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Truckin the NAFTA highway pt 2
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Today, we talk about more of the Mexican trucking access issues that the mainstream always seems to miss. This isn’t really their fault; they contact those agencies and authorities with which they have a working relationship. That usually means either the Dept of Commerce, lawmakers who have been vocal about the issue or the American Trucking Association. All have their own agenda running underneath any sound byte they give up. And, nobody puts the whole thing together. Steve Miller based his Washington Times story on, in part, an interview with a paper mill that is being hurt by the tariffs placed by Mexico against their product. These tariffs are extortion to get access to easy transportation approval within our borders and appear to be working. Because nobody sees the ‘rest of the story’.
Invariably, these stories blame those greedy Teamsters, scourge of business profits, for the entire mess. They also bad-mouth Public Citizen – the Ralph Nader-begun safety lobby, and usually various other groups such as PATT, OOIDA and anybody else they can use to prove all the fears are unfounded. Sure, the Teamsters have spoken out against this plan. And, maybe they’re even being ‘protectionist’ about it. In this case, they’re doing ALL Americans a favor, even though they represent only 17% or less of truck drivers and in many cases don’t have their jobs threatened by this. The Teamsters have done some serious legwork on this, even to sending people into Mexico on more than one fact-finding mission to determine the trucking climate there. They are confident enough of their findings that they testified before Congress as to these findings on more than one occasion. Some of their more recent testimony is available from the public record and can be read here.
Public Citizen has also produced copious amounts of evidence that there are serious safety issues with allowing Mexican domiciled trucks free access to United States highways. Public Citizen has never been particularly pro-truck, no matter whose truck it is. Yet, they are adamant that Mexican trucks are a safety hazard. See some of their recent publications on the issue here. Yet, the Chamber of Commerce, the ATA and the Wall Street pundits are all just as adamant that this must occur immediately. Why?
One key is in the Transport Index stock numbers over the past few years. The Transport Index has always been the stodgy old aunt of the stock market. Never glamorous, the Index usually showed around a 4 to 5% gain per year. . .a very poor showing in the heady atmosphere on Wall Street. Suddenly, after many years of steady but nondescript earnings, transport stocks started showing growth of 18+%. How did this come to pass? The banksters got their hands on the trucking industry.
Big Retail has always had a piece of trucking due to the need to move their product. The banks have always had a piece of Big Retail. In fact, the banks have always had their hands in moving any type of manufactured freight as cheaply as possible to maximize profits on the corporate ledgers. When the banks figured out they could influence the profit margins by managing transportation of freight more cheaply, they wandered over into trucking and started making changes. Freight rates couldn’t be lowered much: they’re already no higher than they were in 1980 - NOT adjusted for inflation. They couldn’t do much about some of the fixed costs, like equipment and fuel. What they could do was lower wages-and they did. Driver wages at the big carriers – those with the most Wall Street involvement – have been steadily falling for several years.
Next to go were the office workers. Those jobs were in some cases outsourced to overseas, along with any support for the driver force. Health benefits, never good in the industry, started disappearing or dwindling to useless policies. Lay-over pay disappeared. Bonuses? Mostly a thing of the past – and usually an empty promise. But the industry ran up against a brick wall when it came to drivers: most people simply wouldn’t work for less than they were getting. When wages dropped below that of factory workers, they knew wages couldn’t continue the downward slide-not if they had to have drivers to drive the trucks. Next, they tried importing drivers, assuming foreign nationals would work cheaper. This ran into legal problems as the Visa systems are set up to bring in only temporary or only highly-skilled workers and the driver category didn’t fit either one. Government even tried to help, with a few surreptitious pilot programs to bring a small number of foreign labor in to be trained as truck drivers. Still, they couldn’t get enough foreign labor that could be trained as reliable truckers and their liability costs went up.
People don’t realize many US carriers now own substantial pieces of the Mexican carriers and are using these untrained drivers to displace their own US drivers for a third of the cost. With a Mexican-domiciled carrier, they don’t have to pay Workers Comp, unemployment, Social Security, Medicare, benefits and other costs-and the drivers make less than a third of what US drivers do. If they don’t own the company outright, US carriers have some protection from serious liability arising from an unsafe system. Even better is to partner with a Mexican-domiciled carrier and have no paper trail to part-ownership. Brokerage to a Mexican carrier gives a US carrier all the advantages of outsourced labor and none of the big liabilities they face daily with their own fleet.
A huge percentage of long-distance freight is now cross-border freight in one direction or another. Especially since the opening of deep-water ports in Mexico, cheap goods from the far east can be off-loaded and placed either on rail or a Mexican truck and trucked here, avoiding the cost of an American longshoreman. The next move for cheap transportation is to be able to allow that same Mexican driver to haul that load to its final destination within the States or into Canada. Rail helps but will never be able to supplant the truck driver for getting it to the final destination. And in many areas, the rail is at or over capacity. That’s the main thrust behind the Mexican truck access. Already, they’re working toward the next big push: getting rid of the cabotage laws that prevent foreign trucks from hauling point-to-point within the US. The Wall Street types are dreaming of making huge profits from replacing a US citizen (or a Canadian citizen) making around 40 cents a mile with drivers making 13 cents a mile. To stay in the States, hauling freight for months on end for 13 cents a mile means these drivers wont even be able to eat at Mickey D’s. It’s as close to slavery as you can get. An underpaid driver will be even more susceptible to being coerced or bribed to carry contraband. It’s simply asking for trouble.
