New planned Industrial Projects spikes up 82% in March 2023 from previous month
IMI SalesLeads announced the March 2023 results for the new planned capital project spending report for the Industrial Manufacturing industry. The Firm tracks North American planned industrial capital project activity; including facility expansions, new plant construction, and significant equipment modernization projects. Research confirms IMI SalesLeads in the Industrial Manufacturing sector. The following are selected highlights on new Industrial Manufacturing industry construction news. Industrial Manufacturing – By Project Type Manufacturing/Production Facilities – 171 New Projects Distribution and Industrial Warehouse – 77 New Projects Industrial Manufacturing – By Project Scope/Activity New Construction – 61 New Projects Expansion – 56 New Projects Renovations/Equipment Upgrades – 76 New Projects Plant Closings – 18 New Projects Industrial Manufacturing – By Project Location (Top 10 States) North Carolina – 15 Indiana – 14 Ohio – 14 South Carolina – 11 Michigan – 10 Tennessee – 9 Texas – 9 Ontario – 8 Alabama – 7 California – 7 Largest Planned Project During the month of March, our research team identified 20 new Industrial Manufacturing facility construction projects with an estimated value of $100 million or more. The largest project is owned by LG Energy Solution, which is planning to invest $5.5 billion in the construction of a manufacturing facility in QUEEN CREEK, AZ. They are currently seeking approval for the project. Completion is slated for 2025. Top 10 Tracked Industrial Manufacturing Projects ONTARIO: Automotive mfr. is planning to invest $5 billion in the construction of a manufacturing facility in ST. THOMAS, ON. They are currently seeking approval for the project. MICHIGAN: Automotive mfr. is considering investing $4 billion in the construction of an EV battery manufacturing facility and currently seeking a site in MICHIGAN. INDIANA: A pharmaceutical company is planning to invest $2.1 billion in the construction of a processing and research complex in LEBANON, IN. They are currently seeking approval for the project. SOUTH CAROLINA: Automotive mfr. is planning to invest $2 billion in the construction of a manufacturing facility in BLYTHEWOOD, SC. They are currently seeking approval for the project. Construction is expected to start in the Summer of 2023. INDIANA: Battery component mfr. is planning to invest $1.5 billion for the construction of a 1.4 million SF manufacturing facility in TERRE HAUTE, IN. They are currently seeking approval for the project. Completion is slated for late 2027. NOVA SCOTIA: Tire mfr. is planning to invest $303 million for the expansion of its manufacturing facility in BRIDGEWATER, NS. They are currently seeking approval for the project. ALABAMA: Ammunition mfr. is planning to invest $250 million in the construction of a manufacturing facility in VALLEY, AL. They have recently received approval for the project. NORTH CAROLINA: Railroad car mfr. is planning to invest $220 million for the construction of a manufacturing facility in LEXINGTON, NC. They have recently received approval for the project. Completion is slated for early 2024. OHIO: An energy company is planning to invest $220 million for the renovation and equipment upgrades on a 1.1 million SF solar panel manufacturing facility at 3600 Etna Pkwy in PATASKALA, OH. They have recently received approval for the project. Completion is slated for late 2023. TENNESSEE: Automobile parts mfr. is planning to invest $147 million for a 55,000 SF expansion and equipment upgrades on their manufacturing facility in MORRISTOWN, TN. They are currently seeking approval for the project. About IMI SalesLeads, Inc. Since 1959, IMI SalesLeads, based in Jacksonville, FL is a leader in delivering industrial capital project intelligence and prospecting services for sales and marketing teams to ensure a predictable and scalable pipeline. Our Industrial Market Intelligence, IMI identifies timely insights on companies planning significant capital investments such as new construction, expansion, relocation, equipment modernization, and plant closings in industrial facilities. The Outsourced Prospecting Services, an extension to your sales team, is designed to drive growth with qualified meetings and appointments for your internal sales team. Visit us at salesleadsinc.com.
The Impact of Inflation
It is a generally accepted principle that moderate inflation is good for business. Moderate inflation has been a fact of life and the natural economic state for more than a century. For one thing, inflation is usually a sign that the economy is growing, which leads to higher demand. Inflation often encourages consumers to make purchases now rather than later. A small but positive inflation rate is economically useful; however, a high inflation rate tends to feed on itself and impair the economy’s long-term performance. What exactly is inflation? Inflation is the overall rise in the prices of goods and services over time. The rising of prices leads to a reduction of purchasing power. The rise in the general level of prices often expressed as a percentage, means that the dollar buys less than it used to in prior periods. As mentioned before, inflation can have a positive impact on the economy. In fact, the Federal Reserve sets an inflation target. They want a healthy core inflation rate of 2%, which takes out the effect of food and energy prices. The central bank wants a little inflation, which also leads consumers to believe prices will continue rising. When inflation rises faster than expected, problems can arise. Now how does inflation impact business owners? Naturally, with inflation costs will rise, putting pressure on gross and net profits. However, the impact of rising prices will vary for different cost types. The rising cost of raw materials will erode gross margins if sales prices are not increased. Keep in mind, the reduction in gross margins may not be immediately apparent. This is because an existing stock that was purchased at lower prices will be used first. However, that inventory will eventually need replenishment. It is best recommended to use the current or predicted cost of raw materials when making pricing decisions when inflation is high. An important note about inflation is that it varies by region and country. It may be possible for a business to source materials from regions where inflation is lower. When the prices of energy are affected by inflation, distribution costs will likely increase. Such rising costs will impact both shipments to customers and suppliers. While service providers may be able to avoid certain negative impacts, they will experience an increase in the cost of travel. As expected, all overhead costs will rise under high inflation periods. These rising prices will begin to eat into net profit that is already being impacted by raw material and distribution costs. While it will take longer for inflation to increase the cost of long-term fixed-price contracts (rent, maintenance contracts, etc.), you could see significant annual increases in these costs if inflation remains high for an extended period. With the impact of rising inflation on businesses, consumers will begin feeling the effect as well. This can lead to pressure from employees to increase wages and salaries. Businesses that do not adjust pay in line with inflation often risk losing workers. When the employee turnover rate is high, recruitment and training costs will be incurred and a drop in productivity will often occur. This encourages businesses to increase wages and salaries to retain employees. An erosion of spending power will affect both businesses and consumers alike. B2B (business-to-business) and B2C (business-to-consumer) companies could very well experience a drop in demand. The degree of the drop in demand will depend on the sector of products or services. Demand for luxury and non-essential products will tail off quickly and demand for low-cost alternatives could rise. As inflation grows higher, so will interest rates. Consequently, servicing existing debts will become more expensive. It very well may become a challenge to obtain new financing. Additionally, inflation devalues money. As a result, you will be repaying the capital element of loans at face value with money worth less than when you took out the loan. Along with this, businesses will likely see a rise in overdue accounts receivable (AR). Customers will have less money to pay their bills and will try to manage their limited available cash. The effects of this will be high collection costs, a squeeze in cash flow, and possibly the need for increased borrowing. As a result, there could be higher bad-debt risks. Considering all the effects of inflation listed above, businesses will ultimately increase sales prices. Consumers and companies will be fully aware that prices are rising and with competitors having to follow suit, it is generally best to adjust prices in line with the inflation rate. With periods of high inflation not being a suitable time for most businesses to expand, it would be advisable to retain cash reserves as a cushion against rising prices and possible bad debts. As mentioned earlier, the cost of borrowing will be high, so most business sectors need to avoid any increases in borrowing during a time of high inflation. High inflation certainly presents challenges to businesses. However, the effects of rising prices can be managed. If costs are controlled, cutbacks are made when needed, and sales price increases are made in a timely manner, margins can be maintained. About the Author: Ian C. Perry is a staff accountant for the Center for Financial, Legal, and Tax Planning, Inc. Roman A. Basi is an expert on closely held enterprises. He is an attorney/CPA and the president of the Center for Financial, Legal, and Tax Planning, Inc. For any questions about how to prepare yourself or your business for rising inflation, do not hesitate to reach out to the professionals at The Center for Financial, Legal, and Tax Planning, Inc at our website, www.taxplanning.com, or by phone at 618 997-3436
