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Why Are Some Construction Groups Worried About Biden’s Newly Unveiled $2T Infrastructure Plan?
President Joe Biden unveiled a broad-based $2 trillion infrastructure plan Wednesday that ranges from building roads to elderly care, to be paid for with an increase in the corporate tax rate.
“The American Jobs Plan will invest in America in a way we have not invested since we built the interstate highways and won the Space Race,” says a White House statement.
President Joe BidenBiden expects the plan to “create millions of good jobs, rebuild our country’s infrastructure and position the United States to out-compete China.”
The eight-year Biden plan is massive but detailed and also provides the often most controversial aspect of infrastructure funding – how to pay for it. So far, that has been the main sticking point in Congress, with many members unwilling to raise the gas tax or adopt alternative methods, such as a vehicle miles traveled tax.
Instead, Biden seeks to pay for his plan by increasing the corporate tax rate, which was reduced in 2017, and eliminating some of the tax breaks and benefits for corporations that were also adopted in 2017.
“The 2017 tax law only made an unfair system worse,” says the Biden plan. “A recent independent study found that 91 Fortune 500 companies paid $0 in federal corporate taxes on U.S. income in 2018.”
He said the tax increase and other measures would bring in more than $2 trillion over 15 years. “These are key steps toward a fairer tax code that encourages investment in the United States, stops shifting of jobs and profits abroad, and makes sure that corporations pay their fair share.”
The proposal won high praise from the American Society of Civil Engineers, which recently gave America’s infrastructure an overall C-minus grade, up from a D-plus in 2017. The ASCE estimates the country, without the plan, is set to underinvest in infrastructure by $2.59 trillion over the next decade.
The ASCE called the plan “a truly historic proposal for modernizing and improving the nation’s infrastructure.”
Concerns over tax hikes, union support
The new plan got a mixed reaction from construction industry associations. All supported an increased investment in infrastructure, but some were concerned about the plan’s call for raising the corporate tax rate and other tax code changes, as well as the plan’s emphasis on union labor.
“The president’s proposal to finance the new investments primarily via an increase in the corporate tax rate will likely undermine many of its economic benefits,” said Stephen Sandherr, CEO of the Associated General Contractors of America. “That is because these new tax hikes will limit the ability of many employers to invest in capital improvement that will provide additional career opportunities for construction workers.”
Associated Builders and Contractors President and CEO Michael Bellama said it would be difficult to support the plan because it “excludes the 87% of the workforce that chooses not to join a union.”
“While policy details are still emerging and the infrastructure plan will need to go through Congress, it is disappointing to see the Biden administration support the use of divisive government-mandated project labor agreement schemes on taxpayer-funded construction projects,” Bellama said.
The associations said they hoped to achieve a bipartisan agreement that would boost infrastructure spending.
American Road & Transportation Builders Association President and CEO Dave Bauer praised Biden for making his announcement in Pittsburgh, known as the “city of bridges,” because more than 45,000 U.S. bridges are in poor condition.
“The president’s plan will accelerate a long overdue conversation about how to modernize our roads, bridges, public transit and other infrastructure systems,” Bauer said.
“The most important thing is not whose plan passes Congress,” he added, “but that at the end of the process, the American people have increased mobility, and the competitiveness of the U.S. economy is strengthened.”
What’s in it for transportation?
The plan calls for $621 billion for transportation infrastructure.
That includes $115 billion to upgrade 20,000 miles of highways, bridges, roads and main streets and another $20 billion to improve road safety. The plan targets repairing the 10,000 worst small bridges, as well as targeting 10 large bridges that have major economic impact and are in need of reconstruction.
The plan also includes $20 billion to help reconnect low-income and minority neighborhoods that have historically been disrupted by transportation projects built through their communities. Another $25 billion would “support ambitious projects that have tangible benefits to the regional or national economy but are too large or complex for existing funding programs.”
Along with roads and bridges, the plan would increase funding for electric-vehicle and public-transit infrastructure, as well as ports and airports.
Public transit would be slated for $85 billion. Amtrak would receive $80 billion. Airports would get $25 billion, and ports and inland waterways, $17 billion.
For electric vehicles, Biden proposes $174 billion in investment in the EV market. His plan seeks 500,000 EV charging stations by 2030, as well as helping U.S. automakers and boosting battery production. It would also include tax rebates and incentives for buying American EVs.
