An import tariff is not all doom and gloom for railroads. As I see it, railroads can make more money handling and delivering raw materials than they can finished products. As domestic manufacturing ramps up to replace sources of consumer goods that get priced out of the market, railroads should see some benefit as carload margins are generally higher than containers. Will it be enough to off-set the loss of coal, not even close. Will the gains in raw materials be enough to off-set the loss in intermodal? That is the question that needs answered.
Will the Class 1’s come to regret having sloughed off non-bulk track/industries?
Probably, if they are honest with themselves. Consumer spending (household final consumption expenditure) is 68.4% of US GDP in 2014. (World Bank and OECD) U.S. manufacturing had gross output of $5.9 trillion in 2013, more than one-third (35.4 percent) of U.S. GDP in 2013. Manufacturing is by far the most important sector of the U.S. economy in terms of total output and employment. It employed 12.0 million workers in 2013, 8.8 percent of total U.S. employment. (Economic Policy Institute)
Let’s just look at what would be coming home shall we. Heavy truck production Ferightliner builds most of theirs in Mexico. Locomotives from EMD would be coming home to Muncie from Mexico I can see several Car plants reopening for the Big 3 across the midwest also. Then throw in Clothing toys Steel Electronics and other consumer goods that are now almost all made overseas. Your talking Millions of Jobs for this nation with Higher wages. We would be the economic superpower that no one would ever want to screw with ever again. Why our leaders would love all that Tax Revenue they would be getting from people and not want to lose it to shipping those jobs overseas again. Also the Unions would see they have a second chance and be willing to not chase off the good jobs. The Major Cites will be reborn and solve alot of the issues we have there. Why people working are happier than those that are not.
This nation is just chomping at the bit for someone to put us first and we finally found that person that wants to do it for the American people that means We the People of the USA win instead of the Rest of the World first. The Railroads will be busy hauling all the raw matrieals needed for production all over the USA plus all the Domestic Containers as the OTR industry is going to be overwhelmed. I will admit that IM freight if all his plans come to fruit the OTR side is going to overwhelmed at first until we can gear up to meet the demand. That means the IM companies will be hauling alot of frieght to keep themselves busy and you will see a spike in rates until capacity catches up with what needs to be hauled.
Illusions beyond argument.
What make you believe that a 35% import tariff would result in all these industries and jobs coming home to the U.S. ?
Blind faith obviously. [X-)]
It is simple math really. You think UP or BNSF is going to pay 35% more for the new EMD locomotive versus the GE models I think not. Freightliner is the largest OTR truck maker you think they are going to risk losing this market to having to raise their prices 35%. Right now my boss buys Volvos why they are made in the USA he would love to buy Freightliner however they are made in Mexico. Petes and KW’s are to freaking expensive anymore they cost over 200K each with our specs in them compared to Volvo at 170K Freightliner is in there ar 150K however not made in the USA. Toys used to be made here in the USA it was not until the 70’s and 80’s they went overseas. Maytag used to make all their Products in the USA along with other appliances and made a profit. TV’s were made in the USA in the past we used to build things here in the STATES not overseas. We can bring it home to the USA again. We do not need to buy Saudi oil anymore people with what we have found recently in TX and with what they have in the ND we have enough here in the USA to meet all our needs without any imports from the Middle East at all. Think about that we can produce enough oil that what OPEC wants to do no longer matters to us. All it is going to take is someone strong enough to make the changes needed to allow us to bring home the jobs instead of offshoring them. From the newsreports I have read I think we have a chance right now.
Perhaps take some econ courses at your community college?
Just an observation. It’s funny how many on here and in the general media who used to lament at the idea of companies moving jobs to other countries now seem to rail (no pun intended) at the prospect of those jobs staying here or possibly coming back.
