Obama address may boost Canadian firms

U.S. President Barack Obama’s state of the union address on Tuesday night included strongly worded promises to expand current commitments on investment in infrastructure and scientific innovation, which could provide opportunities for Canadian firms, according to Paul Taylor, CIO at BMO Harris Private Banking.

“We’ve begun rebuilding for the 21st century, a project that has meant thousands of good jobs for the hard-hit construction industry. And tonight, I’m proposing that we redouble those efforts,” Mr. Obama said to applause. “We’ll put more Americans to work repairing crumbling roads and bridges. We’ll make sure this is fully paid for, attract private investment, and pick projects based [on] what’s best for the economy, not politicians,” he added.

Taylor suggests Obama’s plans to revitalize the United States’ rickety transportation infrastructure could mean significant contracts for some of Canada’s major construction firms, like industry giant SNC-Lavalin.

While Obama seemed to emphasize that jobs created by his proposed increases in infrastructure-related expenditures would be directed inward, Taylor suggests it would be a mistake to assume Canadian firms will be kept out of the mix. Canada was given an exemption, Taylor notes, in the wake of the “Buy American” controversy—an exemption that included provisions specific to Canadian participation in public works projects in the United States.

On funding for research and innovation, the U.S. President struck an ambitious tone, harkening back to one of the defining moments in the United States’ decades-long confrontation with the Soviets.

“This is our generation’s Sputnik moment. Two years ago, I said that we needed to reach a level of research and development we haven’t seen since the height of the Space Race…. We’ll invest in biomedical research, information technology, and especially clean energy technology—an investment that will strengthen our security, protect our planet, and create countless new jobs for our people,” Obama said.

Taylor suggests this component of the U.S. president’s investment package may also benefit Canadian companies, pointing in particular to our highly specialized biomedical research firms.

Taylor was less optimistic about the U.S. President’s remarks on debt reduction, suggesting they amounted to little more than “lip service.” We’ll have to “sit tight,” Taylor suggests, and wait for the U.S. authorities to “make a credible move” on their ballooning debt problems.