Navigating Through the Coming Recovery

Be on the lookout for legislative interference

I don’t want to jinx anything but . . . business appears to be picking up in a serious way. If you attended any of the major industry events in the past months you have no doubt noticed a subtle optimism.

During HD Aftermarket Week in January and several industry events since, the Heavy Duty Manufacturers Association has been pleasantly surprised by the upbeat nature of most of the discussions the officers have had with people throughout the industry. Recently, we have seen encouraging indicators showing improvements in many areas, including truck ton-miles, Truckable Economic Activity (MacKay & Co), forecasts from industry economists, reports of capacity restrictions at the fleet level and the beginnings of driver shortage discussions.

At our annual HDMA Breakfast and Briefing, Daimler Truck North America CEO Martin Daum gave a very upbeat and optimistic talk on business conditions going forward. He spoke of new products on the market, new ideas and a guarded, but still favorable, outlook for the industry. At a recent HDMA Town Hall Meeting, Navistar chairman Dan Ustian spoke of the huge growth plans for his company, much of it projected to occur in the NAFTA region.

Ours is an industry where the core fundamental is freight. The health of the U.S. economy can be measured by what is occurring in the trucking industry. Nearly 70 percent of all U.S. freight tonnage is hauled by truck - a staggering 10+ billion tons of it.

The amount spent on freight hauled by truck in 2008 was more than $660 billion, or 83 percent of all freight dollars spent. Of course, we haven’t hit a trillion dollars yet, so by congressional standards we aren’t really that big an industry, but trucking does represent about 5 percent of the U.S. economy’s GDP.

The good news here is that the economy is improving and all of our businesses will follow that improvement. From new trucks to parts and service related businesses, it seems that either things are improving, or perhaps everyone is just starting to settle in to “the new normal.” I think it is some of both.

Our membership, the commercial vehicle component manufacturers, is reporting some fairly favorable numbers. Most are seeing modest to good increases in sales, increased hiring, improved collections and additions to production capacity, and generally feel good about what is taking place.

For those that attended the Mid-America Trucking Show in March, you would have thought this was 2006 all over again. It was a very busy show and it appeared that people were there to do business. All of this should continue, barring any further “help” from our friends in Washington.

At recent meetings for groups representing “special interests,” U.S. Transportation Secretary Ray LaHood told a bicycling enthusiasts association that the “day of favoring motorized over non-motorized (meaning bicycles and push scooters) transportation was over.” He is also on record promoting rail freight over all other methods.

Keep in mind that all of our former rail right-of-ways are now bicycle and hiking trails. Maybe LaHood should get the two of these groups together to hold hands and sing songs.

Of all things, the U.S. Department of Transportation recently endorsed the nation’s “marine highways,” meaning that the Great Lakes and our coastal waters are being preferred over trucking and rail for moving freight. In a speech to a convention for maritime shipping companies, LaHood said these are much more cost effective and environmentally friendly methods than out current methods of hauling freight.

Those of you that read my columns no doubt have determined that I am a proponent of free-enterprise and capitalism. While the idea of telling favorable things to a special interest group about its pet ideas is expected, especially by politicians, the government cannot be in the business of determining winners and losers. The markets need to decide what works best, not politicians and bureaucrats.

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