The Roemer Report March 1985
- Leased Operator Semi Truck Insurance Quotes
- Bobtail Semi Truck Insurance Quotes
- Occupational Accident (Occ Acc) Semi Truck Insurance Quotes
- Cargo Semi Truck Insurance Quote Form
- Commercial Auto Liability Quotes
- Physical Damage Semi Truck Insurance Quotes
- Owner Operator New Authority Semi Truck Insurance Quotes
- Non-Trucking Liability Semi Truck Insurance Quotes
- Contingent Liability / Contingent Cargo
- Motor Carrier Liability
- Primary Auto Liability
DROPPING AUTO-IMPORT QUOTAS: What is the probable effect of this decision on trucking and the network of raw materials producers and auto parts suppliers it serves? (1) The biggest initial losers are likely to be domestic firms and their suppliers specializing in smal I cars -- American Motors and Volkswagen of
America. Competition for these companies will be immediate and particularly brutal. (2) All other domestic automakers will be pressured to import more completed cars and component parts from Asian countries. Manufacturing costs are inherently lower in this region. The Japanese can still produce a small car from $1,500 to $2,000 less than an American manufacturer.(3) It has been estimated that the end of quotas could trim U.S. industries production by one or two tenths of a percent, while reducing inflation by a similar amount.(4) The Japanese share of the U.S. market will grow, but not dramatically. The Japanese know fully well that a move to flood our market with their cars would almost certainly produce an angry backlash of protectionist legislation here. So look for them to increase their market share, but in a deliberate way. The big picture for truckers serving the automotive industry? It might be smart to diversify your customer base to become less reliant on this sector. The dropping of import quotas spells more intense cost pressures on domestics and a falling-off of domestic sales and freight volume.
TEAMSTER BARGAINING LEVERAGE WANES: That's the consensus of those who can read today's economic tea leaves. New Teamster President Jackie Presser is given credit for his effectiveness in re-establishing much of the national control of Teamster affairs that was lost in earlier years. But he simply lacks the power to change the fundamentals -- a three-year trend of job losses in the industry. Add to this wage declines that have cut pay in the industry by more than 7%. From the Teamster perspective, the solution to this slide into darkness is a national contract. But the price of getting one could create a political hornet's nest for the IBT and Presser. To get a contract, the union will almost surely have to settle for very modest wage and benefits improvements –say no more than 11% over three years. This would be less than COLA increases and would come after a small 8% increase in labor costs since 1982. Moreover, such a settlement could drive a wedge into union solidarity. It would require that some IBT members in some companies would have to settle for less than the fat increases they might be able to get by bargaining on their own. Trucking industry bargainers are taking a page out of the recent Postal Service contracts. They're advocating a two-tier wage system that would result in lower hourly wages for new employees and truckers recalled to jobs.
PROSPECTS FOR PROSPERITY: The U.S. may be on the verge of long-term prosperity, say many economists, buoyed by positive indicators in recent months…Steady boosts in employment should ensure healthy consumer spending through spring. Over the past four months, the number of new workers on industry payroll is totaled 1.2 mil lion. This job growth rate is 18% faster than the preceding four-month period, a sure sign of a resurgent economy. Nonresidential construction is up dramatically, showing a 15% rise since July. New home construction and sales of older homes will also increase come spring. This year's deficit, predicted to reach $222.2 billion, may be more of a stimulant than last year's -- provided Congress and the White House can agree on budget slashes…The Administration forecasts a solid 3.9% economic expansion, adjusted for inflation -- following last year's 6.8% growth…Inflation is expected to settle at 4.1%, up from 3.4% in 1984. Look for unemployment to drop from 7.1% to 6.9% by year's end…If these trends continue, many analysts believe we could reach 1990 with inflation just above 3% and a jobless rate just under 6%.
LONG-TERM TRUCKING OUTLOOK UPBEAT: That's the bottom line of a newly-released Commerce Dept. report which projects trucking revenues for the next few years. Trucking revenues should jump by about eight percent this year, followed by a period of sustained long-term growth for the industry, says the Commerce Dept. It projects that for-hire truckers will experience an eight percent increase in 1985 over the approximately billion ton-miles recorded in 1984. Last year's figure, in turn, was more than seven percent beyond the previous year. Intense competition, high interest rates and meager rate increases are clearly impediments to rapid growth. Still, the Commerce Dept. believes these factors should be offset by a continuation of relatively robust growth. W.F. Roemer believes that current Federal deficits and their influence on high interest rates lace a particular burden on trucking. Many of the major commodity segments served by trucking are capital intensive producers of durable goods -- big ticket items that people buy on time. Hence, these key commodity segments get hit with a triple whammy in an environment of high interest rates. (1) Capital investment is discouraged through high financing costs. (2) Consumer demand is dampened by high interest rates.(3) The value of the dollar, a function of high U.S. interest rates, makes domestic products more costly compared to foreign imports. Hence, we see trucking as a big winner if deficits are given a vigorous pruning.
TRUCKING AND THE IMPORT WAVE: You've probably heard some horror stories about America's exploding trade deficit. But what are Its Implications for trucking? They're not bad if you're hauling imported products from relatively new and emerging American marketing and distribution firms. But the trade deficit -- now hovering close to $300 billion -- is a disaster if you are hauling freight produced by domestic manufacturers. Last year's trade deficit was 32 percent higher than the previous year. Part of this can no doubt be attributed to a pervasive lack of competitiveness by American producers. Nonetheless, the sheer scope of the numbers suggests that the current value of dollar is ravaging domestic producers of many key products and eroding their long-term strength.
Manufacturers here must adopt accelerated quality control and marketing programs to survive. But they appear to be swimming upstream as long as we make foreign products comparatively cheap with each increase in the dollar. We see this as a "back door" economic issue that can hurt many carriers in our industry.
ON THE BUSINESS HORIZON: John Naisbitt, Megatrends author and chairman of The Naisbitt Group, a Washington, D.C.-based consulting firm, advises today's business executives to plan for tomorrow by watching these 13 emerging trends…(1) In an information-based economy, people are your greatest resource. (2) Workers, when valued and encouraged, usually strive for excellence. (3) Computers are taking over middle management positions. (4) Manager-as-facilitator is replacing manager-as-order-giver. (5) Top-down, authoritarian organizational structures are giving way to horizontal, participative systems. (6) Corporations rather than the government will resolve the issue of "comparable employee worth.” (7) American firms need generalists more than specialists. (8) Employee work style options will increase. (9) Manufacturers will develop alternatives to the traditional assembly line. (10) The explosion of new computer companies will continue. (11) Quality control will assume prime importance. (12) Firms will increase their investments in employee health, welfare and education. (13) Managers will place more faith in intuition and hunches as decision-making tools.
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