The Isolation Process: A powerful path to more sales
Psst — hey — c’mere! I’ve got a secret to tell you…Sometimes prospects will stall you, sometimes they will lie to you, and sometimes they won’t tell you the real reason why they won’t purchase. When a prospect gives you some lame excuse (stall) about why they won’t buy now, he’s really saying, “not yet.” There are two basic types of stalls: People stalls and Thing stalls. Thing stalls are when prospects say — I’m too busy now, your price is too high, I have too many other obligations. Frustrating, isn’t it? Want to make the stall go away? Simple. Here’s the strategy: Isolate the stall or objection as the only obstacle, and then eliminate it from the situation by asking, “what if it was gone, or was not the situation…would you buy?” Isolating and eliminating creates a new situation AND a possible sale. You repeat the stall back to the prospect and then take it away. For example — you say, “I understand, Mr. Johnson. So, what you’re telling me is if it wasn’t the fact that you were too busy, this would be a perfect opportunity for you, is that correct? (get the commitment). (then double qualify) In other words, if you had the time, you would get involved? (then say) Well let’s look at the situation closer, you say you have no time, but you also said that you’re not earning all the money you need. Maybe there’s a way to use this opportunity to buy back some of your time with increased earnings.” Another example is — The prospect says, “I don’t have the money.” You say, “If you had the money, would you buy it?” The best way to handle a stall or objection is to take it away and consider new options or solutions. You say…If it wasn’t for…then insert the stall — price, timing of workload, other obligations — would you buy it? People stalls are worse. Does this sound familiar? Sounds good Jeffrey, but I have to talk this over with my wife, husband, boss, accountant, lawyer, the executive committee, the home office, my cat whiskers, my two-year-old son, or my girlfriend. People not being able to decide on their own — Don’t you hate that? Well, here’s how to overcome it. First, isolate the person to a decision that does not include the others. “Bill, if it was only you…what would you decide?” This gives you a chance to find out how they really feel (will they support you). Second, double qualify the commitment. Ask – “Is there anything you would change or object to if it was only you?” Third, secure the prospect’s support when he meets with the third party. “Bill, when you go to the others, will you support the purchase?” And fourth, find other ways to get a decision now. Suggest alternatives that might get Bill to act now without risk. “Bill, since you’re in favor, and we only need your spouse’s approval, how about if we fill out the paperwork — give it to me so you can be in before the end of the month, and when your spouse says OK, we’ll be ready to go (and if your spouse says no, we’ll tear up the papers — no obligation.)” Hard to say no to that. One of the most interesting things about objections is that even though they continue to recur, they continue to stymie or dumbfound salespeople. I don’t get it. You put your hand on the stove once, you get burned, and you don’t do it again. You learn the lesson. Salespeople continue to get burned. If you think about it for any length of time, it’s kind of silly. The isolation process is a powerful way of getting to the truth, finding out the real objection, AND in about 30% of the cases actually making the sale. But it’s only one of an arsenal of weapons available to salespeople for stalls and objections. You can prevent them by covering them in your presentation, or you can at least prepare “best responses” for the ones that happen all the time. Most of the time an objection is actually a buying signal. They’re saying, “I’m interested, but you haven’t sold me yet. And the sale is always made. Either you sell them on yes, or they sell you on no. About the Author: Jeffrey Gitomer is the author of twelve best-selling books including The Sales Bible, The Little Red Book of Selling, and The Little Gold Book of Yes! Attitude. His real-world ideas and content are also available as online courses at www.GitomerLearningAcademy.com. For information about training and seminars visit www.Gitomer.com or email Jeffrey at salesman@gitomer.com or call him at 704 333-1112.
Are you prepared to talk MTM to your banker?
Hey, let’s talk MTM, otherwise, known as Mark to Market. You will soon become very familiar with this phrase. Especially if you are renewing your banking arrangements or are looking for a new loan or loans for 23 and beyond. How about we see if your banker has a sense of humor? When he/she asks for your latest Balance Sheet, how about your ask to see the bank’s Balance Sheet to see if they are liquid and will be able to process your payroll when it comes due? But if you are in serious negotiations with the bank you may want to skip this idea. A number of banks are worried about what is going on in the banking arena. Thus, they will take steps to increase their liquidity which in turn reduces any incentive they have to make loans. NOT GOOD FOR YOU if you have not finalized your arrangements for this year. This is where MTM comes into play because banks will scrutinize the individual categories on your balance sheet to determine whether they are valid, correctly accounted for, and properly valued. Gee, that sounds like what they were doing regarding SVB. They may even ask you to have an audit performed by an agreed-upon accounting firm, hopefully, one that understands your business. They may also ask for annual equipment valuations encompassing both used equipment as well as rental assets. Do not be surprised if they ask for both orderly liquidation values (OLV) and forced liquidation values (FLV). They need these values to mark your assets to market. Which in turn is processed as part of their MTM calculation. And you can imagine how difficult the process can be with the past as well as current used values increasing because of a standard demand/supply situation. If you were in the banker’s shoes, how would you value used equipment as well as recently purchased rental units in terms of loan collateral? I find the answer to this question perplexing. Think about it. Let’s consider some assumptions. Cost of a unit five years ago at $20,000 The cost of the new unit is currently at $26000 to $28,000 Book value of the five-year-old unit. $6,000 The current auction price is $10,000 New EV units coming into market……$30,000 This is a rough idea of what is going on with all types of business equipment. The point is that used prices and demand/supply force prices higher. Lack of new units forces used prices higher. EV units are more costly than current units. Put this all into a blender and I would hate to be the banker required to provide MTM numbers for these units, especially if their loan portfolio stretches over 5-6 years, which is probable in an industry that supplies both short and long-term rental activity. If I were the banker I would be saying. …..here is a used unit that was probably worth $6,000 a few years ago which is now selling for $10,000. What will it be worth (OLV or FLV) five years from now? What if we enter a recession? What if inflation cools or deflation takes hold because of a recession? How much of the inflated costs will stick if there is a recession? If I could build that new machine in 2024 or 2025 for using costs for materials with a cost close to what they were the year before the pandemic hit, what would the value be assuming the labor costs would stick? Would the increase in the used units remain higher than it would have been if the pandemic and related demand/supply issues did not materialize? In the end, the banker is interested in collateral value he can use as a market. What is that market today and what will it be like four or five years from now? He/she will err on the conservative side which means lower collateral value and thus fewer assets to use to make loans. I guess the annual equipment valuations will eventually smooth out and stage the used units by age and hours which will be lower than what you would have to pay for the unit today. Make sense? In the end, it will be tougher when it comes to negotiating with the bank this year. Remember it will be LONGER and HIGHER for some time which translates into higher interest rates for maybe years to come. And that BALANCE SHEET management I keep harping about will provide what the bank needs to support your loans or it will not. I would do my homework regarding the market of the collateral you are providing and how that collateral will provide liquidity as the loan is amortized. This will be a very crazy year. Do your homework and be prepared to show your historical GP margins from used equipment sales including the used rental units as well. One last issue to discuss. It pertains to the commercials about the ERC credits available to companies that qualify. If you did not receive any ERC money to date and you qualified for it, somebody screwed up. But if you didn’t qualify, then nobody screwed up. So, before you sign up with a third-party ERC consultant make absolutely sure you qualify for the funds. I would take the docs to either an independent accounting or law firm familiar with this program. Because There is a lot of money involved It is taxable The consultants take a hefty fee The IRS will audit these transactions and you may have to pay it back if they find you are not entitled to the payment. You do not want to be in this position. About the Columnist: Garry Bartecki is a CPA MBA with GB Financial Services LLC and a Wholesaler columnist since August 1993. E-mail editorial@mhwmag.com to contact Garry.
