The Future of Energy
Energy is one of the most prominent areas in which the recovery plan provides a glimpse into broader economic and business development policy goals of the new administration. Alternative energy is a strong focus, with billions of dollars targeted to stimulate the development of renewable energy facilities, modernization of the nation's electrical grid, research into better batteries for electric cars, education for those interested in working in alternative energy, and a host of other programs that promise to have an impact on the economic development playing field.
"One of the huge growth areas will be green anything," says Wheeler. "There will be huge opportunities in energy." Look for opportunities related to alternative fuels, he says, including cellulosic ethanol, which could be made from such non-food sources as grasses and wood chips. Some see cellulosic ethanol as a big step beyond corn-based ethanol, which creates competition with the food supply. One producer already has a Georgia plant in the works that would process wood chips into ethanol as early as next year.
Wheeler also expects policy initiatives from the Obama administration to create big opportunities in wind power. "We're not going to keep importing all of the components for wind turbines from Europe," he says, adding that American companies need to be on the lookout for ways to cash in. "If I'm a casting company, I'm going to really look at the housings for wind turbines."
From his base in Indiana, heavily dependent upon the auto-producing economy, Wheeler eyes a governmental push to move vehicles away from petroleum and toward such alternatives as electricity. "The big issue here in the Midwest is moving vehicles to a more efficient framework," he says. To that end, there is an effort to expand Indiana's place on the motor vehicle electrical systems map, through creation of next-generation batteries and other components. Some help might come from the stimulus and future Obama administration initiatives.
The economic stimulus bill is seen as a down payment toward the administration's energy plans, plugging $14 billion into alternative energy facilities, $11 billion into energy grid modernization, $6 billion for the Innovative Energy Loan Guarantee program, a similar sum for state and local government energy-efficiency projects, and $5 billion for home weatherization, among many other targets. "There is an array of things that I would see as being huge opportunities," says Wheeler.
The long-term goals espoused by the Obama administration include support for a wide range of other research and innovation beyond energy, aimed at building a 21st century economy. Some of that thinking can be seen in the stimulus plan, which includes $10 billion in science and research funds for the National Institutes of Health and $3 billion for the National Science Foundation.
The Road Ahead
So how should the business world proceed? For starters, keep an eye out for stimulus-related opportunities, Kolb advises. Watch those parts of the federal government that are receiving windfalls. "Look at where some of the dollars are going to be spent. You have the labor department, the energy department, the education department, all getting significant increases," he says. "People in companies that have an interest in these areas should be following very closely the day-to-day developments."
Wheeler agrees. "The Feds are going to pour a lot of money down the energy pipeline and a lot of money down the health care and life science pipeline," he says.
In the long-term, though, not everyone is certain that the stimulus will provide all of the "oomph" needed to get the sluggish economy up and running again. "We see the stimulus package as a Band-Aid and not a long-term fix for the economy," says Jeff Burton, president of American Dream Development in Kansas. To the extent that stimulus means spending on infrastructure, "that means we'll see an initial influx of cash and employment in roads and bridges," he says - but once those dollars are spent, what happens then?
"On the policy side, I would encourage the administration to look less at stimulus and more at sustainability," says Burton. "Be thinking about ways to reach more deeply into the economy in a more long-term, sustainable way."
Getting the world of real estate back on its feet is a top priority, says Rick Peters, president of the R.E. Peters Co. in California, a specialist in distressed commercial and residential properties. "Pricing for commercial, industrial, and residential property has fallen dramatically," he says. "The devaluation of these properties could reach well above $2 trillion." He believes improving the housing market and other parts of the real estate sector will go a long way toward healing the rest of the economy.
Meanwhile, Wheeler advises companies need to spend the downturn looking for opportunities wherever they arise, not just from the Obama administration's policies but also from the efforts of local and state governments. "With the economy in the state it's in, communities are going to be scrambling for any of the few deals that are out there," he says. "In site selection, what I would be looking at are what kinds of negotiations you might be able to engage communities in. There will be realignments, closures, and consolidation, and there will be a lot of interest in communities that are facing those threats or opportunities."