CASH RESERVES AT GEORGIA’S LARGEST FIRMS

Georgia’s Fortune 500 companies hold a total of nearly $42 billion in cash, short-term investments and other reserves. Here’s a breakdown: Cash Total

2Q 2012

$2.8 billion

$7.3 billion

$17.0 billion

$3.5 billion

$2.1 billion

$659 million

$172 million

$483 million

$5.8 billion

$393 million

$422 million

$371 million

$319 million

$377 million Percentage Change

Since 2007

(-7%)

245%

273%

3.5%

52%

290%

(-38%)

(-48%)

36%

71%

138%

128%

453%

(-67%)

201% ing slower profit growth and greater uncertainty here and abroad, he said, so they’re pulling in their horns.

“These corporations are just trying to figure it out,” said Sabbarese. “It seems like you have one or two decent quarters and then something comes along and zaps the domestic economy.”

He said the crash of financial and real estate markets and the global recession of 2007-2009 caused “a huge disruption in 2008 and 2009.” That’s been followed by years of slow recovery and economic and political uncertainty.

Many companies seem to have developed a bunker mentality in which any bright spots here or overseas are quickly overshadowed by worries elsewhere.

“It’s not going to change until it’s clear that the economy is working close to its full potential,” said investment adviser Cronje.

The U.S. economy grew at a slack 1.7 percent annual rate in the April-June quarter, the Commerce Department said last month. Economists expect more slow growth in the second half of the year.

Cronje said companies big and small are worried about the outcome of the U.S. presidential election in November. They also worry about whether Congress will be able to avoid political gridlock that could lead to federal budget cuts and tax increases that could trip up already weak economic growth.

Likewise, he said, parliamentary elections next year in Germany could send shock waves through the European Union, already struggling with recession.

Baker doesn’t buy the argument that corporations, which are in the business of taking calculated risks, are stymied by such worries. “I don’t think that’s the reason, because they’ve been sitting on the cash for a while,” he said.

Putting a portion of that cash to work would boost the economy considerably, Baker said. With corporate cash reserves at a historic high, investing even a 10 percent portion of those reserves would push up total capital spending by 20 percent. That could boost the nation’s economic growth by 2.5 percentage points and add 2.5 million jobs, he said.

“That would be a big deal,” he said. But companies aren’t going to up their bets without clear evidence that stronger growth is coming, he added. “I understand why they’re not investing,” he said.

Still, some companies aren’t waiting.

This Wednesday, Monroe, Ohio-based KLW Plastics is opening a new plastic container plant in Fairburn, its third since the privately-held company was launched eight years ago. The plant, expected to employ about 25 by year-end, will make plastic containers for hazardous liquids, better known as jerry cans.

KLW Plastics president Mike Legeza said the 70-employee company basically had no choice about making the $3 million investment because he’s turning customers away.

“We are at 100 percent capacity and have been since January,” he said.

Still, he said he’ll wait before investing another $3 million in the Fairburn plant that would double its capacity, even though his company’s board has already authorized it.

“That machine I’m holding off on, probably until after the election,” he said.