This is the lead line in the 1989 sports fantasy drama film, “Field of Dreams”. The premise of the film is that if the farmer who owns the land builds a baseball field in his cornfield, the ghosts of baseball legends will come and play.
Now we have the White House demanding that manufacturers step up and start investing in more upfront investments like plants and equipment, with nothing being said about firm orders. “Field of Dreams” is a fairy tale, business is the real world, and no responsible board of directors is going to approve large, multi-year capital investments without a clear path to utilization. Moreover, major projects can take years to reach profitability, while the Washington time horizon is two years or less for policy and one year for work requiring congressional appropriation.
We now know that relying on politicians for business decisions is fraught with risk, as the companies that spent billions gearing up to build large numbers of electric vehicles (EVs) and their batteries have discovered.
Investors are going to have to attempt to assess the viability of large capital commitments before making portfolio decisions.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA
