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Three Small Business Owners Who Love Obama's Stimulus

Some Inc. 500|5000 CEOs are in the right industries to benefit from the President's emergency funds.
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The final stimulus bill, which President Obama recently signed into law, was hurried through Congress as emergency aid for a faltering economy. But several provisions are meant to foster innovation and build up American industries as part of the recovery. Money will go to traditional infrastructure, electronic medical records, smart grid technology, and renewable energy in the hopes of creating new jobs and new technologies.

And several Inc. 500|5000 companies are well-positioned to take the lead.

Infrastructure

In the bill's most traditional investment of public money, $29 billion will go to building highways and bridges. The money will be a boon to the ailing construction industry—which, at 9 percent of the list, is the third-biggest sector on the Inc. 500|5000. Many companies, in an attempt to compensate for dwindling commercial projects, are already shifting toward public works projects, putting stimulus money within their grasp.

John Branham, CEO of Missouri-based Branco Enterprises, No. 2,843 on the Inc. 5000, estimates 60 to 75 percent of their workload this year will be civil projects—a sharp reversal from their usual commercial and residential focus.

"We would normally be doing 60 to 75 percent on the building side. That's how big a turnaround we've seen," he says.

He feels confident Branco will benefit. Missouri's state highway commission is already accepting bids for shovel-ready projects contingent on the funding passing.

Central Florida's Utility Systems Construction, No. 925 on the Inc. 5000, a sewer, water and drainage contractor, has shifted to municipal projects and roadworks to weather the downturn. According to CEO Bill Schwartz, their biggest challenge is the number of contractors in the area bidding on work, which drives profits too far down.

"The stimulus package, if used properly, if money is put in the right place, will help us on a short term basis, and there's no doubt it will create jobs," he says.

Electronic Medical Records

From finance to telecommunications, most businesses have digitized their information. Combined, IT services and software companies make up 17 percent of the Inc. 500|5000. Girish Kumar, founder and CEO of eClinicalWorks, No. 339 on the Inc. 500, thinks it's absurd medical records are any different.

"I would put digitizing medical records as one of the no-brainer investments we could make," he says.

In five years, Kumar's company has grown from 30 to 750 employees and from $1 million in revenue to $84 million in 2008, despite the economic downturn. He believes that with extra push from the government, the industry can go completely digital within five years.

He expects the $19 billion infusion of stimulus funds to create jobs, while speeding the adoption of a technology with proven appeal to consumers.

"We are trying to find ways to create good, high-paying jobs, and this is a good place to pick and say let's do it," he says.

Andy Chiranjeevi of KBTS Technologies, No. 3,161 on the Inc. 5000, another EMR provider, expects the stimulus will bring his company more business, either through working directly with agencies like Health and Human Services or because federal promotion will speed adoption.

"My hope is that it's going to force all the physicians to adopt the technology, so it becomes more usable across the community," he says. And that wave of business will mean expansion for KBTS and hiring programmers, analysts, and administrators to work on design and implementation.

Smart-Grid Technology

In August 2003, 50 million people in the United States and Canada suddenly lost power, due to a cascade of failures started by the shutdown of a single high-voltage power line. The blackout, which illustrates the rapid aging of the nation's power grid, makes a good case for the $11 billion allotted for developing "smart grid" technology.

A smart grid would merge the existing system of transmission lines, substations, and transformers with the latest in IT. According to two Inc. 500|5000 executives developing the necessary tech, bringing the grid into the information age will make it function better and more efficiently, while giving customers more control over their energy use. And without it, widespread adoption of electric cars and renewable energy are impossible.

Augusta Systems, No. 1052 on the Inc. 5000, which develops software to integrate devices like security cameras, is working with Alleghany Power on a smart gird program. CEO Dr. Patrick Esposito predicted, "This won't completely modernize the grid, but it will stimulate the initial investments."

But effective use of the money will require a coordinated spending plan. "Just putting an Ethernet connection on every widget in the field will not make things work together," said Erich Gunther, co-founder and chief technology officer of electrical engineering and consulting firm EnerNex, No. 1709 on the Inc. 5000.

"It can't happen overnight—it's going to take a lot of work."

That work will mean increased opportunities and more employees for both companies. Both Esposito and Gunther expect they'll be hiring soon. EnerNex's biggest problem is finding electrical engineers with IT knowledge. But he hopes that the attention given to smart grid tech in the bill will attract qualified candidates.

"We think the stimulus will let us pull a few more people out of the woodwork," he said.

But the potential for long-term growth is enormous. Esposito believes the United States could become the global leader in smart grid technology. Many emerging markets have less-developed power systems, and if the United States develops the products now, companies like Augusta Systems will reap the benefits when the economy recovers.

"There's a tremendous opportunity for when the economy turns around for this technology to be deployed, and for stimulus-backed smart grid programs to be selected in those emerging economies," he said.

Renewable Energy

Of all the industries targeted by the stimulus, renewable energy is one of the most closely-watched. With the funding promoted as a way to create thousands of new "green collar" jobs and reduce the nation's dependence on foreign oil, these provisions are a big part of new president's long-term agenda. And this sector is glad for the attention.

"There are so many ways that this is a good thing," says Aaron Hall, the CEO of Borrego Solar Systems, No. 261 on the Inc.500.

"A lot of the manufacturing and technology and R&D are in Asia and Europe, and we're importing that technology," he says. "We should have those jobs." Energy companies are only 2 percent of the Inc. 500|5000, but that could change with the stimulus.

The slowdown has hit the solar energy industry especially hard, because tax cuts are the main incentive to go solar, Hall says. For corporations with less revenue, that's no longer appealing. So despite having raised millions in capital, several of Borrego's money-making large projects are on hold.

"It's just a completely frozen landscape," he says.

And the problems aren't limited to the solar industry. The financing environment is a challenge to these large-scale energy projects.

"It is critical to get credit flowing again, in order to allow these capital-intensive projects, such as large wind farms, to get built," says David Hernandez, CEO of Liberty Power, No. 462 on the Inc. 500.

To boost the renewable energy industry, the bill provides $20 billion in tax incentives and $13.9 billion to subsidize loans for specific projects.

"If this were to be implemented quickly, there would be a windfall of projects and we'd be putting people to work and hiring subcontractors, as well," Hall says.

Richard Deutschmann, vice president of policy at No. 757 groSolar and former CEO of Inc. 500|5000 Chesapeake Solar, agrees that the stimulus bill could jumpstart a boom in the industry.

"If we can open up the markets that are tight right now, the industry is ready to be a major partner in growing jobs and providing energy security, homegrown energy, and solving the tremendous dangers of global warming," he says.

For Hall, the advantage of the bill's focus on alternative energy is its potential to address the long-term threat of climate change.

"We have to deal with global warming eventually, so let's create jobs in an industry that does," he says.

Beyond expressing enthusiasm for opportunities in their own industries, these Inc. 500|5000 CEOs were largely upbeat about the package as a whole. Esposito, pointing out that Americans still drive on bridges built by the Civilian Conservation Corps, expressed confidence in the way the package is structured.

"It's got a nice distribution of resources across multiple sectors and I think we will see it stimulate the economy as a whole," he says.

But Bill Schwartz is concerned the bill wastes money and doesn't fix the long-term problem of Americans. "The only way to fix the economy is to allow free enterprise to take its course," he adds.

Last updated: Feb 25, 2009




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