Mr. Chairman, I’m Rita Castle, Issues Analysis Manager in the Public Affairs Department of Caterpillar Inc. I’m pleased to be with you this morning to discuss the importance of transportation to Caterpillar, our facilities, employees and the communities where we live.
As you know, Caterpillar…and our yellow machines… have been synonymous with highway and road construction for almost a century. In 1909, an early model of a motor grader, invented by a Caterpillar founder, was maintaining country roads in California. By the time Caterpillar Tractor Co. was formed in 1925, road building and maintenance machines were in big demand. In 1931, Caterpillar introduced to the market the first modern motor grader known as the “caterpillar auto patrol.” And in 1932, we adopted a paint color that ultimately became a standard for the entire construction industry. We called it “hi-way Yellow,” in recognition of the importance of road construction to our company.
Caterpillar machines have been a dominant force in the construction and maintenance of our federal highway system since its inception in 1956. Today, Caterpillar annual sales to the US roadbuilding industry approach $1 billion, making it a major component of our machine sales business. And as the leading manufacturer of heavy-duty diesel engines used in the commercial trucking industry, we know how important our highway system is to the delivery of goods and services to keep our nation working.
But it’s not just product sales that are the measure of the importance of our highway system. In 2002, almost $120 million in raw materials and supplies were shipped by road to Caterpillar’s US facilities. In that same year, we delivered over $93 million in machines and parts to our dealers and customers in the US and to ports for shipment abroad using our highway network. In Illinois, our facilities received over $64 million in freight shipped over our road system. And outbound, we delivered over $20 million in finished products over our Illinois road system to Illinois customers.
Our system of Interstate and federal roads is equally important to the safety of our employees and their families who rely on our nation’s road system for personal transportation and the delivery of goods and services that sustain our economy.
As a major employer in Illinois, with over 20,000 employees statewide, we know how important our highway infrastructure is to the economic well being of our communities. Just outside my window in downtown Peoria the huge Interstate 74 construction project is underway, modernizing some of the oldest interstate sections in the United States. This multi-year project, the largest road construction undertaking outside of the metropolitan Chicago area, is essential to the growth of the Central Illinois economy.
Because of our long-standing involvement in the road building industry, and due to the importance to our economy of a modern highway system, we are concerned about the current problems that face our nation’s highway system.
Our roads are deteriorating faster than they can be improved…we all know the frustrating picture. Unfortunately, the choices that must be made to address our crumbling infrastructure are neither easy nor simple. This reminds me of an ad campaign that Caterpillar launched many years ago entitled “ No Simple Solutions.” The campaign focused on some of the choices our nation had to make in providing a modern surface transportation system. Unfortunately, the campaign is as relevant today as it was almost three decades ago.
It’s obvious that we need significantly increased investment to repair, restore and rebuild our infrastructure. And that investment is substantial…estimated to be around $50-75 billion a year just to maintain our highway system. Yet current federal road spending is about $32 billion, and the Administration’s Fiscal 2004 budget calls for highway spending at about $22 billion, almost 30 percent less than what Congress approved for FY 2003.
At the same time that many of our highways are crumbling, they remain an essential component in meeting our homeland security challenges and relieving the gridlock of urban congestion. A modern, well-maintained highway system is essential to providing mobility to evacuate a city or improve traffic flow and reduce air emissions.
Current and future growth demands that additional investments be made in our federal surface transportation system. We must preserve the gains made by TEA-21 in dedicating all revenues coming into the Highway Trust Fund to highway and transit programs while maintaining the firewalls and budget guarantees that protect the highway user fees from being diverted to purposes other than capital improvements.
We must invest the growing balance in the highway trust fund, now estimated at $18 billion and capture over $12 billion in revenue lost to ethanol tax breaks.
But these measures alone will not generate sufficient revenue to meet the estimated funding shortfall needed to upgrade and modernize our highway system. Some hard funding choices will have to be made to restore the purchasing power of the motor fuel user tax. It seems unlikely in this reauthorization cycle that a new, radically different funding mechanism will be proposed. Despite considerable opposition, it seems that Congress cannot avoid a discussion of a motor fuel user fee increase.
And finally, we would urge Congress to complete its work on reauthorization of TEA-21 by the end of this fiscal year to avoid the serious delays and disruptions associated with reauthorization delay.
As we ask Congress to consider these revenue measures, Caterpillar remains committed to providing the technology to increase machine productivity and deliver customer value. We are delivering machines that dramatically improve efficiency and increase productivity, while providing 24-hour support to minimize or eliminate downtime. We are linking our dealers, customers, suppliers and operations within CAT to maximize our product support. All of this translates into more efficient machines, lower owning and operating costs for our customers, and more value for our construction dollars.
A more efficient and safer transportation system is critical to our future economic growth, international competitiveness, quality of life and national security. In our view, there is no better way to stimulate this economy than through the creation of well-paying highway construction jobs.
Mr. Chairman, let me thank you again for this opportunity to share Caterpillar’s views on the important highway construction issues facing Congress this year. We look forward to working with you and our Illinois Senators in the months ahead as the reauthorization debate unfolds.
CATERPILLAR ILLINOIS FACILITIES HIGHWAY CONSTRUCTION EQUIPMENT
EAST PEORIA -- Track-Type Tractors
DECATUR -- Scrapers, Motor Graders, Off-highway trucks
AURORA -- Compactors, Hydraulic Excavators, Wheel Loaders
MOSSVILLE -- On-Highway Truck Engines
ILLINOIS HIGHWAY PROJECTS IMPORTANT TO CATERPILLAR
--Peoria Area “Ring Road”: Caterpillar supports completion of the Peoria metropolitan area “ring road” and eventual new Illinois River bridge in the general Mossville-Chillicothe area.
--Macomb to Peoria Expressway: Caterpillar is participating in the effort to develop a Macomb to Peoria expressway, referred to as the “336 Highway,” a redesignation of the present US Highway 136.
--Peoria to Chicago Highway: Caterpillar supports development of a feasibility study of improved Peoria to Chicago road transportation. Current review is underway of a major upgrade of Illinois 29 to four lane expressway standards. This would complete the I80 to Mossville. Other corridors focus on the east side of the Illinois River.
--East Peoria/Washington Street Realignment: Caterpillar supports this major realignment and reconstruction project, which is a central focus of East Peoria redevelopment.
--Interstate 74: This is the largest road construction and rehabilitation project outside of the Chicago metropolitan area. The existing Interstate is some of the oldest in our nation. The project will focus on the upgrade, rehabilitation and rerouting of I-74, overpasses and access roads, resulting in safer, more efficient highway travel.