Tag Archives: corporations

Graduate Macroeconomics of Trucking 501

We have posted around 125 blogs and the only thing I have mentioned about trucking is the places we go and occasionally something unusual like a breakdown or weather. One issue that comes up several times a week and is really the basis for how America works is the finances of the trucking industry. Both the mainstream media and politicians have vested interests in deceiving people. This is a small attempt to shed a little light on a very important subject.

Ever since the dawn of large corporations, these corporations want to use logistics to move their product from point A to point B. Logistics goes back to Ancient Greece, Rome and China. In the most basic view, logistics is the flow of control. It began as a military term and emphasizes having the right equipment and manpower at the right place and at the right time. The real control is financial. While logistics includes the people involved, the security along the way, the warehouses where the goods are stored and equipment to move the product, such as a ship, truck, train or airplane, the real issue in the flow of control. The real flow of control is money.

Sears/Kmart, Walmart, Lowes, Target, Home Depot, JC Penney and anyone else with a “big company” mentality use large contracts to ship their products. They demand large shipping companies such as JB Hunt, Schneider, Swift, Werner, etc. These large shipping companies do not bid on individual assignments or “loads.” They fight for huge multimillion-dollar contracts over a period of time, usually between 6 months and 2 years. With a signed contract in hand, they borrow money to buy the trucks, buy new trailers, hire drivers to make the runs, expand or purchase terminals and hire support staff such as planners, dispatchers and mechanics. They make this sound so good. The truth is that new contracts, unless they are for a new plant just opening, undercut someone else already doing the work. Wages are lower for the people actually doing the work. There are also more people to pay and more overhead. The people doing the actual work, that is the drivers and mechanics, are usually paid substantially less.

Not all loads in these jumbo contracts pay the same. Some are easy and pay well. Other loads are very difficult, some are dangerous and some pay very poorly. Companies working on contracts talk about “covering” loads, That means making certain that all loads are delivered, no matter what the conditions or circumstances. This is where the dangerous push to deliver “no matter what” comes from. It isn’t that a $500 load might be an hour late. It’s that the company might loss a $5 million dollar contract.

Often these difficult and dangerous loads are JIT (just-in-time) loads. That is, companies are using the US road system as their warehouse. They finish a subassembly at one plant then load it onto a truck with just enough time to make a delivery in perfect weather to another plant just as it is needed at the second plant. Any problems with weather, breakdowns or construction are not considered and become “the driver’s fault.” This kind of extreme time pressure causes an enormous increase in accidents.

To avoid most of these accidents caused by this time pressure, simply allow the driver to choose the load instead just assigning loads to the driver. This is the system now in place by Landstar.

Not only would the big companies lose control, many intermediate level jobs will no longer be needed. There is no more need for dispatchers or even terminals. Existing noncompany mechanics and drivers will make more money, creating a greater demand for waitresses, video games and whatever else drivers and mechanics want to buy. Individual “bad” loads will have to pay more, increase safety or both. Otherwise they will not be delivered. If there are not enough drivers, then competition for the existing drivers with cause rates to go up. Once rates have gone up enough, more people will want to become drivers.

Once again, the free market, if it is allowed to truly be free, will triumph over central planning. Everyone will win. Everyone, that is, except the central planners.

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Cain and Politico

Here’s a quote from a Politico article from October 31st on the Herman Cain sexual harassment accusations. Did you read the fourth page? Did anybody?

“Revelations about the settlements come as members of the association’s [the National Restaurant Association, or NRA’s] board planned to meet this month to talk about ways to use the organization’s clout to boost Cain’s campaign.

Ideas to be discussed included making a donation to Cain from the organization’s political action committee, which typically doesn’t contribute to presidential campaigns, and, more significantly, organizing a fundraiser for his campaign.” 1

According to Charlie Spiering of the Washington Examiner, in a November 4, 2011 article, online news and commentary site Politico has published ninety articles on the subject since it first “broke” the story. In the 1990s Herman Cain was, to use Politico’s term, “head” of the National Restaurant Association (NRA) and the accusations were filed then.

The NRA has lifted the confidentiality restriction to allow at least one woman with whom it settled to speak out on the matter. Her attorney, Joel Bennett, says she has declined to do so. “The woman ‘sees no value in revisiting’ the complaint.” Attorney Bennett told “CBS News earlier that Cain did not sign the initial settlement agreement, and that it’s conceivable that Cain didn’t even know about it.”

