The Roemer Report August 1984

THE INSIDE BATTLE AT THE ICC:

If you've had a tough time following the ICC's reasoning lately, you've got plenty of company. It seems that the agency is developing a pronounced case of regulatory schizophrenia rooted in some fairly profound differences among its commissioners. Chairman Reese Taylor continues a relatively mod­ erate approach to transportation deregulation, preferring an evolutionary rather than revolutionary approach. Meanwhile, the commission's other three members--Frederic Andre, Heather Gradison and Malcolm Sterrett -- accuse Chairman Taylor of being a closet regulator out to derail the deregulation movement and pervert the will of Congress. The battle is not really political, since all four commission members are Republicans. The conflict is ideological. The majority clearly favor a free market approach to the industry, Mr. Taylor fears that sudden and dramatic further changes could create irreparable damage to the industry. Right now there are three remaining vacancies on the commission. The White House has nominated attorney Paul Lamboley (who has represented the Teamsters) and former commissioner J.J, Simmons. Both nominations are opposed by Robert Packwood, chairman of the Senate's Commerce Committee. The near term outlook suggests nothing but infighting paralysis and confusion at the ICC for the foresee- able future.

TOUGH CHOICES FOR LABOR: Last month we discussed the cur­rent auto talks and their strategic impact on the future of both manufacturing and trucking. Clearly, labor unions -­ including those in trucking -- must abandon the tradition­al adversarial approach. Still from a labor perspective, the realities and responses aren't particularly appetizing.

Ben Fisher, director of the Center for Labor Studies at Carnegie­ Mellon University in Pittsburgh, recently pointed out labor's basic dilemma in Industry Week. Experience and environment have powerfully shaped labor demands through most of this century,

Fisher maintains. For unions, this has meant contesting management for a bigger piece of an ever-expanding pie. Bargaining and re­sponding to sober economic realities in an age of limits is largely outside the domain of traditional union experience. Prior to the most recent recession, the primary job of most unions, in­cluding the Teamsters, could be summed up in one word…MORE. The job of management was to run a business and make it successful. The job of the union was to deliver better wages, fringes and working conditions. These roles have been basically changed by the harsh realities of post-recession unionism, says Fisher.

The dominant new role for unions is to insure a degree of job security for its members. But, doing this plunges a union into deep and complex issues requiring it to make tough decisions and hard choices.

THE COMPETITIVE IMPERATIVE: The Teamsters and all other unions seeking jobs and job security for members inevitably confront the fact that the employer must be viable and competitive. This forces the union to come to grips with two very distasteful reali­ties: (1) Part of the process of being competitive in the 80s means the inevitable reduction and permanent disappearance of many union jobs. (2) Compounding this is the distasteful fact that the surviving workforce will be under constant pressure to improve hourly employment costs -- or at least minimize any increases.Hefty union wage gains will merely accelerate future job losses. How can truckers deal with this Catch-22 to help their unions out of the dilemma? One way is to genuinely invite union participation in jointly facing the harsh new realities. This might mean broadening the traditional labor-management dialogue to include the major issue of the day… how to assure workplace survival. No union can revert to the era of the 1960s and 1970s when a hearty economy rewarded everyone. The new job security imperative requires a far more active and flexible degree of union involvement directed toward maintaining the competitiveness of the employer.

WILL THE CANADIAN MARKET OPEN FOR TRUCKERS? Very possibly. Indeed, this may be one of the few positive elements that some outfits will find coming out of deregulation. Canada has a near biological economic relationship with the U.S. It may well prove both impractical and unreasonable for Canada to maintain a highly regulated trucking industry in the wake of the deregulated American market. Canadian Transport Minister Lloyd Axworthy has floated some proposals intended to make his country's trucking environment more compatible with that of the U.S. The Canadian Trucking Association views them as tantamount to deregulation. Specifically, the Canadian truckers fear that large U.S. carriers will win operating authority in Canada and dominate the trans-border shipment of goods. The Canadians have kept up the roadblocks to date. But, continued refusal to grant operating authority to U.S. truckers will merely invite retaliatory actions by the U.S. Congress. An open border for truckers would seem to be in the spirit of the historically hospitable Canadian-U.S. relationship. Still, such a move would seem destined to wreak havoc on less cost-efficient Canadian operators.

PROFILING THE RISK TAKER: Everyone takes risks every day of his life, but some people habitually take more and greater risks than others. Why? Dr. Marvin Zuckerman, psychology professor at the University of Delaware, has studied this question. His research shows that high-level risk takers are motivated by one or more of these four internal stimuli: (1) A taste for adventure. This characteristic is evident in test pilots and mountain climbers, for example, (2) A "Go for the Gusto" philosophy. These folks know they've got one shot at life and are determined to make the most of it. (3) An attempt to overcome self-doubt. Some "sensation seekers," as Zuckerman calls them are­ driven by a need to cancel certain fears.(4) A solution to tedium. For people who are easily bored, frequent and intense challenges may be necessarily…”Risk” implies a potential for negative consequences, yet the degree of danger involved is largely a matter of personal perception. In other words, what appears hazardous to one person may seem relatively safe to another. The stakes differ depending upon the "players," so to speak. Maximum-risk takers may tend to assign lower danger ratings to proposed ventures than do minimal-risk takers. The secret to avoiding disaster lies in realistically analyzing risks -- balancing possible hazards against possible benefits and considering alternative approaches. ·

FINANCIAL DEREGULATION AND TRUCKING INSURANCE: Our readers are all too familiar with the impact of trucking deregulation on their operations. Perhaps less obvious is the inevitable impact that the deregulation of the financial services industry will have on trucking.First, one of the obvious consequences of a deregulated financial environment will be a permanently higher "floor" (the cost of funds) under interest rates originating from the need to pay savers higher unregulated rates. A second factor is the huge losses experienced in the business insurance industry over the past five years -- about $40 billion in underwriting losses -- and the inevitable impact on your insurance rates. With high insurance industry profits in the 70s, the big insurance houses cut premium dollars to gain market share and investment income. This pricing cycle has turned sharply and truckers could be facing premium increases which in some cases approach 50%. We think the situation in trucking could be particularly difficult because of the scarcity, of sound providers and the highly specialized nature of this industry. We would merely add that W. F. Roemer Insurance has weathered the storms of deregulation and remains one of the nation's most innovative providers of cost-efficient insurance for solid trucking companies.