Jeff
Too many of these people seem to believe that there are all these idle factories and mills all over the country that will instantly re-open once the future inhabitant of the White House unilaterally imposes said protective tariff without any Congressional action.
schilm everyday I deal with the economics of helping my boss run 250 trucks all over the eastern 2/3rd’s of this nation. I also have to deal with all the Regualtions that have been imposed upon this industry in the last 8 years and help our drivers deal with those DOT officers that think our trucks our rolling ATM’s for their States. Tolling Authrities that think we are their only source of revenue that matters and try and hose us with 20-40% increases annually. Then I get to deal with both our lawyers and other party lawyers and we had one that thought his client cutting one of our trucks off causing the accident caught on our dash cams that led to his broken arm was worth 2 Million dollars to his client to avoid a lawsuit. We are taking that one to court ourselves and our first piece of evidence is going to be the dashcam showing his client dive bombing a loaded acid tanker in Rush hour traffic.
My husbands town was devastated by NAFTA they lost 3 factories to it alone 1 glass plant 1 finished clothing plant and near us one electronics componet maker. All went south of the border right after NAFTA was signed. But the ironic part for the glass company they kept their Mold making operation up here. Thats right all the molds for their NEW plant in Mexico come from here the best molds still come from the USA for glass. Yet to hear a lot of people on here you think there is Zero chance of any heavy industry ever returning to the USA. I can tell you this the Workers are here in the states we just have to get the Regulators off the freaking backs of industry so they can make it profitable for them to make things here again. You want to know how screwed up over regulation of businesses look no further than how the FDA regulates the size of fruit. The stuff that is undersized they can not sell it at all or even give it to a food bank they have to Destroy it. Millions of Lbs of fresh Produce each year are destr
+1
Even with a tarriff, you’re not going to have $2/hr jobs come back as $20/hr jobs. You’d need 10X the productivity for parity - that’s a huge investment in automation. That doesn’t happen overnight.
Anybody want to pay $1500 for a television or $250 for a pair of sneakers? (I bought a 19" TV in 1980. It was make in Indianapolis. It cost $500 which is $1500 in 2016 dollars.)
Making the US more business friendly and investing in basic R&D are the formulae for long term success.
+1
As usual, most political slogans and campaign promises are worth about 2 cents. The Barnum Effect lives on!!
The hero in this story is Malcom McLean.
https://en.wikipedia.org/wiki/Malcom_McLean
Without containerization, transportation and handling costs and damage from break-bulk handling would swamp a good bit of the labor rate difference.
That, and a few other things, have hammered the world flat.
Plenty of $1500 TVs around at Best Buy. 50-60" screen and 4K and made in China most likely. People are buying them. Now for the real question: What would that TV cost if made in the US? And I just really don’t think it would be multiple times $1500.
I think the right policy changes would make this economy explode with growth overnight without adding an import tariff, and without bringing back a single job lost to outsourcing. And that explosion of growth would sweep up all the 95-million unemployed people and put them back to work with new jobs. New factories will spring up like mushrooms. Human resource hiring managers will be camped in your front yard waiting to offer you a job.
All of this nonsense about bringing back jobs lost to outsourcing is a distraction beside the point. Not only is it beside the point, it will have the unintended effect of slowing down the economy. It is a BAD IDEA.
Nonsense. In that category (4K) 50-59", Best Buy shows 45 sets. 31 are under $1000, 24 under $750, the cheapest $300. All are Asian.
A key question for this is - what are the wages? How many manhours does it take to build, package, and ship each TV, and what does that translate to at a burger flipper’s $15 an hour?
Info from 2014 (Yahoo Finance) indicates the average manufacturing wage in China was about $3.50 an hour, half the current US minimum wage, a quarter the burger flipper’s wage, and one fifth the average US manufacturing wage.
But that info isn’t of much use for comparison unless we know how many manhours it takes to turn the item out.
Still, if we throw out a random number - say 25 manhours, that means it costs nearly $500 to do in the US what $87.50 will produce in China in that amount of time. And that cost will be passed directly on to the consumer.
In the process of digging up numbers for this, I found an article that indicates that the manufacturers are losing money making LCD TVs…
Depends upon how they sloghed them off. If short-lined, no. If abandoned, some will be regretted at some point, but many will be gone with no looking back.
It also depends if the industry tanked or managed to survive. If they survived, the railroads could always direct those customers cut-off to a trans-load site (the modern equivelant to a team-track). With the right trucking service (if any railroads still do that), the shipper could be very happy with that arrangement.