AED Study Matches Highway Spending to Machine Buying

September 28, 2010

A study by the Associated Equipment Distributors quantifies for the first time the impact of government highway spending on construction-equipment buying and measures the economic impact of the equipment industry. The study, authored by Professor Stephen Fuller of George Mason University, found that 6.4 percent of the average highway contractor's annual budget goes to purchase equipment and dealer services. Fuller estimated that 6.4 cents of every dollar spent on highway construction is spent at equipment dealerships, and that the equipment-market impact of the $39.1 billion 2007 federal highway program was $2.5 billion.

Fuller also concluded that every dollar spent on heavy construction equipment generates a total of $3.19 of economic impact: $1 in direct spending, and $2.19 in indirect and induced economic activity from the re-spending of the direct payment in other sectors of the national economy. The study found that the estimated $10.2 billion in direct spending for the purchase of heavy equipment for non-building construction projects in 2007 had a $32.5 billion impact on the economy, generated an estimated $9.2 billion in personal earnings, and supported more than 265,000 jobs.

“We now have a better idea than ever before about how federal highway spending affects our industry and we can say with a good deal of certainty exactly what's at stake for equipment distributors in next year's highway reauthorization: literally billions of dollars,” AED vice president of Government Affairs Christian Klein says. “We also now have data to show our industry's important economic impact.”

The study is available online at: www.aednet.org/government/pdf-2008/Fuller-Report.pdf.

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