Saturday, August 27, 2011

The Great American Truck Show..For Real

Since I don’t live too far from Dallas, I decided to go the Great American Truck Show (GATS) this week. It was at the Dallas Convention Center. I usually try to attend a “truck show” every couple of years. The Mid-America in Louisville is held in March and it’s the biggest and the best. Las Vegas has a good one and there’s one in Iowa that’s pretty good (plus they’ve got giant pork chops on the menu).

I like going to truck shows. Many of our clients are trucking companies and some of their managers and executives go to the shows. So it’s a great opportunity to meet and greet a lot of folks in one place in a very short period of time. But the main reason I go is that I like trucks. I grew up around trucks and spent over 25 years in the transportation industry before becoming a headhunter. It’s amazing to see the new technology and innovations. All of the equipment just keeps getting better and better. From a “hardware” standpoint, the industry is in pretty good shape.

But, this equipment is of no value on its own. Equipment is only one part of the “Real World Truck Show” (RWTS) formula. The RWTS needs freight, capital, roads, energy and drivers. And it would appear that all of those elements are hard to come by these days. Freight demand is okay, but only because capacity is tight. Capacity it tight because the most important actors in the RWTS are drivers and there aren’t nearly enough them. When freight demand grows (and it will) and assuming capital for more equipment is available (and it will be eventually); there simply won't be enough drivers. Rates will go up and more money will be available for the drivers. But some estimates are that driver pay, benefits, perks and training costs may have to increase by as much as 50% in order to attract truly qualified and capable people into the industry. If that happens, the overall cost of highway transportation will increase 15-20%. That will push some freight on to other modes (rail or inland waterways) and, in some cases, result in certain products just not getting to market.

And then there are roads and energy. The RWTS needs fuel and right-of-way. It’s reasonable to assume that the cost of fuel and taxes will increase 25-50% over the next decade. This will add an additional 10-20% on to the cost of highway transportation. (That’s assuming we have a rational energy policy that includes aggressive petroleum exploration and production along with the development of alternative fuels. If we don’t do that, all bets are off and the rest of this discussion is irrelevant).

So now we’ve increased the overall cost of moving goods over-the-road by 25-40%. The North American economy is so dependent on highway transportation, that this type of cost increase would stifle economic growth for decades. We’re talking about major shifts in populations and production just to offset this cost increase. Lifestyles will change and not for the better. Some folks dream of going back to self-sustaining villages where we all walk or ride our bicycles down to the market every day for a loaf of bread and locally grown fruits and vegetables. (And forget about that cheeseburger, animals will only be allowed in petting zoos). A little bit of this “village” economy is a good thing. But, turning the clock back 150 years across the board would be a disaster.

So the time has come where we must look at better ways to transport products. Equipment technology must continue to improve. We need a 50% improvement in fuel efficiency over the next decade. We need to move larger loads and utilize all available capacity. A 25% improvement in capacity utilization (to include larger, combination trailer configurations) is a reasonable goal. Highway improvements are a must. We need more highway capacity, including truck only lanes connecting major markets. The entire pick-up & delivery, load/unload process has to be streamlined. Packaging and material handling has improved significantly over the past 20 years but we need to do more.

All of these issues have been cussed and discussed for years. We have made some progress. But we are falling behind, especially on highway improvements and the training and development of a new generation of drivers. I’m not a big fan of government involvement, but these are two areas where the government must take the lead. The issues are too big for companies or an industry to tackle on their own. How do we pay for it? It’s tough, but we’ve got to make meaningful changes to social security, medicare/medicaid and military spending. And we have to increase tax revenues. (Notice that I didn’t say just print more money). All of these steps will be painful. And the jobs created building roads and driving trucks won’t be nearly enough to offset the pain. But if we don’t step up and address these issues, life as we know it North America will cease to exist. A lot of people don’t realize it, but we really do need the RWTS.

Saturday, August 20, 2011

If I Had A Hammer....

….I probably wouldn’t have a job. If I was a registered nurse or a software developer with JAVA/J2EE or .Net proficiency or a truck driver with a clean driving record; I would have my pick of jobs. And therein lays the problem with the “Jobs Problem” in the United States. According to the Bureau of Labor Statistics, there are 3.1 million job openings in this country. Certainly not back to pre-recession levels of 4.5 million but much better than the 2.2-2.3 million we saw in 2009. So why aren’t we making more progress on reducing unemployment? There are 13.9 million reasons (the number of officially unemployed) plus probably another 10 million or so we don’t count. Every story and situation is personal and unique. I get that and we should not minimize that fact.

