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Railcar Shortages the Norm as Demand Rising

By APICS staff | 14 | 9 | June 03, 2014

A railcar shortage is plaguing farmers, automakers, and oil companies, but it may be a boon to railcar manufacturers and supporting industries, the Wall Street Journal reports. “There’s strong demand for a broad base of car types and there’s not enough inventory,” says David Nahass, senior vice president at investment advisory Railroad Financial Corporation. “As an operator or lessor in this environment, this is what you pray for.”

Rail car prices for liquids such as crude oil have risen to about $1,500–$2,000 per month from about $500 in 2011. The rise of hydraulic fracturing or fracking is responsible for some of the increased demand. Cars that transport sand used in fracking also are up about 50 percent in the last year.

“Tank cars are almost impossible to get,” says Frank DeCastro, North America purchasing director for Solvay, a Belgian chemical manufacturer. He says he has been unable to get enough cars to meet demand and that congested railways are delaying deliveries. A backlog of orders is pushing deliveries of new tank cars into the next year and beyond. According to the Railway Supply Institute, new freight car orders increased 62 percent in the first quarter of 2014 from the previous quarter.

US Regions Chosen for Manufacturing Investment

A new federal program has recognized 12 regions of the United States to receive special attention to make them more attractive to manufacturers, the Associated Press reports. The Investing in Manufacturing Communities Partnership is an initiative of the Obama administration, started last September to spur local communities to make plans to become more competitive for manufacturers and court the jobs and economic growth they would bring.

The partnership is one of a series of efforts by the Obama administration to raise the profile of the US manufacturing industry. The Associated Press reports that as the US economy shifted away from manufacturing, many companies have moved jobs to countries with lower labor costs. The Obama administration says it has created nearly 650,000 manufacturing jobs in the past five years.

The selected regions, chosen from more than 70 applicants, are Southwest Alabama; Southern California; Northwest Georgia; the Chicago metropolitan region; South Kansas; the Greater Portland, Maine, region; Southeastern Michigan; the New York Finger Lakes region; the Southwestern Ohio aerospace region; Tennessee Valley; Washington Puget Sound; and the Milwaukee 7 region.

Hyundai-Kia Tops Cleanest Automaker Charts

Hyundai-Kia has unseated Honda to become the greenest automaker, the Union of Concerned Scientists reports in its latest 2014 environmental rankings. All eight of the world’s best-selling automakers showed improvements this year, according to the metrics evaluating pollution emissions of each manufacturer’s fleet. Further, the average new car is 43 percent cleaner than it was in 1998.

The factors that lead to emission improvements include customer demand, better technologies, and stronger standards for fuel economy and pollution. Upcoming regulations and standards will ensure that improvements continue.

While they all made progress, the “Big Three” US automakers Ford, General Motors (GM), and Chrysler still lag behind foreign manufacturers and rate worse than the industry average in terms of environmental impact. The full 2014 rankings, starting with the cleanest, are Hyundai-Kia, Honda, Toyota, Nissan, Volkswagen, Ford, GM, and Chrysler.

Cambodian Garment Workers Seek Higher Minimum Wage

Last December and January saw series of strikes in Cambodia, as garment workers called for a minimum wage increase to $160 per month. As Bloomberg Businessweek reports, the demonstrations saw violent suppression by military police, and at least four people were killed. Meanwhile, 25 leaders and activists were arrested and imprisoned for participating in the strikes.

While the courts convicted all defendants and issued prison sentences of four-to-five years, those sentences were suspended and all defendants released last Friday. 

Activists are continuing their efforts to raise Cambodia’s minimum wage and improve working conditions for garment workers. However, the Garment Manufacturers Association of Cambodia counters that increased salaries would hurt the country’s competitiveness. Low wages are what helps get business from China, where worker compensation is rising. Meanwhile, a group of major international clothing brands say they would consider absorbing higher factory costs if Cambodia’s minimum wage increases. 

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