AAR reports Rail Traffic for the week ending April 15 2023
The Association of American Railroads (AAR) has reported U.S. rail traffic for the week ending April 15, 2023. For this week, total U.S. weekly rail traffic was 468,197 carloads and intermodal units, down 4.4 percent compared with the same week last year. Total carloads for the week ending April 15 were 234,066 carloads, up 5.8 percent compared with the same week in 2022, while U.S. weekly intermodal volume was 234,131 containers and trailers, down 12.8 percent compared to 2022. Eight of the 10 carload commodity groups posted an increase compared with the same week in 2022. They included nonmetallic minerals, up 3,445 carloads, to 33,677; motor vehicles and parts, up 2,408 carloads, to 14,871; and metallic ores and metals, up 2,195 carloads, to 22,835. Commodity groups that posted decreases compared with the same week in 2022 were miscellaneous carloads, down 668 carloads, to 8,714; and forest products, down 272 carloads, to 9,311. For the first 15 weeks of 2023, U.S. railroads reported a cumulative volume of 3,453,227 carloads, up 0.2 percent from the same point last year; and 3,483,361 intermodal units, down 10.9 percent from last year. Total combined U.S. traffic for the first 15 weeks of 2023 was 6,936,588 carloads and intermodal units, a decrease of 5.7 percent compared to last year. North American rail volume for the week ending April 15, 2023, on 12 reporting U.S., Canadian, and Mexican railroads totaled 339,933 carloads, up 6.0 percent compared with the same week last year, and 311,134 intermodal units, down 12.3 percent compared with last year. Total combined weekly rail traffic in North America was 651,067 carloads and intermodal units, down 3.6 percent. North American rail volume for the first 15 weeks of 2023 was 9,601,378 carloads and intermodal units, down 3.9 percent compared with 2022. Canadian railroads reported 82,319 carloads for the week, up 9.0 percent, and 60,931 intermodal units, down 14.8 percent compared with the same week in 2022. For the first 15 weeks of 2023, Canadian railroads reported a cumulative rail traffic volume of 2,097,986 carloads, containers, and trailers, up 0.7 percent. Mexican railroads reported 23,548 carloads for the week, down 1.7 percent compared with the same week last year, and 16,072 intermodal units, up 10.1 percent. Cumulative volume on Mexican railroads for the first 15 weeks of 2023 was 566,804 carloads and intermodal containers and trailers, up 2.4 percent from the same point last year. To view the weekly traffic charts, click here.
New Roadmaster Truck Driving School in Houston offers training for a career with steady pay, flexibility, and job security
Amid The Great Resignation, job seekers are looking for new career fields that satisfy their need for increased flexibility, steady pay, and job security. Roadmaster Drivers School President Brad Ball explains how a career in truck driving could be fulfilling, lucrative, and a unique opportunity to experience the open road With a growing national need for truck drivers amid supply chain disruptions and driver shortages, Roadmaster Drivers School, the Class A CDL (commercial driver’s license) truck driver training program, is opening a new Houston, Texas location. The new school is Roadmaster’s fourth location in Texas and could be a tremendous opportunity for Houston residents who may be unemployed, underemployed, or looking for a career change. Brad Ball, President of Roadmaster Drivers School, explains that the demographics of the greater Houston area are well-suited to a truck driving career. Ball says, “The national economy relies on a new generation of trained truckers to help meet the needs of the country’s biggest trucking state, Texas.” The state of Texas employs over 170,000 truck drivers, which equates to 15 of every 1000 jobs, and that number continues to grow year after year.1 Because Texas is centrally located from the Dallas/Fort Worth Metroplex, the average turnaround time is only 48 hours for truck drivers to reach most parts of the U.S. As one of only four states bordering Mexico, the Texas trucking industry facilitates 85% of the trade between Texas and Mexico.2 The pandemic created a massive disruption in the traditional job market. In 2021, people started to re-examine their work-life balance and began seeking new jobs that provided better pay, increased flexibility, and more personal fulfillment. This career uncertainty contributed, in part, to The Great Resignation. According to the U.S. Bureau of Labor Statistics, over 47 million people opted to willingly quit their jobs.3 Supply chain disruptions and driver shortages were already problematic before the pandemic, but COVID-19 certainly exacerbated the issue. Studies predict a shortage of 240,000 drivers by 2023 driven by factors such as truck drivers retiring (the average age of truck drivers is 55 years old), new regulations and qualification requirements, and truckers who never returned to the industry after pandemic-related layoffs.4 As a result, 2.6 million global positions remained unfilled in 2022.5 A truck driving career offers job security, competitive pay, and benefits. According to Indeed.com, the average entry-level truck driver’s salary in the U.S. is $73,907 per year!6 Ball states, “We’ve proudly trained more than 160,000 men and women to build a career in truck driving, positively changing their families’ lives in the process. There’s a growing diversity in truck driving with no wage gap tied to race or gender.” Once considered an almost exclusively male occupation, the industry is experiencing record growth among women now choosing a truck driving as a career.7 More than 90% of truckload fleets gave raises in pay to drivers in 2021, with an average increase of 10.9%. A majority of fleets are also offering significant sign-on and referral bonuses.8 Ball says wage increases look promising over the next few years. Ball explains, “On average, completing CDL training classes takes about a month. We thoroughly prepare you every step of the way, including hands-on experience driving a truck and classroom training. Financial assistance is available for those who qualify.” He adds, “We encourage you to stop by our new facility and let us show you what life on the road could look like. Taking a few hours out of your day could be the first step to a fascinating and profitable new profession. We’re excited to meet the Houston area residents and support them on their new career path.” On May 18th, between the hours of 11:00 am and 3:00 pm, members of the press, prospective students, and the general public are warmly invited to the grand opening ceremony of Roadmaster’s new training facility at 1224 Normandy Street, Houston, Texas 77015. Ball remarks, “Trucking is an essential and increasingly well-paid and respected profession. If you — or someone you know — are in the market for a better future, I urge you to come and talk to us. It might turn out to be the best thing you ever did.” References What states have the most truck drivers? Fremont Contract Carriers. (n.d.). Retrieved September 10, 2022, from fcc-inc.com/what-states-have-the-most-truck-drivers/ Texas Trucking Industry. TheTrucker.com. (n.d.). Retrieved September 10, 2022, from thetrucker.com/truck-driving-jobs/resources/states/texaB Fuller, Joseph, and William Kerr. “The Great Resignation Didn’t Start with the Pandemic.” Harvard Business Review, 25 Mar. 2022, hbr.org/2022/03/the-great-resignation-didn’t-start-with-the-pandemic. “Supplying Your Hauling Needs.” Haulink, haulink.com/blog_post/the-truck-driver-shortage-in-the-united-states#! Kerriou, Anne. “The Truck Driver Shortage Has Got Worse in 2022.” Market Insights, 29 June 2022, market-insights.upply.com/en/the-truck-driver-shortage-has-got-worse-in-2022. Entry Level Truck Driver Salary in United States – Indeed. indeed.com/career/entry-level-truck-driver/salaries. Bisaha, Stephan. “Truck Driving Has Long Been a Man’s World. Meet the Women Changing That.” 19 houstonpublicmedia.org/npr/2021/09/19/1037513003/truck-driving-has-long-been-a-mans-world-meet-the-women-changing-that/#: McNally, Sean. “Trucking Wages Jump in 2021 as Shortage, Supply Chain Issues Increase Demand.” American Trucking Associations, 10 Aug. 2021, trucking.org/news-insights/trucking-wages-jump-2021-shortage-supply-chain-issues-increase-demand.