From elderly care to broadband
The plan also targets the nation’s water, sewer and drainage infrastructure, with $111 billion. Part of the goal is to replace all of America’s lead pipes, which are harmful to children’s health.
Other highlights of the plan:
• $400 billion for expanding access to home- or community-based care for the elderly and disabled.
• $300 billion for manufacturing, with $50 billion toward critical goods, $50 billion toward semiconductor production and $30 billion toward preparing medical manufacturing for future pandemics, including shoring up the nation’s strategic stockpile. This funding also includes $46 billion for federal purchases of electric vehicles, charging ports and electric heat pumps in an effort to reach Biden’s goal of net-zero emissions by 2050.
• $213 billion for affordable housing, which includes new construction and renovations for housing for those with low to moderate incomes. The goal is 2 million affordable homes and buildings.
• $180 billion for research and development.
• $100 billion to construct and upgrade public school buildings.
• $100 billion for broadband infrastructure, particularly in underserved communities to reach 100% connection in the U.S.
• $100 billion for training workers and apprenticeships, particularly in underserved communities.
• $25 billion to upgrade child-care facilities.
• $18 billion for Veterans Administration hospital improvements.
• $16 billion for creating hundreds of thousands of union jobs to plug orphaned oil and gas wells, improving the electrical grid and restoring and reclaiming abandoned coal, hard rock and uranium mines.
• $12 billion for community college facilities and technology.
• $10 billion for a new Civilian Climate Corps that would create jobs paying union wages for preserving public lands and waters, among other climate-related projects.
• $10 billion for modernizing federal buildings.
• $5 billion to clean up and redevelop Brownfield and Superfund sites.
Paying for it
The plan calls for the following tax changes to raise over $2 trillion in revenue over the next 15 years:
• Raise the corporate tax level from 21% to 28%. Biden says the 28% rate was agreed upon in 2017, a drop from 35%.
• Raise the minimum tax on U.S. corporations to 21% on a country-by-country basis. This would eliminate the tax exemption U.S. multinational corporations get for the first 10% of return on foreign assets. Biden says the goal is to prevent the offshoring of jobs from the U.S.
• Set a 15% minimum tax on the largest corporations’ “book income,” which is the income they report to investors, but not the same amount they have to report to the IRS due to tax loopholes.
• Eliminate several tax loopholes and preferences for corporations that locate jobs out of the country or are polluters.
“All of these measures will make it much harder for the largest corporations to avoid or evade taxes by eliminating parts of the tax code that are too easily abused,” the plan says. “This will be paired with an investment in enforcement to make sure corporations pay their fair share.”
Construction equipment associations react
The Association of Equipment Manufacturers praised the plan but also had some concerns about how the proposed tax changes affect equipment manufacturers, many of which operate internationally.
“We stand ready to work with President Biden to help him make the bold, transformational investment in workforce development, infrastructure and American manufacturing that is long overdue,” said Kip Eideberg, AEM’s senior vice president of government and industry relations. “At the same time, we strongly urge him to make sure that we preserve the predictability and stability in the tax code that keeps equipment manufacturers competitive and drives job creation and good wages. Tax reform made equipment manufacturers more competitive in the global economy. It is imperative that we do not undo that progress.”
Brian McGuire, president and CEO of the Associated Equipment Distributors, praised Biden’s plan as bold and necessary to address the years of underfunding infrastructure.
“The time is long overdue for the federal government to provide the investments needed to restore the nation’s infrastructure to the envy of the world,” McGuire said. “There is no better way to put the United States on the path to long-term economic growth and job creation than investments in transportation, water, telecommunications and energy infrastructure.”
To read more about Biden’s American Jobs Act, click here.
Caterpillar is bidding farewell to its 259D3, 279D3 and 289D3 compact track loaders with the introduction of its new, next-generation 255 and 266 models.
The completely redesigned models debuted at media and customer events at Caterpillar’s Edwards, Illinois, Demonstration and Learning Center last week. The 255 and 265 offer improved engine performance, more lift height, a roomier cab and more standard technology than their predecessors.
“We kept the DNA of the D3 series while reimagining the possibilities of loader performance using voice of customer feedback to lead the way,” says Trevor Chase, product application specialist for Caterpillar. “Both next-generation models leverage the many benefits offered by the vertical lift design. The new Cat 255 replaces the 259D3, while the 265 replaces both the 279D3 and 289D3 machines.”