HOWEVER, I think we have to be honest with ourselves and if it means being politically incorrect or insensitive, so be it. I think there are 4 major factors driving unemployment. I think these factors are so embedded in our society that it is likely we will continue to see a large number of our fellow citizens out of work or, at best working in jobs that will not support a reasonable standard of living without some sort of government assistance.

Number 4 issue: Mobility. Many of the unemployed are not living where the jobs are. If we can’t sell our home or we can’t afford to move away from our spouse’s job; we’re going to be unemployed, or at best under-employed, for a long time.

Number 3 issue: Skills. The politicians talk about creating jobs. I’m not sure what that means (and obviously they don’t either.). But I do know this, if you cannot produce a product or a service that people are willing to pay for, you are not going to have a job (unless it’s a government job.) We have to start with the demand side of the jobs equation. What do we need done? Who’s going to pay for it? And, how do we motivate/assist people in developing the skills necessary to do that work?

Number 2 issue: Downsizing. 92 million baby-boomers are going from spenders to savers. In addition, their kids have developed different values and are actually more conservative when it comes to spending money. Smaller homes, smaller cars, smaller vacations, fewer clothes, fewer “toys”. Sure at the high end, we see some big spenders among baby-boomers and baby-boomer offspring. But for the most part, I think there is a fundamental shift away from the “shop ‘til you drop” mentality. This downsizing, de-leveraging, payoff the credit cards, live within your means is a good thing over the long-run. But, for now it means much slower job creation.

Number 1 issue: Demographics. And here’s where it gets so P.I. The “Have Not” population is growing much faster than the “Have” population. Certainly there are some “Have’s” who have become “Have Not’s” or “Have Less’s”. But the real growth in the “Have Not” population is coming the old-fashion way…they are having more babies. This is not just a racial issue, although the statistics would say that race is a major factor. It’s not just a regional issue, again even though statistics point to regional differences and those have racial overtones as well. I really believe it is an across the board issue that is more related to economic and educational factors.

The Best and the Brightest among us are barely reproducing enough to replace themselves. If your parents are among the “Best and Brightest”, odds are that you have a good chance of becoming one of the “Best and Brightest”. But if you’re one of five kids growing up in poverty in SE Oklahoma with an “I’m going back for my GED someday”- occasionally employed for minimum wage, chain-smoking, food stamp shopping, watching Married With Children reruns, single parent….if that’s your circumstance…the deck is stacked against you. And these folks, the “Have Not’s”, whether living in rural poverty or the inner cities, make up the majority of the next generation. These and the children of immigrants, some illegal.

The good news is that those “Have Nots” who do beat the odds often turn out to be the “Best of the Best and the Brightest of the Brightest”. They have to be in order to beat the odds. But, they cannot do it alone. Better public education, more relevant and more invested in developing citizens who can fully contribute and participate in our society; not just pass minimum standard tests; is the key. If we do nothing, a generation from now twice as many people will be unemployed. And, at some point, society starts to breakdown. When the people fail, nations fall. That’s just how it works.

Sunday, August 14, 2011

Someone Else's Tomorrow

“All the memories fade, send the ghosts on their way
Tell them they've had their day, it's someone else's tomorrow…”

-from the song Someone Else’s Tomorrow, written and performed by Patty Griffin

Back in the mid-90’s, we lived in Western Montana. It’s a great place. We often question why we ever left and why we don’t move back. (And when it’s 110 in Texas and it hasn’t rained in months, we ask those questions more frequently.) There are a lot of answers to both of those questions and most of them drift into the realm of TMI. We know why we left, but we always had it in our heads that we might move back someday. We’ve gone back several times and we just spent the last week up there. Western Montana is still a great place, but it’s not the same place we left in the 90’s. And for that matter, we’re not the same. Eventually all places become “Someone Else’s Tomorrow”. We don’t like to admit it, but it’s true. And this truth goes way beyond just places on the map. Change is inevitable and rarely do things change back to the way they were. This is what makes change so difficult.