Taking a page from the video game industry to generate reoccurring revenue
If you play video games or have children that play modern-day video games, without even thinking about it, you are familiar with the video game industry’s revenue model. You are especially familiar if you are the one footing the bill for your or your children’s video game play. The old-fashioned business model for gaming has been the console model. Video game console manufacturers sell their gaming consoles usually at cost or very low margin while making money by selling high-priced games. The rise of online gaming, especially as high-speed internet has become an everyday commodity in households, has further diversified the revenue models for video game companies. One of these revenue streams is the subscription model, where a game requires continuous payments to play the game. Another revenue stream is what is called microtransactions, where there are features or aspects of a game that the player can purchase to upgrade gameplay or attain digital goods or premium features of the game. Again, if you are into gaming or have children into gaming, you are probably all too familiar with these microtransactions if it is your credit card being billed. While companies might not necessarily be making high margins by selling consoles, or even if they provide some free-to-play games, these revenue streams outlined above continue to remain lucrative. Now you are probably wondering what that has to do with the material handling industry and lift trucks. I wanted to draw the parallels between the revenue streams in the video game industry to the revenue streams within a traditional lift truck dealership. Think of the lift truck as being the gaming console for the purposes of this article. The sale of a new lift truck can lead to years of service maintenance and replacement parts business for the dealer. As defined by MHEDA, the material handling aftermarket is the add-on revenue source from industrial truck equipment sales; parts, after-sales service, and rental fleet operations. So compare the subscription and microtransaction revenue models I mentioned at the beginning of this article for the gaming industry to the lift truck dealer’s subscription and microtransactions. They can include but are not limited to field service repair, preventive and/or planned maintenance, annual safety inspections, service shop work, sales of high mortality rate/high-wear parts and accessories, component replacements, rebuilds or remanufactured parts, and service and maintenance contracts. According to the MHEDA data, a typical lift truck dealership revenue mix consists of the following: New Equipment Sales: 29.2% Used Equipment Sales: 7.9% Parts: 18.4% Service: 20.4% Rental Billings: 14.4% Other Revenue (not listed above): 9.7% According to the same MHEDA data, the gross margin from new equipment sales for a typical dealership is 8.7% whereas the gross margin for parts sales is 34.9%, and the gross margin for service is 62.6% Tight margins on the new equipment, similar to the console in the video game industry model I described earlier in the article. As the MHEDA data shows, the sale of parts and services is critical to the profitability of the dealership. This is especially true with the current climate of our industry. Extended lead times from new equipment manufacturers have led to the life of the older equipment within the market being extended past its normal operating life. This has led to an increase in parts and services needed to maintain the equipment that would normally be replaced during the normal equipment life cycles of your end-customer. While new equipment manufacturers and lift truck dealers are aware of the importance of aftermarket/after-sale parts and services as shown in the data above, many dealers sometimes struggle to differentiate the role of an equipment salesperson and the role of a customer service sales rep. Too often I see these roles rolled up into one function, where I believe these roles should always be separate functions and separate salespersons. Where an equipment salesperson’s objectives are the targeting and identifying of new equipment opportunities, along with quoting and selling of new/used equipment, if they are also tasked with providing aftermarket parts and service support that could lead to not having enough focus on one function over the other. I believe having dedicated customer service sales reps will allow your dealership to provide focused and professional aftermarket parts support, along with dedication to targeting and obtaining service agreements and the upselling of service repair quotes. Well-defined customer service sales rep function includes but is not limited to targeting accounts to develop and ensure aftermarket sales, ensure the growth of a dealer’s existing service accounts, and develop new and maintain existing rental equipment customers. This dedicated function aligns with the dealer’s workflow to ensure a steady stream of service, rental, and parts business while working cross-functionally with said departments within the dealership. Having this dedicated customer service sales rep function allows the for the new/used equipment sales rep to focus on the functions of selling equipment. In addition, as with the sale of new/used equipment to your end-customer leading to service maintenance and parts sales for your dealership, you could also see how targeting new customers through a dedicated customer service sales rep can also lead to the future sale of new/used equipment to those end-customers as well. Combining this with a great customer experience as I discussed in last month’s article, will lead to the continued growth of these revenue streams for your dealership. About the Author: Chris Aiello is the Business Development Manager at TVH Parts Co. He has been in the equipment business for 16-plus years as a service manager, quality assurance manager, and business development manager. Chris now manages a national outside sales team selling replacement parts and accessories in various equipment markets such as material handling, equipment rental, and construction/earthmoving dealerships.
What really kills organizational productivity
I was sitting in a coffee shop on a Thursday afternoon when I overheard two gentlemen talking about work. Not so much about whether client X needed Y, solving a technical problem about a product, or even collaborating on a slide deck. They were deep in discussion about organizational behavior. They went over multiple email and phone communications where they dissected whether the sender was “testing” the receiver, had a hidden message, or had a secondary agenda. They tried at length – over two hours – to divine what these communications were all about. What an incredible waste of time. How many hours a day (whether in the office or remotely) do your employees and teams spend interpreting the meaning behind the meaning of internal communications? While politics are inherently part of business, time wasted and money lost is typically blamed on inefficiency and lack of productivity. People aren’t working hard enough. They’re slacking off. They’re not really working when they are working from home. This all stems from the perception that people can’t really be trusted to do their jobs without extensive supervision or oversight. (But that’s a debate for another day) However, I’d argue that wasted time, lack of productivity, inefficiencies, and all the other things that drain a company’s dollars stems from communication and culture. Had these two guys had the ability to communicate openly and ask straightforward questions, those two hours never would have happened. Companies often try to sidestep this issue through teambuilding exercises, office events, or even through promoting their organizational values (which always include communication and an ‘open door policy’). Yet, this doesn’t change behaviors, it only glosses over underlying cultural problems. There’s frequent talk about shaping culture through establishing a common purpose and a sense of community. But when there’s a lack of trust, those things really don’t matter much. Trust is huge. According to a study conducted by the Edelman Trust, 1 in 3 people don’t trust their employer. According to research, this lack of trust costs U.S. companies approximately $450 billion to $550 billion annually. Trust also goes both ways. Employees need to be able to put trust in their superiors and other executives, while managers and leaders need to be able to trust their teams. Building trust, however, often requires thinking from a new perspective. Trust really isn’t about you. It’s about empowering other people as a result of your presence, and about making sure that the impact of your leadership continues into your absence. This requires three things – honesty, transparency, and authenticity. Delivering these three means being your true self, focusing on what others need to succeed, paying less attention to what you think people want to hear and more attention to what you need to say to them, and ensuring all communication ends with actual understanding. People don’t always realize how they’re communicating may undermine their own trustworthiness. People tend to trust when they believe they are interacting with your authentic self when they have faith in your intentions, and when they feel that you care about them. If the gentlemen in the coffee shop had trusted in their organization, those two hours may have actually resulted in something a lot more productive. About the Author Andrea Belk Olson is a keynote speaker, author, differentiation strategist, behavioral scientist, and customer-centricity expert. As the CEO of Pragmadik, she helps organizations of all sizes, from small businesses to Fortune 500, and has served as an outside consultant for EY and McKinsey. Andrea is the author of three books, including her most recent, What To Ask: How To Learn What Customers Need but Don’t Tell You, released in June 2022. She is a 4-time ADDY® award winner and host of the popular Customer Mission podcast. Her thoughts have been continually featured in news sources such as Chief Executive Magazine, Entrepreneur Magazine, Harvard Business Review, Rotman Magazine, World Economic Forum, and more. Andrea is a sought-after speaker at conferences and corporate events throughout the world. She is a visiting lecturer and startup coach at the University of Iowa, a TEDx presenter, and TEDx speaker coach. She is also an instructor at the University of Iowa Venture School. More information is also available on www.pragmadik.com and www.andreabelkolson.com.
