Some fiscal certainty could unleash the Michelin man and other business enterprises.(Photo: AP)
The Next Big Idea may be right around the fiscal cliff.
Economists say businesses are poised to unleash a wave of new
products and services, and expand into new markets and territories if
Washington can reach a deal on the year-end package of tax increases and
spending cuts called the fiscal cliff.
behavior can drive the economy and job growth more dramatically than
replacing worn factory equipment or gradually hiring to meet customer
"We're ready to pull the trigger - just give us
some certainty," Pete Selleck, CEO of Michelin North America, said of
planned company projects, including the development of fresh markets for
new types of tires.
The fiscal cliff has frozen many such
investments. Thirty percent of large-company CEOs plan to increase
their capital spending in the next six months, down from 48% in the
first quarter, according to a Business Roundtable survey.
Yet, if a deal on the fiscal cliff is struck, as most analysts say is
likely, a pent-up torrent of expansion-oriented projects could flow.
"That is where you get the big productivity gains, the outsize
growth," says Mark Zandi, chief economist of Moody's Analytics.
During and after the recession, U.S. firms restored profits by
cutting costs and modestly growing revenue. To ratchet growth much
higher, companies must develop new products and markets, Zandi says.
U.S. corporations are sitting on record cash reserves. Yet, many backed
off the past two years as the economy was slowed by events such as the
European financial crisis.
Among the plans:
Resource Group of Minneapolis has developed a durable plastic wall for a
popular elementary-school sport similar to dodge ball called Ga-Ga.
Currently, schools use wooden walls that wear out faster.But Sports
Resource chief Chris Guertin worries parent groups won't be able to
raise the $3,700 for the walls with "this much uncertainty" about
parents' future taxes. The project would add about a dozen factory
--Abbey Color, which makes industrial dyes, will likely
roll out new dyes in 2013 for the first time in four years if the fiscal
cliff is resolved, says President Roger Nielsen in Philadelphia. He has
worried the business won't provide the marketing capital he needs if
the economy tanks.
--Sushi-teria, a high-end take-out sushi
restaurant in Manhattan plans to open two more outlets next year after
delaying expansion. When the fiscal cliff is fixed, "the mood of the
country and the city will be different," says owner Victor Chan.