The CTLs are the last of Cat’s building and construction products to get the next-generation treatment and simplified nomenclature. The first number (2) represents the skid steer loader and compact track loader machine family; the middle number (5 or 6) designates the machine size; and the ending number (5) is the compact track loader identifier. Skid steers will be identified by a 0 end number. Additional new models will roll out in the coming months, the company says.
CaterpillarMore power and torque
Cat equipped the 255 with a C2.8T engine and the 265 with a C2.8TA engine, both at 74 horsepower. This gives the new machines a significant boost in torque – 13% for the 255 and 43% for the 256 – over their D3-Series predecessors. The engine and cooling package are mounted lower in the frame for added visibility out the rear window and stability while lifting heavy loads.
Customers attest that the added lift height makes truck loading easier. The 255 offers 10 feet 4 inches of lift height, while the 265 can reach 11 feet high.
“The lift height has made a big difference when loading trucks,” said Derrick Roger, owner of Coast to Coast Lawnscapes, who spent several months testing the 255. “You can get on top of that truck now and empty the bucket; whereas, before you would have to shake the bucket to try to get the material to fall out.”
The 255 delivers 36% more tilt breakout, 26% higher lift breakout force and a 24% increase in rated operating capacity (ROC). The 265 also delivers 19% higher tilt breakout force and 22% higher lift breakout force.
Standard hydraulic pressure has been increased to 3,500 psi, allowing the 255 and 265 to operate all Cat Smart Attachments with the standard auxiliary hydraulics provided.
If demanding attachments require additional hydraulic flow, customers can have their Cat dealer activate the high flow functionality on the machine or remotely via software update. This makes it possible for the CTLs to hit 30 gallons per minute of flow at the standard system pressure.
A High Flow XPS factory option increases auxiliary hydraulic system pressure to 4,061 psi for both models, while also increasing the hydraulic flow to 30 gallons per minute for the 255 and 34 gallons per minute for the 265.
The torsion suspension undercarriage delivers better operator comfort, track wear and material retention, plus the stiffer design results in smoother graded surfaces, Cat says. A new 12.6-inch bar-tread narrow track option is available on the 255.
A more spacious cab
Cat says it has increased the cab width by 2.75 inches without making the machines wider and the footwell-to-ceiling height by 1.8 inches. The larger cab gives operators an additional 1.5 inches of hip room and 1.1 inches more width between the joysticks.
A range of new mechanical and air-ride suspension seat options are available, including a ventilated and heated seat. A new automatic temperature control allows operators to set a specific temperature. Relocated vents help cool or heat the machine quickly.
The standard package includes the same 5-inch LCD monitor as the D3 Series CTLs, which offers Bluetooth connectivity and functionality for the rearview camera feed, creep, job clock, and maintenance reminders.
Customers can upgrade to a new 8-inch advanced touchscreen monitor, like the display found in Cat’s next-generation mini excavators and small loaders. It delivers advanced radio control and supports the 270-degree multicamera option. The advanced monitor pairs with the advanced joysticks for integrated control of all machine functions and adjustments.
“You can adjust the movement – or the aggressiveness or the conservativeness – of how your tracks and lift arms work through your advanced touchscreen display,” Dante Thomas, skid steer and CTL marketing manager, said. “And you can control of all of your display functions from the advanced joysticks. There are buttons with enter and select functions on those joysticks that you’re able to change any functionality that is possible.”
Cat also redesigned the entry, making the 255 and 265 easier to enter and exit. The cab door can be opened even when the lift arms are not fully lowered to the frame stops. It can be removed without tools in less than one minute.
Advanced technologies
Calling the 255 and 265 “one of the most attachment-friendly machines on the market,” Thomas says both the standard and advanced monitors can run Cat Smart Attachments, such as the dozer and grader blades and backhoe.
“It has attachment recognition that when you plug the attachment into the machine, it recognizes which attachment is connected. It adjusts your joystick pattern, so it gives you intuitive and simple control,” says Thomas.
The available Cat Product Link Elite system tracks machine hours, location, asset utilization, provides fault code details and delivers advanced monitoring and machine health, that is remotely accessible via VisionLink. In addition, Product Link Elite provides remote flash and troubleshooting capabilities and quickly enables the remote activation of the SEA High Flow feature.
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Quick Data is a snapshot of new and used wheel loader sales trends from Randall Reilly’s EDA equipment financing data, TopBid auction price service and EquipmentWatch market trend reports.