PTDA Foundation now accepting nominations for 2023 Leadership Awards
Wendy B. McDonald Woman of the Year Award and Robert K. Callahan Advancing Leaders Award nominations are open through June 9th The PTDA Foundation is seeking nominations for its Wendy B. McDonald Woman of the Year Award and Robert (Bob) K. Callahan Advancing Leaders Award. The Wendy B. McDonald Woman of the Year Award recognizes a woman who, regardless of where she is in her career, brought change as an integral contributor to the success of her company and the PT/MC industry in 2022. The PTDA Foundation established the award in 2014 to honor the memory of Wendy B. McDonald, one of the PT/MC industry’s true pioneers known for her legendary philanthropy and commitment to giving back to the industry and the communities that led to her success. The award is presented annually when merited. Nominations will be accepted through June 9, 2023. Award criteria can be found at ptda.org/McDonaldAward. The Robert (Bob) K. Callahan Advancing Leaders Award recognizes young and ambitious individuals who demonstrate a passion and drive to grow within the PT/MC industry. The late Bob Callahan made a lifelong commitment to supporting the advancement of next-generation trailblazers in the PT/MC industry. The award was established in his honor. Nominations are due by June 9, 2023, and criteria can be found at ptda.org/CallahanAward. Nominations are not gender specific—all are welcome to be considered. Both awards will be presented at the PTDA 2023 Industry Summit in Amelia Island, Fla. in October.
Poor economic climate knocks warehouse construction
Warehouses added to the global building stock in 2023 down 35% compared with 2022. 26% of warehouses are expected to be automated by 2027, up from 18% in 2022 The Inflation Reduction Act, coupled with the trend toward near-shoring resulted in an uptick in durable manufacturing warehouses in Europe and North America As with many other sectors, the recent economic downturn has hit the warehouse construction sector hard. Updated research by Interact Analysis suggests that fulfillment center construction has suffered in particular, partly driven by Amazon’s decreased spend on micro-fulfillment. In response to the rising trend towards online shopping and e-commerce during the pandemic, we saw an increase in the construction of fulfillment centers to cope with this demand. Amazon accounted for a large proportion of this activity, as it doubled its fulfillment capacity between 2020 and 2021. But, as the trend towards e-commerce begins to slow down, the construction and building of new fulfillment centers have also dipped. In 2022, 4,000 fulfillment centers were added to the global building stock, but in 2023 this is forecast to decline to 2,000. Consequently, demand for end-to-end automation solutions will also decrease and the boom we saw during the COVID-19 pandemic will come to an end. Many companies are likely to focus on automating their existing assets rather than investing in new, larger projects. Warehouse construction has also suffered from the effects of poor economic conditions across much of the globe, in particular rising interest rates. It is expected the US will see a “meaningful” downturn within the next 12 to 18 months and, consequently, Interact Analysis forecasts a decline in the rate of warehouse construction in the coming years. Despite this, the growth in e-commerce since the pandemic is likely to dampen the shock to the warehouse construction sector. This is a lagging indicator, so a significant decrease is expected in 2H 2023 and 1H 2024. Overall, 6,700 warehouses will be added to the global building stock in 2023, a reduction of 35% compared with 2022, but still higher than pre-COVID levels. Overall, China and the US are leading the way in terms of warehouse construction. In 2022, the two countries combined accounted for 58% of the total square footage added. The US’s total warehousing stock increased by 6% over the year and China’s by 5%. The updated research shows that Japan and France registered the lowest growth in terms of additional warehouse square footage in 2022. Rueben Scriven, Research Manager at Interact Analysis, says, “It is important to realize the downturn in warehouse construction is not due to a lack of demand. Rather, it is due to high-interest rates and poor economic conditions. The slowdown in warehouse construction is likely to be short-lived as the demand for sites is still there. Rent prices are anticipated to increase in the mid-term and e-commerce will continue to drive demand over the long term. Regarding automation, although we expect to see a decrease in demand for end-to-end automation, by the end of 2022, 18% of all warehouses had some form of automation installed and this is set to increase to 26% by the end of 2027. Food & beverage warehouses, and parcel sectors report the highest levels of automation in their warehouses.” About the Report: “Lockdowns and social distancing measures implemented to mitigate the COVID-19 pandemic caused a wholesale disruption of traditional brick-and-mortar retail. In less than a year, US e-commerce penetration rose from ~10% of all retail sales in late 2019 to roughly 15% by the end of 2020. With global e-commerce online sales projected to more than double over the next five years, 28,500 warehouses will be added to the global stock. A significant portion of these new warehouses will be direct-to-consumer fulfillment centers necessitating significant labor and automation investments.” IA’s Warehouse Building Stock Database is the ONLY report on the market that estimates warehouse counts, footprint, sizes, labor demand, and automation penetration as a single, consistent, and global dataset. We’ve consolidated and analyzed data points from government sources, public company filings, and industry sources into a model that provides detailed and credible warehouse estimates – all regularly updated to incorporate new information, outlooks, and segmentations. About Interact Analysis With over 200 years of combined experience, Interact Analysis is the market intelligence authority for global supply chain automation. Our research covers the entire automation value chain – from the technology used to automate factory production, through inventory storage and distribution channels, to the transportation of the finished goods. The world’s leading companies trust us to surface robust insights and opportunities for technology-driven growth. To learn more, visit www.InteractAnalysis.com
ASSP names Safety Professional of the Year
The American Society of Safety Professionals (ASSP) has named Subba Rao Palagummi, CSP, CMIOSH, F.S. Eng., its 2023 Safety Professional of the Year. The oil and gas industry safety expert from the Middle East has been an ASSP member for 15 years and has helped advance occupational safety and health for more than 30 years in India, Kuwait, and the United Arab Emirates. Palagummi is a corporate health, safety, and environment specialist at ADNOC Onshore (Abu Dhabi National Oil Company). His organization is involved in oil exploration and production in Abu Dhabi, the capital of the United Arab Emirates located on an island in the Persian Gulf. Palagummi oversees a large team of health, safety, and environment professionals and contractors, and he has built a reputation of being a safety leader with integrity, knowledge, ethics, and an unwavering commitment to reducing illnesses, injuries, and fatalities on the job. He developed and delivered a workplace training module called “Supervising for Safety” that supports an organization-wide culture transformation strategy. He also organized a successful road safety awareness campaign to increase public safety. “He has spearheaded task forces across the group and developed standards and guidelines that led to corporate performance improvement and an enhanced safety culture,” said Tahir Azhibekov, an HSE manager at ADNOC. “His business acumen and people management skills are very much admired across the organization.” As past president of ASSP’s Kuwait Chapter and the chapter’s 2011 Safety Professional of the Year, Palagummi mentors fellow safety and health professionals and helps them advance their careers. He strives to motivate students and young engineers to pursue safety as a career. He also guides university safety students on internships and academic projects. He was ASSP’s Region 9 Safety Professional of the Year in 2019. “Rao has always been proactive and hard-working by nature,” said Viswasri Pendyala, an HSE manager at ADNOC. “His leadership skills in handling teams and mentoring young professionals deserve recognition.” As a lead auditor, Palagummi supports management system reviews and is known for his ability to work collaboratively. He broadly contributed to the development of his company’s life-saving rules as well as a safety and health training matrix for contractors. He also is experienced in creating emergency response plans, incident reporting procedures, and oil spill contingency plans. Each year, ASSP honors an occupational safety and health professional who demonstrates outstanding achievement in the safety field while making significant contributions to advancing the profession. Visit the ASSP website to see past recipients of the Society’s Safety Professional of the Year Award.
