US must build its way out of debt

Competitive advantages

Second, investing in infrastructure creates a competitive advantage that sucks business and jobs into a local, regional or national economy.

Look at the global race to build the most efficient port. Hong Kong's container port had long been the busiest in the world, thanks largely to its efficiency. Three years ago, it took only 13 to 14 hours to unload and then load the average containership. Every hour that a ship is tied up at a dock -- and every hour its cargo sits on board, undelivered -- costs the shipper and the shipping company money, so it's easy to understand Hong Kong's appeal.

But mainland China ports such as Shanghai and Shenzhen were able to take over first place in global container traffic, thanks to much lower labor costs.

So Hong Kong struck back. There was no way it could match the labor costs in Shanghai or Shenzhen, but the port could invest in new, bigger cranes. Today, it takes only 10 hours to turn around a containership in Hong Kong.

U.S. ports are players in that port infrastructure race. For example, the port of Charleston, S.C., recently bought four state-of-the-art cranes from Shanghai's Zhenhua Port Machinery. The cranes are big enough to handle two containers at a time, so they can move more than 40 containers an hour. That's a huge edge in efficiency over the 30 moves an hour that are the average at many large U.S. ports.

But state of the art doesn't last long in this global economy.

Zhenhua Port Machinery's newest models can lift three containers in one grab, making them 20% more efficient than the company's other cranes. The first of those new cranes went into operation at container terminals in Shenzhen.

Factors in our favor

The need for constant change is actually good news for the United States, which has been slow off the block in many infrastructure sectors. In today's global economy, no competitor that can scare up the cash is out of the race, and it's possible to use new technology to leapfrog today's leaders, just as China, Singapore, South Korea and Taiwan have leapfrogged older economic powers.

And the United States does have a couple of factors working in its favor in the global infrastructure competition. At times, it can seem like a market economy without much top-down planning is at a disadvantage to those economies that issue five-year plans.

But a centrally planned economy can wind up putting too much capital into things such as the Shanghai Maglev train that runs from the city's airport to a strange no-man's-land terminal on the outskirts of the city. The train whizzes along its 20-mile route at a top speed of 250 miles per hour, but it still delivers its passengers a long taxi ride from anywhere.

The trial and error of a market system, with multiple players implementing competing solutions, may work better when the decision on the future direction of infrastructure investment isn't so clear-cut.

And market systems have another advantage. In a centrally planned economy, when the government runs out of money or shifts priorities, infrastructure projects die, whatever their merits. So, for example, I have to wonder how much of the grandiose infrastructure plan announced in Russia will actually be built, now that the government is running up against a need to cut taxes on oil companies -- and thus reduce its own revenue -- to encourage more investment in the country's oil industry.

Promises and projections

This leaves investors looking at a very real global boom in infrastructure spending. The competition for worldwide market share among countries, national industries and global corporations will keep this race in high gear.

But like all booms, this one is rife with promises that won't be kept and projections that won't be met. Caution advises investors to pick the stocks of companies with the widest possible exposure to different national markets and global market segments.

The five infrastructure stocks I like best on that basis are Wabtec (WAB, news, msgs), which sells rail-car braking and braking-control systems for passenger and freight trains in both developed and developing economies; General Cable (BGC, news, msgs), which sells electrical cable in the utility, industrial and home segments across the globe; Gorman-Rupp (GRC, news, msgs), which sells a wide line of pumps in a world that's increasingly desperate to move water and oil from hither to yon; Flowserve (FLS, news, msgs), which is a bigger maker of pumps and flow-control systems; and Titan International (TWI, news, msgs), a maker of big tires for agriculture, construction and mining.

I still don't like the current stock market enough to commit money to much of anything new. A market hedge, such as gold and recent pick Kinross Gold (KGC, news, msgs), or a high-dividend play, such as recent pick US Bancorp (USB, news, msgs), OK. But I'm still 40% in cash in Jubak's Picks.

So I'm going to hold off on these five infrastructure plays for a while. I will revisit a few, however, in my April 29 column on how to profit from the end of the housing slump.

Continued: Developments on past columns

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