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Home » something's gotta give
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something's gotta give

April 1, 2008
John R. Johnson
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As I write this month's column, I'm returning from the annual spring meeting of the Material Handling Industry of America. During the course of three days of meetings in Charlotte, N.C., it was evident that attendees aren't too concerned about the possibility that the economy will slip into a recession. Other than an acknowledgment of a slight economic slowdown and a caveat that things could get much worse if the housing sector doesn't pull out of its slump, reports from attendees seem pretty rosy.

But I don't get it.

As we met in Charlotte, the price of oil was spiking to over $109 a barrel—far more than the previous inflation-adjusted price record of $103.76, set in 1980 during the Iran hostage crisis. And reports are rampant that gas could spike to $4 a gallon or more by Memorial Day. All this while U.S. demand has fallen.

Diesel prices hit a new record in March at $3.71 a gallon, which will eventually translate to higher prices for everything moved by truck, so shippers are feeling the pinch, too.

The dollar, meanwhile, continues to look like junk currency. It seems to fall to a new low against the euro every day.

Consumer confidence is at a 15-year low after a precipitous 12-point drop in February, according to the Conference Board Consumer Research Center. With the exception of the Iraqi War in 2003, consumer confidence is at its lowest level since November 1993.

The mortgage crisis continues to show signs that it could spiral out of control. In early March, Federal Reserve Chairman Ben Bernanke called for additional relief and urged banks to help distressed home owners by lowering the amount of their loans. Analysts say that a far likelier scenario is a bailout from the government worth hundreds of billions of dollars.

Meanwhile, new home sales fell in January to the lowest rate in nearly 13 years. That has obvious implications for the construction industry, but there are plenty of other sectors that are feeling the pain right now. A recent survey of third-party logistics service providers revealed that 14 percent expect business in their market to contract, with another 34 percent predicting flat sales.

So can you blame me for feeling a little gloomy? And it's not just me. In a recent Gallup poll, just 30 percent of Americans said they were satisfied with the United States' position in the world today, an all-time low.

Yet in the halls of the Hilton Charlotte, industry players were reporting no ill effects. That's a positive sign for our business, but remember, the material handling industry typically runs six months behind the overall economy. The industry may still come through the economic turmoil unscathed, and MHIA's members may be just as upbeat about the future when they meet again in the fall. But you might want to buckle your seatbelts just in case.

Material Handling Business Management & Finance
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John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.

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