Practice Ladder Safety all year long – Ladder Safety Month is over, but safe ladder usage is not
The American Ladder Institute (ALI) spent last month marking National Ladder Safety Month, spreading the word about safe ladder practices, training opportunities, and more. Because safety never takes a break, now is the time to take the lessons learned in March and carry them forward all year long. By continuing to follow ladder safety practices every day, we can reduce the number of home and workplace ladder injuries. Here are some safety tips to keep in mind: Choosing Your Ladder Before you ever climb, select the appropriate ladder for the job based on style, material of construction, material weight, size, and duty rating. First, you have to know whether or not the work can be accessed with a self-supporting stepladder, or a leanable, non-self-supporting, single or extension ladder. To be able to safely reach the work, size must be considered. If light weight is most important, then aluminum might be best. However, if you will be working around electricity, make sure to choose a non-conductive material like fiberglass. Select a ladder with the duty rating to hold your own weight plus any work materials going up with you. Safety Before the First Step (Inspection and Set Up) You’ve chosen your ladder. Now comes the ladder inspection and gaining a thorough understanding of your surroundings. First of all, even a new ladder can potentially be damaged or otherwise compromised. So, the user must visually inspect it to see if it’s in good condition before they use it. If you’ve picked the right ladder for the job, then don’t misuse it by standing higher than you should or by overreaching. Next, take note of the general area you’re in. For example, is there potential for a forklift to come around the corner, or an unblocked door to swing open and knock you over? Is the ladder set up correctly with all feet on a firm, level surface? Safety While Climbing Maybe you’ve gone up that ladder 100 times. The 101st time is no time to get lax when it comes to personal safety. Always pay attention to what you are doing when climbing and using your ladder. Some tips are just common sense. Face the ladder and have a firm grip. Don’t have hands distracted with other materials. Keep hands free by using a tool belt or some other means, such as a material lift, tag line, or rope, to raise equipment to the work area. Remember to maintain three points of contact as you climb: two hands and one foot or two feet and one hand on the ladder. And don’t do unnecessary reaching. A good rule of thumb: keep your belt buckle between the rails. Safety at the Top You’re finally at the uppermost point of your ladder. This is no time for slacking off. Contact with the ladder is important not only while climbing, but also while working. To that end, the top step and the top cap of a stepladder and the top three rungs of a single or extension ladder are not suitable standing surfaces. The few upper feet of the ladder are there for body support, so you don’t have to balance on just your two feet. If you are transitioning from the ladder onto another surface, your ladder must be secured from movement. According to the U.S. Bureau of Labor Statistics, ladder deaths accounted for 161 on-the-job fatalities in 2020, the most recent year for which statistics are available. That same year, there were 22,710 ladder-related workplace injuries, an injury stat that has remained relatively constant over the previous several years. ALI’s Ladder Safety Training site, www.laddersafetytraining.org makes safety training easy, with an organized curriculum, video and resource library, and free registration.
FHI, LLC launches FHI NOW to tackle supply chain staffing challenges
FHI Inc., a supply chain labor workforce services provider, is introducing FHI NOW, an on-demand labor solution, to help companies address the shortage of qualified supply chain workers. The service provides staffing solutions that augment an existing workforce with personnel based on each customer’s specific needs, delivering measurable results at a predictable cost, while enhancing ergonomics and safety measures. All FHI NOW associates are trained in ‘The FHI Way,’ which includes a comprehensive range of standard procedures to ensure workplace safety and improved productivity. Because of their experience, the onboarding and learning curve for FHI NOW team members is extremely short, so they are highly productive from day one. “If your company is facing a labor crisis or there are significant seasonal swings in your volume, FHI NOW is a perfect solution because we provide the trained and reliable workers you need to quickly stabilize the operation and get back to running efficient facilities. Our team members are focused on safety and acclimate to client warehouse environments almost immediately, saving you time and money,” said Ryan Wall, CEO of FHI. FHI NOW is available for most consumer product supply chains, including grocery, food service, apparel, furniture, beverage, healthcare, automotive, construction, and manufacturing. There are more than 1,600 qualified associates in the FHI NOW network, with expertise in selecting, unloading, loading, receiving, order consolidation, replenishment, put-away, shipping, and more. Each FHI NOW team consists of at least 10 associates with onsite leaders who have both warehouse operations and people management experience. FHI can provide 150 associates or more for clients’ locations and has the capacity to deploy teams for several months and even years. To learn more about FHI NOW, visit https://www.fhiworks.com/services/fhinow or contact FHI directly to schedule a consultation.
$4.5 Million STEM Talent Challenge funding opportunity launched to Build a Robust STEM Workforce
The U.S. Economic Development Administration or EDA is now accepting applications for its FY23 STEM Talent Challenge to support programs to train science, technology, engineering, and math (STEM) talent and fuel regional innovation economies across the nation. The $4.5 million competition will provide funding for programs that help build a robust STEM workforce in emerging and transformative sectors such as aerospace, aeronautics, biotechnology, advanced manufacturing, and cybersecurity, among others. Click here for the Notice of Funding Opportunity (PDF) Competition applicants may request up to $500,000 for the implementation of a 24-month workforce program that complements their region’s innovation economy. Click here to apply. The deadline to apply is 11:59 p.m. EDT on June 12, 2023. Competitive applications will demonstrate how the program will develop or expand regional STEM workforce capacity to support entrepreneurial ventures, industries of the future, and other innovation-driven businesses. Click here to learn more about past STEM Talent Challenge awardees Eligible applicants include cities, counties, states, other political subdivisions of states, and Tribal Nations; as well as non-profit organizations, public-private partnerships, federal laboratories or science/research parks, institutions of higher education, Economic Development Organizations, and consortia of the aforementioned with government support. For more information including full details on eligibility, visit EDA’s STEM Talent Challenge webpage. EDA’s Office of Innovation and Entrepreneurship (OIE) administers the STEM Talent Challenge, which is authorized under Section 30 of the Stevenson-Wydler Technology Act of 1980. This challenge builds on the momentum of OIE’s Build to Scale Program, which builds regional economies through scalable startups.
Women In Trucking Association Awards Truck to Female Owner-Operator
The Women In Trucking Association (WIT) announced the winner of its second truck giveaway in the last five years. WIT gave away a 2018 Volvo VNL670 truck, which includes a Volvo VED13 engine and a double-bunk sleeper, to Angelique Temple, owner-operator of Virginia-based Tornado Transport LLC during WIT’s Salute to Women Behind the Wheel event on March 31 at the Mid-America Trucking Show in Louisville, Ky. The truck was donated by Kansas City-based Arrow Truck Sales, which is a source of used heavy- and medium-duty trucks with locations across the U.S. and Canada. Temple has more than 20 years of experience in the trucking industry. She began her career in the industry in 1999 as a HAZMAT driver and trainer for Oil Transport and became a HAZMAT driver and certified trainer for Atlantic Bulk Carrier. In 2021 she started her own company, Tornado Transport LLC, through which she hauls dry foods, medical supplies, and most anything that doesn’t need to be refrigerated. This additional truck she was awarded will enable Temple to expand her capabilities in her business as well as actively introduce professional truck driving opportunities to young girls during high school career days. Temple has been an active member of the WIT Image Team since 2015, through which she regularly grants interviews, speaks at events, and does ride-alongs when needed. She was recently inducted into the Howes Hall of Fame and has been selected to be one of the new voices of safety for FMCSA’s Our Roads, Our Safety Program. She also is active in her community feeding the homeless and securing Christmas gifts for local families. “I’m still in shock that I won this truck,” says Temple. “Having this truck will expand my capabilities in my business and also will give me the ability to regularly talk with women about getting into the industry through events, my social media accounts, radio interviews, and conversations about new opportunities in trucking,” said Temple. WIT received more than 30 applications for the 2023 Truck Giveaway last fall. Qualified applicants were at least 23 years old, hold a valid commercial driver’s license, and are a member of WIT. Applicants completed an application form and submitted a short essay on why it is important to attract more women into the trucking industry.
