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The Roemer Report On-Line, February 2010

INDUSTRIAL OUTPUT CONTINUES TO CLIMB: New signs of economic recovery continue to prompt U.S. manufacturers to boost output and rehire laid-off workers. According a Wall Street Journal story appearing February 18, Caterpillar, Inc. has brought back 600 workers in the past 60 days, including 100 recalled to its engine plant in Indiana. The Federal Reserve reported that week that industrial production, which includes utility and mining output, as well as manufacturing, rose in January for the seventh straight month. Factory output in January rose a solid 1% reported the Feds. Improvement is being noted across a wide range of industries including clothes and appliances, both highly sensitive to consumer spending trends. Particularly strong, said the Wall Street Journal, was the output of motor vehicles and parts, rising 4.9%, attributable to pent-up demand and government incentives. On a seasonally adjusted basis, factories have added 11,000 jobs, the first increase since before the downturn began two-plus years ago. Some Midwest manufactures remain cautious though, waiting for consumer demand to strengthen. Deere & Co., for example, said it had no plans to boost hiring in the near term. More upbeat perhaps are Russian steelmaker Severstal’s plans to reopen U.S.-based plants, including its Warren Ohio operations and its coke-making facilities, another light in the fog that may be signaling recovery. Elsewhere in the paper, reporters noted that construction of single-family homes jumped 1.5%, which analysts agree is a good measure of positive activity in the residential construction industry.

CLASS EIGHT CLARK KENT: In January the Energy Department announced grants totaling $187 million for programs to develop more fuel efficient vehicles including heavy-duty trucks. One in particular aims to produce a “SuperTruck,” with 50% better fuel economy than current offerings. According to American Machinist magazine, two class eight truck OEMs are in line for more than $100 million in federal funding to undertake SuperTruck research. Class eight trucks consume more than 80% of the diesel fuel in the country so improving fuel efficiency is seen as the fastest way to cut consumption and reduce emissions. Engine-maker Cummins will receive nearly $39 million to develop, integrate and demonstrate “systems level” technology and another $15 million to support advanced diesel powertrains for light duty vehicles. Navistar and Peterbuilt are also in line to receive funds, and all are aligned to develop fully-realized tractor-trailer rigs that, say Navistar, if commercialized and implemented, “could save more than 100 million gallons gasoline and diesel fuel a day.”

SPEAKING OF DIESEL FUEL: The demand for diesel fuel remains sluggish and the price of a barrel of crude oil has been alternatively creeping above or below $78 per barrel for the past three months. Diesel fuel hit a new high mid January, just shy of $2.88 a gallon—a 14-month high that might hurt fleet owners’ cash flow because of the lag between prices at the pump and fuel surcharges applied to freight rates. By February 15 though, diesel prices were flat, hovering around $2.83 a gallon. Interestingly enough, the DOE failed to report weekly fuel price data February 8th because the District of Columbia was snowed under. In its February 15 story on fuel prices, Transport Topics quoted Tom Kretisinger Jr., president of American Central Transport, Inc. who said winter affects fleets in another way because a different blend of fuel is used that cuts fuel efficiency by about 0.5 miles per gallon.

TRUCKING INDUSTRY HIRING REBOUNDS: According to a Bureau of Labor Statistics report February 5th, the for-hire truck transportation industry gained 2,500 jobs in January. The figure includes all segments of truck transportation — general, local and long distance — and does not include truckers employed by fleets or independent contractors. Bob Costello, chief economist for the American Trucking Association, noted that while the January increase was the second in three months, it followed a 12,900 drop in December. “The fact that for-hire carriers added any jobs in January is a good sign, however, the increase must be put into context,” Costello told The Trucker. “Specifically, it doesn't even come close to offsetting December's cut.  We must also remember that this data is highly volatile and subject to substantial revisions, which means we'll wait to see if the January increase sticks.”
 
TRUCK FREIGHT UP, TRUCK SALES TO FOLLOW: Accelerating economic activity, reported Logisticstoday February 8th, has led transportation forecasting company FTR Associates to increase its estimates of the amount of truck freight that was moving at year-end 2009. If sustained, said the report, the stronger freight picture will result in higher truck rates and better financial results for truckers in 2010 and higher truck and trailer sales in 2011. Meanwhile, 2010 tractor sales will be affected by the new EPA mandate, with higher sales in the first half and a second-half slowdown likely. According to Eric Starks, president of FTR, “Higher freight demand will cause the existing large overhang of surplus equipment to be worked down more quickly, translating into the potential for more units to be sold in 2011. While freight demand will increase throughout 2010, actual build numbers for Class 8 vehicles will likely be higher in the first part of the year because of the late pre-buy activity for vehicles with pre-2010 emission engines.”

BROWN GETTING GREENER: As part of United Parcel Service Inc.’s effort to reduce its carbon footprint, it has deployed some 245 new compressed natural gas (CNG) delivery trucks in fleets operating in Colorado and California. In December, reports an item in the Atlanta Business Chronicle, the Atlanta-based shipper said 140 trucks began service in Colorado and the rest in California. UPS runs one of the largest fleets of alternative fuel vehicles in the shipping industry, said the report, with more than 1,900 in the fleet ranging from CNG, liquefied natural gas, propane, electric and hybrid electric vehicles.

BAD BOSSES OK IF GOOD: The study, “Perpetuating Abusive Supervision: Third Party Reactions to Abuse in the Workplace,” examined how people reacted to bad behavior on the part of supervisors. According to a recent article in EHS Today, the study by University of Iowa researchers revealed supervisors who are the most productive have the longest leash when it comes to bad behavior. The study found that victims tend to accept the abuse if the supervisor is seen as productive or effective. “When a supervisor's performance outcomes are high, abusive behavior tends to be overlooked by third parties when they evaluate a supervisor's effectiveness,” said researchers. To gather their data, the researchers had a group of subjects read about a fictitious CEO that portrayed him as either as a high performer or a low performer, and as either a verbally abusive person or not abusive. When asked to rate the CEO, the subjects gave high marks to the productive high performing CEO no matter his management style. In contrast, the non-abusive but poorly performing CEO was given low marks as an executive, despite his likeability.

TAIL-END CHARLIE: The world’s oldest known truck is a 1909 Federal. Until recently the truck had been owned by one family since purchased new in 1909. The first Federal production model was 1910. This particular truck is registered as the 1909 prototype per the D. Cameron Peck collection of the Detroit Public Library and the original blueprints and marketing material from the Federal Motor Truck Company. The truck offered by Barrett Jackson in 2008 for $16,500, is museum quality; and in 99% original condition. The second oldest one known is a 1910 and is in the Henry Ford Museum in Detroit, Michigan.

Pro and con are opposites, that fact is clearly seen. If progress means to move forward, then what does congress mean? Nipsey Russel