Detours Lead To Business Growth

May 27, 2008
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Add the significant increases in fuel prices to the dominoes tumbling from the mortgage and housing credit crisis to Michigan’s slow evolution of manufacturing, an oppressive business tax and inept legislature, and “the perfect storm” appears more like a tsunami.

Still, as the stories researched for this week’s Focus Section indicate, businesses are moving quickly to stay ahead of the deluge.

In fact, the alternate route to lower costs may provide a tremendous jump for alternative fuels and environmental relief. That this effort is likely to be led by businesses, albeit mostly of necessity, provides the real economic jump-start for a state singing the praises of such action but failing miserably in its intent to “stimulate” it.

Steep diesel fuel price increases have impacted trucking companies most viciously, and it is an industry of notoriously slim profit margins. By all accounts nationally and internationally, it is unlikely to end. Ever. The Associated Press noted that the dollar, again weakening against the euro last week, pushed investors to regard commodities such as oil as a hedge against inflation and a weak dollar (also noting that a weak dollar makes oil less expensive to buyers dealing in other currencies). The AP reported that investors believe the dollar's protracted decline over the past year has been the most significant factor behind oil's rise from about $66 a barrel a year ago to the current high of $129 (as of press time).

Grand Rapids area trucking company owners say they’ve seen a trend begin among shippers nationally to acquire more warehousing space, rather than less, some of which also has been noted in the area surrounding the Gerald R. Ford International Airport, and previously reported in the Business Journal.

Kevin Ruble, the CEO of Marquette Rail, is pleased with the growth of his business. The short line of 130 miles links Ludington and Manistee to Grand Rapids, where it connects to major railroads CSX and Norfolk Southern. Ruble noted that the railroad industry nationally is handling “more ton miles of freight than at any point in the industry’s entire history.”

Likewise, consumers are said to be finding public transportation to be more convenient, and Amtrak is prepared for a bigger spike in summer rail travel.

Old is new again. (Oh, that the public sector could be so judicious …)

The impact of business price increases to cover the transportation cost increases — already coupled with high commodities prices, especially for copper — is likely to push inflation where the Fed does not want it to go. (And in a side note to the Michigan Legislature, so, too, will the business tax hikes.)

In the long run, however, the efficiencies now being regarded could certainly provide the creative beginnings of investments in the new economy business of alternative energies and related industries. Business as usual is modeled in the concept of using roadblocks to invent new products. 

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