Women In Trucking Association announces Gold Partnership with Navistar
The Women In Trucking Association (WIT) has welcomed Navistar Inc. as its newest Gold Level Partner, forming an industry alliance to further its mission to encourage the employment of women in the trucking industry, promote their accomplishments, and minimize the obstacles they face. Jennifer Macalaguin, VP of Engineering at Navistar, will serve on the Board of Directors. Since joining in 2014, Navistar has actively participated in the association. In 2022, the company, which manufactures International® brand commercial trucks, was a Platinum Sponsor of WIT’s Accelerate! Conference & Expo held in Dallas, TX Nov. 13-16 and virtually Dec. 6-7. Additionally, Navistar participated in the event’s Truck & Technology Tour which featured an International® eMV™ Series Class 6 607 SBA 4×2 box trucks. “Navistar is deeply involved with the efforts to support inclusion in the trucking industry, and this partnership with WIT further solidifies that commitment,” said Macalaguin. “It is an honor to represent Navistar on the Women in Trucking Association’s Board of Directors and I look forward to contributing more directly on this board as we build awareness and foster support to demonstrate the integral role women play in the trucking industry.” “WIT is pleased to welcome Navistar as a Gold Level Partner,” said Jennifer Hedrick, president and CEO of WIT. “Their avid support of the WIT mission and commitment to increasing gender diversity within the trucking industry makes this an exciting opportunity to expand the relationship between Navistar and the Women In Trucking Association.” Founded in 2007, the Women In Trucking Association was established to encourage the employment of women in the trucking industry, promote their accomplishments, and minimize the obstacles they face. Currently, the organization is a resource for nearly 8,000 corporate and individual members located in the United States, Canada, and Mexico, as well as Japan, Australia, Sweden, South Africa, and New Zealand. Recent accomplishments include: releasing the 2022 WIT Index, the official barometer to benchmark and measure the percentage of women who make up critical roles in transportation each year, finding professional female drivers increased to 13.7%; participating in White House and FMCSA roundtables and events; launching its Professional Driver Hub, an online resource to encourage driver success; and more than 1,700 registered attendees at the 2022 Accelerate! Conference and Exhibition.
March 2023 Logistics Manager’s Index Report®
LMI® at 51.1 Growth is INCREASING AT AN INCREASING RATE for Warehousing Capacity and Transportation Capacity Growth is INCREASING AT AN DECREASING RATE for Inventory Levels, Inventory Costs, Warehousing Utilization, and Warehousing Prices NO MOVEMENT FOR Transportation Utilization Transportation Prices ARE DECREASING The Logistics Managers’ Index reads at 51.1 in March, this is down (-3.6) from February’s reading of 54.7 in February. This is the lowest reading for the overall index in the 6.5-year history of the LMI. This is being driven by an all-time low in Transportation Prices, which are down (-5.0) to 31.1, reaching a nadir for the second consecutive month. Relatedly, Transportation Utilization reads in at 50.0, indicating no upward movement for the first time in 2023. Inventory Levels (55.6) continue to grow, though at a decreasing (-6.8) rate. And both Transportation (71.4) and Warehousing Capacity (58.2) continue their upward climb. Interestingly, Inventory Costs (66.0) read in below 70.0 – which we consider being the threshold of significant levels of expansion – for the first time since September 2020. Transportation and Warehousing both contribute to the costs of holding inventory. This metric moving to a more moderate rate of growth is a strong indicator that the high supply costs that have been the primary source of overall inflation in the U.S. for much of the last year are beginning to subside; something that will hopefully be taken into account by the Federal Reserve as they consider their course of action throughout the rest of 2023. Researchers at Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP) issued this report today. Results Overview The LMI score is a combination of eight unique components that make up the logistics industry, including inventory levels and costs, warehousing capacity, utilization, and prices, and transportation capacity, utilization, and prices. The LMI is calculated using a diffusion index, in which any reading above 50.0 indicates that logistics is expanding; a reading below 50.0 is indicative of a shrinking logistics industry. The latest results of the LMI summarize the responses of supply chain professionals collected in March 2023. The overall economy continues to be somewhat mixed. Things are clearly slower than they have been, but it does not seem that we are in an official recession. The U.S. economy grew at a pace of 2.6% in Q4 2022, which is slightly lower than what was expected[1]. This is partial because seasonally adjusted consumer spending grew by 0.2% in February, down significantly from the 2% growth observed in January. Inflation was up 5% year-over-year, but at a slower pace than what we saw in January’s 5.3%. Increased interest rates have led to the U.S. money supply falling year-over-year in every month since December – reaching its fasted rate of decline since the 1930s (which economically speaking, is never a decade you’d like to be compared to)[2]. However, the slowing rates of inflation, combined with the recent troubles in the banking system have led Jerome Powell to suggest the Fed’s program of interest rate increases may be slowing down in the near future[3]. This all led to some optimism on Wall Street, leading the S&P 500 and Nasdaq to expand by 7.3% and 16.77% in Q1 – which was the best quarter for the Nasdaq since 2020[4]. These mixed economic messages are epitomized by the LMI’s overall index score of 51.1 (-3.6). This is the slowest rate of growth we have ever tracked in the 6.5 years of the index, but it is still growth. Things have clearly been slowing down, but the macroeconomy has not yet come to a halt. Volumes moving through the Port of Los Angeles have been slowly climbing since reaching their nadir in February, with volume creeping back up over 100,000 TEUs in the second week of April[5]. This is likely an echo of the increase in Chinese manufacturing volumes we observed last month, as completed goods are now making their way to the U.S. The Chinese manufacturing PMI was down slightly in February but still expanding[6]. When combined with the robust expansion in Chinese services, it certainly seems the world’s second-largest economy is coming back to life, with some of the byproduct likely to be inventory trickling into the U.S. Inventory Levels are growing at a rate of 55.6, which is lower than what we’ve seen (-6.8) in 2023 but similar to November and December. This growth is likely focused more on retail and consumables as goods that are tied to housing and other areas that are most impacted by interest rates have piled up over the last year. Consumers are still spending though, and some new inventory coming into the U.S. will be necessary as some large retailers such as Nike report significant progress in whittling down inventories. Although for some firms, moving inventory so quickly required many goods to be sold at a discount which bumped up topline sales in 2022 – something that is likely to fall in 2023[7]. The slowdown in spending and a glut of inventory has led some firms to put additional pressure on their suppliers. The shortages that plague supply chains have long since ended and large firms are attempting to reestablish dominance over their suppliers, canceling orders and pushing for cost-cutting measures[8]. While Inventory Level expansion has slowed, we still see fairly robust growth in Inventory Costs, which read in at 66.0 (-4.8). It is interesting that Inventory Costs have fallen below 70.0 – which we define as the cutoff for significant rates of growth – for the first time since September 2020. Respondents predict that the expansion of this metric will continue to slow down over the next year. If this were to come true, it could signal significant relief for consumers and firms at every level of the supply chain. After 30 months of expansion, Warehousing Capacity is up (+1.6) for the second consecutive month to 58.2. Industrial property sales
ASSP honors Krug for work on safety standards
The American Society of Safety Professionals (ASSP) has named Terry W. Krug, M.S., CSP, the recipient of the 2023 Thomas F. Bresnahan Standards Medal for his extensive work in developing and advocating voluntary consensus occupational safety and health standards. Krug is president and owner of Exceptional Occupational Safety and Health Advisors (EXOSHA) in Knoxville, TN. He conducts OSHA standards training, develops safety and health programs, performs workplace audits, and provides expert witness testimony. Krug is a longtime member and current chair of the committee that has developed ANSI/ASSP Z117.1 Safety Requirements for Entering Confined Spaces. Considered a leading national expert on confined space safety, Krug has helped direct several revisions to the standard and has presented many webinars on the subject, including one internationally for the Italian Safety and Health Congress in 2012. “Terry’s expertise and involvement has strengthened the Z117.1 standard in a significant way,” said Leo DeBobes, CSP, CPEA, CIT, chair of the ASSP Standards Development Committee. “His analysis of a full decade of OSHA injury and fatality data provided insights that were vital to the revision of the standard.” Krug’s leadership resulted in a key update that made the standard easier to understand and implement. He regularly shares his confined space safety expertise by presenting courses at ASSP’s annual safety conferences, most recently in Chicago in 2022. An ASSP member since 1996, Krug has been involved in the development of several workplace safety standards, including ANSI/ASSP A10.43 Confined Spaces in Construction and Demolition Operations; A10.49 Control of Chemical Health Hazards in Construction and Demolition Operations; and ANSI/ASSP Z244.1 Control of Hazardous Energy Lockout, Tagout and Alternative Methods. He also served on ANSI/ASSP A10 Construction and Demolition standards subcommittees. “Terry’s impact on workplace safety and health standards is significant, and thousands of people are safer on the job today due to his contributions,” DeBobes said. “I can’t say enough about his value to the safety profession.” Krug served on ASSP’s Standards Development Committee from 2014-18. He also co-authored “Confined Space Entry: An AIHA Protocol Guide” published in 1995 and revised in 2001. The Thomas F. Bresnahan Standards Medal recognizes an ASSP member who actively participates in developing voluntary consensus standards that advance worker safety. The award is named in honor of Thomas F. Bresnahan, a former ASSP staff member and Fellow who reinvigorated the Society’s standards development program and helped position the organization for growth in this strategic area.
