How do you think the U.S.’s $787 billion economic stimulus bill will affect the lubricants industry?
TLT Sounding Board April 2009
TLT readers did not register much enthusiasm about the recently signed economic stimulus package, which many believe actually will do more harm than good by whipping up inflation. Many readers were in favor of doing nothing and letting both the economy and markets self correct. “Historically, recessions last less than 2.5 years unless the government meddles,” noted one respondent. On the positive side, many readers were encouraged that the bill’s funding for infrastructure spending could have a positive impact on construction materials and the heavy equipment market, which helps lubricants and hydraulic fluids. Others were pleased by the emphasis on green energy. There was general agreement by readers that the bill should have placed greater emphasis on cutting personal and corporate taxes. “80% tax cuts for small business, 20% infrastructure projects is the formula,” said one reader. Asked if they were pleased overall with the final version of the bill that President Obama signed into law, only 20% of survey respondents answered yes.
I don’t expect to see much of any effect on the lubricants industry overall, except for a drop in U.S. sales as manufacturing activity takes a dive. I don’t see how the package helps manufacturing at all in the near term.
Not as much as one would hope. The package lacks direct funding. The Big 3 bailouts have the most direct affect.
The money will have a negligible effect on the overall economy, let alone the lubricant industry.
I anticipate that sales of lubricants to U.S. automotive OEMs will stabilize or recover slightly, but high gas prices will dampen driving so motorists will make fewer oil changes. Other U.S. markets will recover somewhat as inventories are drawn down and replaced. Sales in other countries will follow trends in the U.S.
In theory it could be an increased market for lubes used in prestressed concrete manufacture and others directly related to bridge and highway construction. Doubt if it actually will happen though.
Since little time or study was used to develop the plan, the consequences are anybody’s guess. The only way the lubricants industry is going to be affected positively is for positive economic growth to take hold again. The fastest way for that to happen is to encourage private enterprise by reducing or eliminating their taxes.
I think it is all about special interests getting money from the Democrats to ensure the Democrats get to stay in office for a long, long time. It is all a waste of our taxpayer dollars and very unfair to people who didn’t get stupid about their money.
It will have no effect whatsoever as the amount of money being thrown around isn’t enough to fix anything.
We’ll need lubrication for the shafting we are taking. There are a lot of American taxpayers, so we’ll need a lot of lubrication.
It should assist a wide variety of markets (auto, construction, etc.) that use lubricants and other fluids resulting in increased demand.
Don’t know. The bill is very, very short on details.
Nothing is perfect, but I think the current package is a good mix. You have tax cuts for short-term stimulus, which we certainly need. And then you have investments in infrastructure, which is medium and long-term stimulus.
I believe the lubricants industry is strong enough to stand on its own without economic support from the government.
Higher taxes!
It will continue to allow the economy to fall into a downturn. Most of what’s in the bill has nothing to do with increasing consumer spending.
In the short-term (1-2 years) I expect it to increase lubricant demand. Reason for this demand will be from industries such as cement plant and trucking companies that are involved with new road construction and other infrastructure projects.
The stimulus package will hopefully accelerate the growth of environmentally friendly energy technologies such as wind power. This should help increase the growth of lubricants used to produce the wind turbines and to maintain them during use.
As the market starts to turn around, the industry will probably pick up. It will take time, but I don’t see the lubrication industry to be a front runner in the turnaround. The green proposals in the stimulus package may make bio-based lubricants more competitive.
Further government borrowing will impact businesses negatively.
I think focusing on green energy and improvements to efficiency will have a positive effect on the lubricant industry.
Improve sales based on global stabilization of associated industries.
Slight increase in output for existing lube products as the economy moves from reeling to crawling.
This “stimulus” by Obama and the gang is for pet projects and social engineering.
Prices as a whole will increase as a result of inflation.
Heavy equipment makers will benefit from increased highway construction. This will increase their use of lubricants, MWF and HF.
Until America starts building things again, lubricant consumption will not increase.
$10 trillion in debt? How does getting more debt help get rid of debt?
This package will do little for the lubricants industry. In fact it will do nothing for the country.
In general, the lubricants industry will be affected indirectly and slowly. As manufacturing and transportation markets recover, there will be improvement in the lubricant industry.
Negative at worst, nothing at best. The bill was rushed to Obama’s desk by mindless, gutless politicians hoping beyond reason that the magic will work!
I think the package is so full of pork and so misspent that it will have an overall negative effect.
After a brief and slight improvement, the rate of inflation will devastate the U.S. economy. We will begin a depression era with no hope of improvement until the citizens realize the government is the root of the problem, not the solution.
Only positive impact will be in alternative energy equipment.
The stimulus package actually will drive hyperinflation and wreck our economy for years. Therefore, all industries will suffer, including lubricants. Globally, it will put the U.S. at a significant disadvantage and provide even stronger competition from abroad.
It will be very positive for growing the industrial and heavy-duty lubricant market in manufacturing and infrastructure building.
I can’t see the upside in general, except for wind turbine lubricants.
What is more important is that consumers have less discretionary income to purchase automobiles and equipment. The employment situation is very shaky and will be for the next 12 to 18 months.
If it truly stimulates the economy, all sectors will benefit as more people will be in the marketplace and not on the sidelines.
It could help as good tribology can increase energy efficiency. On the other hand, fewer machines being built means less use of lubricants.
The issues affecting the U.S. lubricant market have to do with declining industrial capacity. Loss of inherent capacity isn’t going to be addressed by the spend-ulus package.
It will be a disaster for all industry. These idiots don’t comprehend the free market system.
Any boost will be short-lived.
