastructure, you are going to end up with a stronger economy.
Q: There are two arguments regarding the stimulus package. One, it's a lifeline for the economy. Two, the debt creates a long-term anchor. What's your view?
A: I don't think it's an anchor, because we have roads, bridges, highways that have been crumbling. But we've failed to make the argument that America's prosperity is dependent on its infrastructure investment, and therein lies the challenge for leadership. We need ideas like when the Erie Canal was put in place, and the railroad connected East and West. We could have commerce corridors that just move freight at high speed, a high-speed rail to move freight between California and North Carolina at 150 miles per hour. We'd (make) the Panama Canal (obsolete), with a commerce corridor between China and Europe that we could charge for. I want people to laugh at ideas because with that will come creativity and vision that will figure out how to make it work.
Q: More likely, they would choke on the cost. You're talking trillions of dollars.
A: If $1 trillion produces $2 trillion of returns, that's what will get prosperity working. You think the Panama Canal doesn't produce a return? Our ports produce returns, but our ports are obsolete. Do you think China is putting in ports to put workers to work? Or do you think they're investing? We have to stop thinking of this as pork and start thinking of it as business decisions.
Q: That requires long-term planning. Won't much of the infrastructure spending in the stimulus bill be hurriedly wasted or spent down the road when it will kick in too late and may contribute to inflation?
A: Again, it's necessary, but the infrastructure spending doesn't solve the problem. We have been neglecting our infrastructure for 30 to 40 years. The 18-cent gasoline tax was last raised in 1993. Inflation-adjusted, the effective rate is about 11 cents a gallon today, so it's been cut in half, and the cost of repairing roads and bridges has dramatically gone up. We react when a bridge falls into the water.
Q: We have so many needs, like health care.
A: Infrastructure is just a piece, but it would make the country economically viable. An economically viable country can do a better job with health care and education issues.