Why innovation should be more like Easter eggs
Every year in the spring, Amy B., a buyer for a large retail chain store, hosts an Easter egg decorating teambuilding party, where she and a bunch of her suppliers spend an entire afternoon coloring and bedazzling hard-boiled eggs. None of them bring their kids—they do this for the sheer pleasure of out-of-the-office bonding, creating interesting and attractive objects. The group is always amazed at the creativity of the resulting eggs. (And in case you’re wondering, no, none of them are artists.) So why, as adults, don’t people exercise their inner child-like creativity more often? And what is it about the Easter egg party that allows them to so freely generate and express such a range and diversity of ideas? There are several factors—all of which also apply to innovation. 1. Each egg represents a very low commitment. It is cheap in both time and materials to try any idea they think of, so they try lots of ideas. If one doesn’t work, it doesn’t matter—it’s just one egg. Similarly, in your innovation work, you need to consider and try out many ideas, to ensure that only the best ones move forward. As innovation projects proceed through a company, they get more expensive—in money, time, and labor—at each successive phase. Developing Fail Fast, Fail Cheap methodologies allows you to try out lots of ideas early on, while it’s still cheap. 2. They leverage not only individual creativity but also use the power of the group. Someone will think of an idea to try, and then toss it out to the group. Then everyone contributes ideas for how best to accomplish it. No one ever says, “Yes, but that won’t work.” Everyone just thinks of ways to help make it better. The resulting final solutions are nearly always significantly better than what the person would have tried originally. In many companies, the “Yes, But” phenomenon is all too common and can be very damaging to creativity and innovation. Most ideas aren’t perfect when they’re first conceived, but teams act as they should be. They point out all the problems in an emerging idea before they ever attempt to find out if there’s anything good about it. For innovation and creative problem-solving to thrive, it’s critical to create an environment that nurtures ideas rather than stifles them, so you get the benefit of the best thinking of the entire team. 3. They are willing to start over when something clearly isn’t working. One woman brought eggs that were not naturally white; instead, they were brown. It wasn’t clear that dyeing them would work very well, if at all. And, in fact, the first few attempts didn’t work. So, she scraped off all the color on her unsuccessful eggs several times. But when she chose red, yellow, and orange colors and left them in the dye bath long enough, she got some of the most uniquely rich and vividly colored eggs anyone had ever seen. Unfortunately, in large organizations, too many innovation projects that aren’t quite hitting the mark proceed too far. It’s important to recognize when an idea isn’t working, and then be willing to start again when you need to. 4. Reframing the goal results in more divergent ideas. The woman with the brown eggs also tried other methods of decorating the eggs, not just coloring them with dye. Once she reframed the problem from coloring eggs to decorating eggs, everyone else also began creating the most innovative and unusual eggs of all. This reframing of the problem is a critical step in effective problem-solving and innovation. This is because the way a problem is stated affects the potential solutions you will think of. So when addressing any obstacle, it’s a good idea to question the way the challenge or problem is worded, to see if you can reframe it to get to different and better solutions. So the next time you find yourself with eggs to decorate—or a challenge to meet—keep these tips in mind to help you think more creatively and come up with more innovative solutions. • Fail fast, fail cheap. Test many possible ideas. • Leverage individual and group creativity; “Yes, and” instead of “Yes, but”. • Be willing to start over when the idea isn’t working. • Reframe the opportunity to expand your thinking. About the Author: Susan Robertson empowers individuals, teams, and organizations to more nimbly adapt to change, by transforming thinking from “why we can’t” to “how might we?” She is a creative thinking expert with over 20 years of experience speaking and coaching in Fortune 500 companies. As an instructor on applied creativity at Harvard, Susan brings a scientific foundation to enhancing human creativity. To learn more, please go to: SusanRobertsonSpeaker.com.
Propane Council encourages Ports to apply for funding
Grant funding applications are now open for safety, efficiency, and reliability improvement projects The U.S. Department of Transportation Maritime Administration (MARAD) recently opened applications for the Port Infrastructure Development Program (PIDP). More than $600 million in grant funding is available for projects that include environmental and emissions mitigation measures and terminal equipment upgrades. Heavy-duty diesel equipment in ports, such as forklifts and yard tractors, are a leading cause of air pollution within nearby communities. With this funding, ports can begin replacing their diesel and gasoline-powered equipment with clean energy alternatives such as propane-powered port tractors, forklifts, and other cargo handling equipment (CHE). In fact, best-in-class propane forklift engines produce 97 percent fewer hydrocarbon and nitrogen oxide (NOx) emissions when compared with similarly sized diesel forklifts without any drop-off in payload or power. “This funding brings the opportunity for ports to take immediate steps toward decarbonization,” said PERC’s director of off-road business development Joe Calhoun. “Propane is a clean, powerful, dependable energy option available right now that can improve quality of life in surrounding port communities.” Along with CHE upgrades, propane-powered charging infrastructure, such as mobile charging pods and anti-idling shore power technologies, are also eligible for funding. This is a cost-effective and low-emissions strategy to provide immediate clean energy power for CHE and other mobile equipment. Because propane is affordable, ports can more quickly implement clean solutions to accelerate emissions reductions. Propane-powered microgrid projects are also eligible for PIDP grant funding. Microgrids are local, isolated, and independent electric grids that can be either grid-connected or disconnected. The microgrids produce power with a combination of propane generation equipment and renewable sources like wind and solar. By combining ultra-low emissions propane with renewable energy sources, ports are able to significantly reduce emissions. Beyond emissions reductions, propane-powered microgrids provide autonomy and resilience that keeps the lights on, assures equipment is charged, and assists with making sure containers stay moving in the ports — even when the grid fails. Qualified projects can be located within the port, outside a port boundary and directly related to port operations, or as an intermodal port connection. Grant applications must be submitted through Grants.gov by 11:59 p.m. EST on April 28, 2023. For grant writing support, reach out to PERC at Propane.com/Contact. There are many ways propane can help ports improve efficiency and reduce their carbon footprints. To learn more, visit Propane.com/Ports.