In February, President Obama made a trip to a Caterpillar factory in Peoria, Illinois, where he said his economic stimulus plan would allow the construction equipment manufacturer to rehire recently laid-off workers. But Caterpillar CEO Jim Owens -- a member of the president's economic advisory board -- wouldn't go along with Obama's claim.
"Realistically, no. The honest reality is we're probably going to have more layoffs before we start hiring again," Owens said, according to ABC News.
Once again, Caterpillar is raining on the president's parade. In a commentary posted with its first quarter earnings report, the company threw more cold water on the $787 billion economic stimulus.
"The infrastructure portion of the stimulus package was disappointing in that it was less aggressive than other countries and missed an opportunity to correct past underinvestment in U.S. infrastructure," Caterpillar said in its report (PDF). "For example, China, with an economy one-third the size of the United States, is allocating over three times as much for infrastructure and initial results from this package look promising."
Caterpillar's commentary said increased government funding for infrastructure in the stimulus would have a "fairly limited" impact on the total construction spending. "Up to $70 billion could be disbursed in 2009 and that would represent about 6.5 percent of last year's total construction spending. We do not expect this increase to offset steep declines in private construction spending."
Far from boosting its workforce, layoffs may be in the offing at Cat: "We are adjusting the workforce as production levels change, and in this uncertain environment further reductions may be necessary. Additional action would likely be handled with flexible and cost-effective rolling layoffs."
Many economists, including Nobel winner Paul Krugman, have criticized the president's stimulus plan as too small. Krugman argued in a March 8 New York Times column that the economic recovery effort devoted too much money to propping up financial institutions and not enough to creating jobs.
Some economists have also argued that China's got the superior stimulus package, and today's statements from Caterpillar seem to concur with that sentiment as well.