The CBS article continues: “The National Restaurant Association ‘can confirm that … in July 1999, Mr. Bennett’s client filed a formal internal complaint. … Cain disputed the allegations in the complaint. The Association and Mr. Bennett’s client subsequently entered into an agreement to resolve the matter, without any admission of liability. Mr. Cain was not a party to that agreement. The agreement contains mutual confidentiality obligations.'”

Corporations are known to quickly and quietly settle such allegations. Radio Shack did the same thing in at least one publicized case in the same time period. Herman Cain not only would not know what was “settled,” he wouldn’t be able to find out. The accuser gets a severance package. Herman Cain has stated that this is all he knows about the matter. Since he denied the accusations, he, perhaps foolishly, thought he was exonerated.

CBS’s article went on to say that “Bennett said he and his client ‘have not asked them [the NRA] to lift it [the confidentiality agreement] beyond making this statement.’ He also expressed concern about violating ‘confidentiality and non-disparagement’ provisions in the agreement.”2

This is lawyer-speak for “We’re afraid of a big company and a big man. We don’t want to get in trouble if we tell the truth” and is misleading and highly inflammatory.

Now let’s hear from Herman Cain. Has he “changed his story”? Has he “given conflicting reports”?

Cain was “asked by [Sean Hannity] if he ever made flirtatious comments to female subordinates or comments such as ‘you look hot’ or anything, Cain replied: ‘No, no, no, I didn’t.’… As a business leader,’ he said, he ‘learned a long time ago’ not to comment on a woman’s appearance. Cain told HLN earlier this week that he has never committed sexual harassment ‘in (his) entire career. Period.'”

Herman Cain noted that a former aide, Curt Anderson, signed on with the Perry campaign shortly before the allegations surfaced in Politico. “These are the facts. Connect the dots,” Cain said.3

Anderson and Perry have both denied any involvement. Cain was certain he had brought up what he referred to as a possible sexual harassment issue with Anderson, and told him that he had “won” the case and the woman had paid his legal expenses.

It sounds like the NRA “handled” the matter, without telling Cain the truth about its actions, and would explain why he might not have the facts in his possession to “come clean” about. Any honest person will admit that sexual harassment is almost impossible to defend against when it is simply an accusation made with no physical evidence. Our society has gone from accusing a woman of “making up stories to get a man in trouble” to the opposite extreme, not even trying to defend against such claims, just paying a settlement. Both are equally wrong decisions.

Finally, let’s hear what Cain’s co-workers and potential witnesses to any of these allegedly “multiple incidents” have to say about him. This is also on the fourth page of Politico’s article, referenced above, where it is just as likely to remain unread. The article includes specific quotes from five top-level NRA members, three of them women. The quotes that follow are representative of all of their views about Cain.

“‘I have never heard that. It would be news to me,’ said Marie Fugo, who runs a Cleveland, Ohio, catering company. ‘He’s very gracious.’

“Joseph Fassler described Cain as treating men and women identically and asserted it was ‘not within his character’ to make unwanted advances.

“Cain was ‘extremely professional “and “fair” to female staffers, recalled Lee Ellen Hayes, an executive at the National Restaurant Association Education Fund. Cain’s treatment of women was ‘the same as his treatment of men. Herman treated everyone great,’ said Mary Ann Cricchio, who was elected to the board of the restaurant group in 1998.

1 http://www.politico.com/news/stories/1011/67194.html

By JONATHAN MARTIN & MAGGIE HABERMAN & ANNA PALMER & KENNETH P. VOGEL 10/31/11 9:18 PM EDT Juana Summers and Emily Schultheis contributed to this report.

2 http://www.cbsnews.com/8301-503544_162-57318924-503544/herman-cain-accuser-stands-by-complaint-wont-go-public/

CBS News POLITICALHOTSHEET November 4, 2011 4:54 PM By Brian Montopoli

3 http://www.news4jax.com/election-2012/Cain-accuser-stands-by-sexual-harassment-complaint/-/1875986/4445738/-/item/1/-/ho70utz/-/index.html

Author: By Tom Cohen and Alan Silverleib CNN Posted On Nov 04 2011 12:52:35 AM EDT  Updated On Nov 04 2011 06:44:29 PM EDT

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