Feeling fuel-ish

November 30, 2007
By: Dan Davis

I won $30 in fuel cards during an all-staff meeting earlier this week. It's an enticement for people to come to the meeting and an overall nice thing to do for the employees—especially those with a long commute.

I'm one of those employees. It's a 106-mile round trip for me each day. And the fuel card amount didn"t even fill up my tank. My wife is really pushing me to get a smaller car, such as the vehicle actor Richard Farnsworth drove in the 1999 release The Straight Story.

Like most Americans, however, I'm living with it. Luckily, working long hours and a long commute prevent a person from spending money on frivolous things like fun. Well, you know what I mean.

Metal fabricators are living with it as well. Some aren"t too happy about it. I heard a couple of stories from shop managers that the increase in fuel costs are eating into their profits. Maybe it's time for these shops to do a little outsourcing of their own.

I remember a conversation I had this summer with Chris Hollenback, president of Integrated Manufacturing Solutions (IMS), Shakopee, Minn., a small shop with a big investment in automated laser cutting equipment. He outsources everything—accounting, human resources, and transportation—just so he can concentrate on metal cutting and bending.

He recounted a story about hearing another shop bragging about some new trucks it was purchasing to deliver painted goods. "What would I want those trucks for?" he said with a laugh retelling the story.

He might be correct:

  • In 2007 new emission standards for heavy-duty trucks went into effect, and that caused truck owners to invest in their fleets in a big way. For example, U.S. companies purchased 378,000 Class 8 trucks in 2006 to meet the new emission standards, according to Longbow Securities, and only 217,000 trucks were sold in 2007. The sales should spike again as even tougher emission standards are enforced in 2010. Is this constant reinvestment in new engine technology worth it?
  • Longbow Research also reported that freight declined in 2006 by as much as 2.8 percent. More shipping companies are chasing after less freight, which should be good for manufacturing companies.
  • Purchasing magazine predicts that demand for both truckload and less-than-truckload shipping will remain weak in the first quarter of 2008, which should drive pricing down for both types of shipping.
  • Who's going to drive your truck? The American Trucking Association estimates that 54,000 new drivers are needed each year to meet the industry's demands.

Of course, you don"t get to advertise your company on the side of a third-party courier or delivery truck. I know someone who has a pretty long commute in northern Illinois, and he might consider advertising your company for the right price. The starting price is more than $30 in fuel cards.

Dan Davis

Dan Davis

FMA Communications Inc.
2135 Point Blvd
Elgin, IL 60123
Phone: 815-227-8281