U.S. industrials see green in Obama stimulus plan

By Scott Malone - Analysis

BOSTON (Reuters) - Diversified U.S. manufacturers including General Electric Co and United Technologies Corp could be among the first companies to benefit from U.S. President Barack Obama's proposed $825 billion stimulus, but likely will not feel any effects until late this year.

The program, which Obama said on Friday could be approved by mid-February, is intended to create or save 3 million to 4 million jobs and help the United States pull out of a year-long recession.

One goal of the plan is to spur investment in energy-saving technologies, which could boost demand for windmills, electric-grid components and other heavy equipment.

Executives at both GE and United Tech this week cited the stimulus as a factor that could boost their results, though the companies and investors agree that it will be some time before they start to see sales related to the program.

"We think it could help us by the second half of the year and more realistically could help us in 2010," said Keith Sherin, GE's chief financial officer.

But the world's largest maker of jet engines and electricity-producing turbines is not factoring stimulus-related spending into its 2009 financial planning.

"We don't have anything that we're specifically counting on from the stimulus," Sherin said in an interview.

Obama's proposal includes $550 billion of government spending and $275 billion of tax cuts.

NOT JUST WATCHING WASHINGTON

Both conglomerates generate about half their sales outside the United States, so they are not just looking at Washington's efforts to spark the ailing economy.

"Based on the intensive global stimulus efforts underway today, we still expect a modest recovery in the latter part of 2009," said Greg Hayes, CFO of United Tech, the world's largest maker of elevators and air conditioners, on a conference call with analysts.

For example, executives with Hartford, Connecticut-based United Tech said sales at their Otis elevator unit could start to pick up as China's stimulus plans take effect.

Analysts agreed the program could directly spark demand for wind mills, solar panels as well as energy-saving devices.

"It's more than two or three quarters away in terms of when it will have a material impact, but it's definitely helpful to the GEs of the world out there that supply power generation products," said Morningstar analyst Daniel Holland. "They'll be one of the first ones that end up seeing the benefits of it."

United Tech's Hayes said the U.S. stimulus could in particular boost demand for products made by its Carrier air conditioner, Fire and Security and Otis elevator units.