Short-term it will result in increased sales to companies in the construction materials business. But over the long-term I see reduced sales due to decreased economic activity as private capital is edged out by public capital. Public works projects do not build wealth; wealth is built through private industry. When the projects are completed those jobs will disappear. But we will have huge deficits, double or triple the size of what we have now. Those deficits will put a drag on the economy as the debt repayment will eat up too much of our GDP. In the long run this is going to hurt us much more than it is going to help.
How long do you think it will take before the U.S. begins feeling a positive impact from the Economic Stimulus Package?
Six months 10%
One year 23%
Two years 16%
Three years 1%
Four years 2%
Won’t help 50%
Based on results from 160 respondents. Total equals more than 100% because some readers chose more than one response.
If President Obama and Congress had asked for your advice in formulating the bill, what recommendations would you have given them?
Initiate an across-the-board reduction in marginal tax rates for individuals, couples and businesses. Historically, this is the only way that tax cuts have helped stimulate the economy.
No one offered to help me a few years back when I had financial problems. I don’t want to see anyone lose their jobs. I believe in fare wages, but I think union labor has strained the auto industry to death.
Do not subsidize those who irresponsibly spent/lent beyond their means. Let them sacrifice like those who tow the line and do the right thing.
Assist small businesses. Also, I would recommend a tax break for taxpayers, not giveaways to non-taxpayers.
More tax cuts. Fewer entitlements.
Leave the free markets alone and they will self-correct on their own.
Get out of the way and let the markets re-equilibrate. No pork.
Two recommendations. Cut all federal taxes on corporations. Only people pay taxes anyway. And finally, everyone pays their taxes. No one gets to opt out!
Let the markets work. Don’t provide bailouts, stimulus packages or anything.
Put Wall Street’s lying thieves in jail.
Cut corporate taxes and then do what President Eisenhower did—go play golf. Just stay out of the way.
Use the money to achieve long-term goals (R&D, infrastructure, etc.).
Help the people, not the banks and brokerages.
Take your time and do it right.
Requiring more manufacturing be done in the U.S.
Concentrate on meaningful infrastructure and tax cuts that would jump start the economy. There is a strong need for getting liquidity to companies so they can make adjustments in their method of doing business. I do not see this bill doing that.
Let the people and institutions that overextended fail or work out their own program to recovery. Why punish those who have succeeded?
Tax reductions should have made up half of the stimulus package.
Eliminate the pet projects that Congress cannot seem to do without and focus on projects to get people back to work ASAP. Included are those focused on our crumbling infrastructure.
Make sure there is enough money to support higher education through this economic downturn.
Health care reform is probably one of the most important things the U.S. can do right now. The U.S. spends more per capita on health care than any other country (double that of most developed nations). Still, we have one of the worst health care systems.
Don’t do it! Let the natural cyclic nature of the economy run its course.
Why bother with a hypothetical? They wouldn’t even listen to recommendations from the other side.
Cut taxes, cut spending. Do not borrow to spend.
Do nothing and let the markets reestablish equilibrium without driving our great-grandchildren into irretrievable debt.
More restrictions or taxation on imports.
Provide incentives for corporate investment. Put some cash in consumer hands through tax credits. Fund no bailouts.
Overall, are you satisfied with the final bill that President Obama signed into law?
Yes 20%
No 80%
Based on results from 160 respondents.
Disband all labor unions before providing subsidies.
Target specific industries instead of an across-the-board panacea. This will ensure accountability later.
More targeted infrastructure spending determined by a little more time and honest evaluation.
Mr. President, you are the leader. You and your staff propose a package to Congress. Don’t let the idiots on the hill take the initiative.
Everybody claims the recession started with the housing market and bad lending practices, so they should think of ways to responsibly lend money to homeowners.
Remove the past 30 years of deregulation in the financial markets!
Apply more control on banks to reduce foreclosures and credit card debit by providing economic aid.
Spending to fix spending is a bad decision that will bring bad results. Cut out the pork! Don’t spend money we don’t have.
(1.) Reduce capital gains. (2.) Allowed the auto industry to file Chapter 11, which will allow it to restructure and re-open labor agreements. (3.) Six-month federal tax exemption for all working families. (4.) Subsidize medical education. (5.) Allow those in jeopardy of losing their homes to utilize their 401(k)s or IRAs to pay off the mortgage without penalty or paying taxes. (6.) Tax incentives to perfect a process to convert algae to biodiesel fuel.
Work hard on breaking our dependence on foreign energy.
Spend money on the working people and give them more disposable income now. Tax breaks for the people and corporations.
Disregard the banks, which are a parasite industry. Investments in infrastructure construction and development of the energy base will generate employment and economic wellness. The banks will automatically do well too.
Forget a spending package and go with tax breaks.
Keep it focused on both long-term and short-term programs to create sustainable jobs, not pet projects!
I would have told them to reduce the income tax rates to a level competitive with the rest of the world. That is stimulus.
Have a team of highly qualified PhD economists devise the best plan, not politicians!
Banks should always be regulated, otherwise greed takes over and you get what happens.
Only help people who have lost jobs and are unable to pay their mortgages and other bills.
You must promote manufacturing and industry to create any real increase in jobs, wealth. Helping wealthy investors is a disservice to the working class.
Emphasis should be on prioritizing national security (borders), deporting illegal aliens, allowing Capitalism to purge unhealthy risks from the market.
Editor’s Note: Sounding Board is based on an e-mail survey of 7,200 TLT readers. Views expressed are those of the respondents and do not reflect the opinions of the Society of Tribologists and Lubrication Engineers. STLE does not vouch for the technical accuracy of opinions expressed in Sounding Board, nor does inclusion of a comment represent an endorsement of the technology by STLE.