B12 Solipsism

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Bad U.S. roads force just in time manufacturers to plan for just in case

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And Have You Traveled Very Far Today?
And Have You Traveled Very Far Today?

Here is another reason why Republican-friendly, Republican-leaning, and straight-out Republican corporations are not served by the current Tea Party ascendency. Government does have a purpose, does need a tax base, or else common good tasks like maintaining roads and other infrastructure cannot be performed. If corporations such as the ones mentioned in the James Kelleher, Reuters article quoted below were smart, they’d put their political capital to work throwing out the Tea Party wing of the GOP.

Companies like Whirlpool and Caterpillar are making costly additions to their otherwise sinewy supply chains to compensate for aging U.S. roads that are too potholed and congested for “just in time” delivery.

Some opt to keep more trucks and inventory on the road. Others are leasing huge “just in case” warehouses and guarded parking lots on the edges of big cities. All that activity raises costs, which are expected to increase even more if roads are allowed to deteriorate further and an improving economy boosts traffic.

Whirlpool, for instance, has set up a network of secure drop lots outside Chicago, Milwaukee and Minneapolis. A washing machine that used to go from regional distribution center to local distribution center to customer in one day now sits overnight in a parking lot.

It “adds an extra day of lead time, which means extra inventory,” said Whirlpool Corp logistics chief Michelle VanderMeer.

Then there are the parking lots and the guards. “That’s real physical infrastructure and security that we have to pay for,” she said. “We’d rather be investing our money elsewhere,” she added, declining to estimate Whirlpool’s expenses.

Overall, U.S. companies face billions of dollars in costs due to the limitations of the creaking, overcrowded transportation network, which earned a D+ grade in the most recent report card from the American Society of Civil Engineers (ASCE).

The Texas A&M Transportation Institute estimates that road congestion alone costs shippers $27 billion a year – and that is only the value of wasted driver time and extra fuel.

Outside Chicago, Panasonic Corp, Ingram Micro and Owens & Minor have all leased spaces in recent years to help take congestion-related variability out of their supply chains

(click here to continue reading Bad U.S. roads force just in time manufacturers to plan for ‘just in case’ | Reuters.)

East To Dan Ryan Expy
East To Dan Ryan Expy

for instance, do you think the mouth-breathers in Congress are going to raise the gas tax anytime soon? What kind of odds would you give? A million to one? or a billion to one?

Manufacturers are lobbying Congress to approve new repair funds next year, with low expectations. The Highway Trust Fund, which finances road and bridge repairs, narrowly avoided insolvency this summer when lawmakers approved funding through May.

The current gas tax which funds repairs raises $40 billion annually and has not been raised in two decades. There is little appetite in Washington, D.C to raise the gas tax to bring in the $170 billion the Federal Highway Administration estimates is needed annually to improve roads.

So if you do the math, every year, we have a $120,000,000,000 budget shortfall for roads and bridges. Every year! Even if you discount the $170 Billion number by a bit, because everyone wants a bigger budget, there still is a huge gap between actual money and required money. How long can this go on before the problem gets so bad we turn the corner into a Mad Max type society? But hey, ISIS is an existential threat, so by all means, piss our tax money on the sands of the Middle East instead of on the roads of Iowa and Illinois…

Written by Seth Anderson

October 1st, 2014 at 8:03 am

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