Which brings me back to Montana. I love Glacier National Park, especially the eastern side. It is spectacular. It used to belong to the Blackfoot Indians. Then the Whiteman took their land. The life today’s Blackfoot lives in places like Browning, Montana is a big step down from how they lived before the whites came and took away their tomorrow. But, to keep things in perspective, the Blackfoot took the land from other Indians and not all that long ago. In the early 1700’s the Blackfoot invaded from the North and chased the Flatheads over the Continental Divide. And in less than 150 years those valleys west of the Divide along with most of Montana and Idaho also became “Someone Else’s Tomorrow” for ranchers, loggers, miners, railroad workers, factory workers, truckers, retirees and most recently the “rich and occasionally famous”. And today there are a lot of multi-million dollar homes for sell at reduced prices. Someone’s dream home will become someone else’s tomorrow.

Texas and the entire Southwest have gone through the same cycle. The Comanche Indians were late comers to the region. When they arrived, life changed dramatically for the Wichitas, Caddos and Tonkowas. Mexico then opened the door to Anglo-Saxon immigrants and everything changed for Mexico and for the Indians. And everything kept on changing, rapidly. Even now, the Texas I grew up in is not the Texas I live in today. And that’s not necessarily a bad thing. I may well live to see the day when Hispanics once again outnumber Anglos in this state. When the “all bidness” is no longer big business. When there is not enough water to irrigate West Texas cotton and communities can no longer afford to build multi-million dollar high school football stadiums.

Montana and Texas are just blips on the map of world history. When one looks at the bigger picture, change has always been and will always be. It can be hard to swallow, especially if a society has lived with the myth that children will always have better lives than their parents. I guess it depends on how one defines “better”. The truth is that the children will always have different lives than their parents. Just ask a Blackfoot Indian.

Thursday, August 4, 2011

Money, Shoes and Taxes

In today’s edition of the NY Times there is a story about how the rich are doing so well in the recovery. It talks about how high-end luxury stores are actually “marking UP’ their merchandise, yet it's still “flying off the shelves”. The article includes a photo of this gorgeous young woman buying a pair of Louis Vuitton shoes at Bergdorf’s for the mere price of $1495. This “outrageous extravagance” was brought to my attention by the talking heads on MSNBC’s Morning Joe show. (Yes, I must admit that I watch MSNBC on occasion. Just for the record, my morning channels in order of preference are: CNBC, FOX-Business (only because Don Imus is there), CNN, ESPN, The Weather Channel, The Golf Channel, MSNBC, The Cartoon Network and FOX News.)

At any rate, this morning I happened to catch the discussion on MSNBC regarding this young lady’s purchase of a pair of $1495 shoes. There was outrage and expression of disbelief that our nation has come to this point. That the gap between the rich and the poor is too large. That the middle class has been virtually wiped out. That we are a nation of the wealthy, for the wealthy, run by the wealthy. That this again was a clear message that the wealthy should be willing to step up and pay higher taxes instead of buying designer shoes. (Wonder what the sales tax was on those shoes?)

Ok, I’m already on the record as saying that some sort of tax increase must be part of our long-term plan to push the federal deficit down to a more manageable level. And, I fundamentally agree with a moderately progressive tax system where higher income brackets pay marginally higher tax rates. But, if I could wave a magic wand, I’d rather see our young lady friend buy two or three or four pairs of $1500 shoes than give more of her (or someone’s) hard earned money to the government.

Where do the liberals think the money goes when a rich person buys something? Do they really believe that there is a members only economy where just the wealthy are involved in manufacturing, distributing and selling $1500 shoes? Is it just rich folks who build yachts and luxury homes and $80,000 automobiles? The liberals (who now prefer to be called progressives) really believe that $1500 given to the government is better than $1500 spent on a pair of designer shoes. That’s the issue. Plain and simple. When Rachel Maddow looks at the Hoover Dam and preaches that this is the type of super project that only a government can build, their argument makes some sense.
The problem is there are far too many government projects and programs which are not “super”. Frankly, I’m inclined to believe that $1500 spent on a pair of designer shoes does more good for the economy than $1500 given to the federal government. (I would even argue that $1500 given to your state or local government is better than $1500 given to the Feds.)

So if you have some extra money, if you’re one of the rich (whatever that means these days), don’t let the liberals guilt you in to not buying something. The most patriotic thing you can do is go buy something. At least then your dollar has a better chance of going to someone along the line who’s actually earned it. What a novel concept.