Meanwhile, Mexican carriers see the loss of their freight contracts to the companies that can take advantage of the cross-border business. They realize the contracts will all end up going to the carriers with the Wall Street support in the form of US partners. It may be a lousy business, but it’s their business and they want to keep it. I cant fault them for that.
Simply because the Mexican regulations are so lax and so poorly enforced, both trucks and drivers are a questionable commodity on our highways. The Mexican CDL was actually a chauffer’s license, previously obtainable for about $50 and no training whatsoever. Mexico says they now have a bonafied CDL and there’s plenty of doubt that this is anything but a new name for the same old chauffer’s license. I have it on pretty good authority that some US carriers were actually sending trainers to Mexico to train through interpreters for awhile. And another big carrier has been training drivers from Mexico at their Phoenix facility, supposedly under B-1 visas. . .at least until their licensing center in Tennessee got shut down for investigation of training foreign drivers without proper authorization. The liability issues are huge, however. . .accidents with poorly-trained drivers hurt the company image, not to mention the bottom line. Illegal drivers add exponentially to the lawsuit potential.
Don’t think this mess will be exposed after the first big accident; many big accidents have happened where the driver, truck and/or cargo were illegal. Money talks-but in the major media, as in government, it pays for silence. You will notice that the nightly news will report the big truck accident but will never give you the name of the trucking company. And carriers would rather pay off, even when they are not at fault, than risk a big court settlement from sympathetic juries. There’s some credibility to this fear as this has happened more than once. But it’s inserted a culture of silence into the mess that most people will never even suspect.
In terms of trucks selected for the pilot program shut down by Congress, the Dept of Transportation assured us all that trucks would be selected only from among carefully monitored carriers and their safety could be assured. Within a couple of weeks, questions arose over the safety records of the few carries allowed cross-border privileges. It seems that opponents could read and interpret the public record for themselves and found that some carriers weren’t nearly as safe as we – and Congress - had been led to believe. One carrier with a particularly poor record voluntarily removed themselves from the program. . .but not before a large number of ‘previously unrecorded’ truck inspections were added to the official record. . .all in order, all written from the same inspection ticket book and all ‘no violation’ records, lowering the percentage of violations. One cant blame the ‘Mexican Carrier’ for this-it was obviously done by DOT enforcement somewhere along the line. And, incidentally, the ‘Mexican Carrier’ in question is a subsidiary of a US-owned corporation. The statement by DOT officials that these trucks were actually safer than US trucks is patently false, but who is going to call them on it? Certainly not an unknowing and unsuspecting public that never knows they’re being lied to. Our government holds the records- they control what goes into the public record. How do you prove they're lying to you?
Mexican trucks burn dirty diesel. Even more advantageous for Mexican carriers, they purchase all of their diesel from Pemex – owned by the Mexican government – and get subsidized prices. With 400-500 gallons of cheap diesel on board, a truck can get from the border clear to Detroit and part way back before they ever have to buy fuel in this country. This gives a cost advantage to the Mexican carrier that a US small company or owner/operator cant compete with. The entire plan is designed to cut costs at the expense of American jobs. . .in an economy where we cont afford to lose ANY jobs!
As for the tariff issue, NAFTA regs say tariffs can only be levied at a rate based on the price differential between the domestic and imported goods affected. These tariffs vastly exceed that limit by a couple hundred percent. This same administration that howls we're violating NAFTA hasn’t made any move to challenge the violation! The tariffs are also carefully designed to hurt primarily smaller farm producers and businesses in states whose legislators have demanded they comply with the law. Case in point: Mexico places a tariff on toilet paper. Fact: the big two toilet paper producers have factories in Mexico and MAKE the toilet paper there. So, toilet paper isn’t imported into Mexico-it's exported! California grape growers were slapped with a huge tariff. Mexico is attempting to develop its own grape growing industry. Is this truly protectionist and illegal under NAFTA? These tariffs were carefully targeted NOT to hurt the big global companies who do most of the cross-border factory-to-factory freight movement. The big corporations figure their return from Mexican trucks is worth the cost of a few dollars lost to tariffs. And they certainly don’t mind hurting their competition while they participate in this scam.
US carriers under NAFTA will have access to Mexico if they want to qualify. Mexican trucking companies are cheaper; they'd rather use them. Theft is a serious issue. Nike at one point was shipping shoes with the lefts on one truck and the rights on another to thwart thieves. Most who go into Mexico send several trucks together for safety. At least one of the biggest Mexican carriers advertises specially armored trucks and armed escorts for freight. Would you want to go there? Other than the toll roads, the roads are in terrible shape and very dangerous to the stranger. Truck stops hardly exist.
As for national security, the situation is similar to sharing a border with, say, Pakistan. Most Pakistani nationals would mean us no harm. But in a desperately poor country, with some nefarious characters who wish to harm us, and others with plenty of money to bribe, threaten and otherwise entice that border crosser to do something against our safety, it would only be a matter of time before the unthinkable would happen. This border situation is already too loose for comfort. Let's not make it easier to harm us, either physically or economically, by opening the border to trucking.
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