Demand for wheel loaders has softened with new and used financed wheel loader sales down year-over-year from August 1, 2022 to July 31, 2023 according to Randall Reilly’s EDA equipment financing data.
Financed new wheel loader sales dropped 10%, while used financed wheel loader sales fell by 15% compared to the same period last year.
Cat (22.4%), Deere (21.0%) and Komatsu (12.4%) held their positions year-over-year as the top three sellers of new financed wheel loaders. Top models sold included the Deere 544 P-Tier (401), Deere 624 P-Tier (380) and the Komatsu WA270-8 (364).
[Watch: “A Really Solid Machine” – Test Run of Komatsu’s WA475-10 Wheel Loader]
Cat (28.5%) and Deere (22.9%) also snagged the No. 1 and 2 positions for the highest number of financed used units sold, with Case (14.7%) claiming the third spot. On the date we examined the data, the top-selling models were the Case 321F (340), Cat 926M (164) and the Case 621G (159).
During this period, there were more buyers of new loaders in Florida (955) than in any other state. Buyers of new wheel loaders were also prevalent in Texas (893) and Illinois (665). Those states were also top buyers of used financed machines, with 712 units sold in Texas, 413 in Florida, and 412 in Illinois.
EDA data is compiled from state UCC-1 filings on financed construction equipment. EDA continually updates this data as information comes in from each state.
[Related Content: A Rundown of the Latest Wheel Loaders for 2023]
Used Wheel Loader Market
Used wheel loader prices rose 10.1% for the 12-month period from August 1, 2022 to July 31, 2023, according to Randall Reilly’s EquipmentWatch market trend data.
The average price for a used wheel loader was $137,465 in July 2022 compared to $151,367 in July 2023. The average age of used wheel loaders fell slightly during the period, dropping from 8.8 years to 8.3 years.
EquipmentWatchThe average age and price were calculated on 153,356 resale listings during the period in the EquipmentWatch database.
Over the last 12 months, prices for used wheel loaders have in general increased, with the largest gains in October 2022 (6.5%) and February 2023 (2.9%).
EquipmentWatch defines fair market value (FMV) as the monetary value of an asset that can be expected in a transaction with a single seller and single buyer, neither of whom is under any compulsion or time restriction to complete the transaction. FMV for heavy equipment is most closely associated with the private resale market, as opposed to the public auction market.
Wheel Loader Auction Prices
Caterpillar also dominated the auction charts, accounting for 18 of the top 20 wheel loaders sold in terms of price for the 12-month period of September 1, 2022 to August 31, 2023. Deere and Komatsu were the only other manufacturers to appear on the list.
The top auction price spot went to a 2021 Cat 966M with 2,188 hours. It sold for $400,000 at a Ritchie Bros. auction in Orlando, Fla., on September 21, 2022. The second-highest price paid was $315,000 for a 2019 Cat 980M with 7,836 hours at another Ritchie Bros. sale in Atlanta, on December 1, 2022. Rounding out the top three was a 2018 Deere 944K with 8,941 hours. It sold for $290,00 at a J.M. Wood Auction Co. sale in Montgomery, Ala., on March 21, 2023.
In total, there were 358 wheel loaders sold at auctions tracked by Top Bid during this time, with an average price of $99,747. (This does not include any units sold for less than $5,000.)
EDA, Top Bid and EquipmentWatch are owned by Randall Reilly, parent of Equipment World.
[Related Content: Heavy Equipment Auctions Set for Second Half of 2023]
Volvo Construction Equipment bought Terex’s off-road truck line in 2014, and six years later, it rebranded its articulated haulers under the Rokbak name.
On this episode of The Dirt, we hear from Paul Douglas, Volvo vice president of rigid haulers, who explains the differences between the old Terex line and the Rokbak trucks. He also gives a hint at some of the new things coming from Rokbak, including redesigned cabs and replacing the current trucks with new models. There’s also the possibility of a new size truck to hit the market.
Rokbak, as with other construction equipment brands, is working toward a zero-emissions future. On this episode, he explains where the articulated dump truck market is heading in terms of alternative fuel. He adds that customers will see big changes in emissions and engines in the next five years, with the ultimate goal of reaching zero emissions within 10 years.
So to learn more about Rokbak and what the brand has in store for the future, check out this episode of The Dirt.
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