January 16, 2017
Trump’s pick for transportation secretary faces the least amount of scrutiny of any nominee; thus, it is very likely Elaine Chao will be approved. Her vision for transportation supports Trump’s vision – we need a heavy boost of infrastructure improvements because our current deteriorating roads, bridges, airports, grids etc. will jeopardize the economy. The key is that she is seeking private investment to support these initiatives. Public-private partnerships are on the rise. Are you thinking creatively about financing the essential building blocks for your supply chain?
As one who drives the Los Angeles freeway system on a daily basis (nice aerial view of my driving complexities above), it is obvious we need improvements; however, we also do not have time to deal with anything but a quick delivery of these improvements. Can you imagine what happens when one of these connectors closes down during rush hour?
What Should We Consider and/or What Impacts Could Arise?
There are a few items to think about related to infrastructure. Let’s start with whether your business is dependent on infrastructure – and to what degree. I’d be hard pressed to think of a manufacturing or logistics industry business that isn’t somewhat dependent on infrastructure. In manufacturing (in its simplest form), we receive deliveries of materials and purchased parts (delivered over the road, via rail, to/from the airport, and possibly via the port), add value to them and deliver them to customers (again via several modes of transportation).
Next, think about whether your business supplies materials and services that could support these infrastructure projects? Perhaps you should expect a sudden jump in business – assuming you are prepared to successfully handle it. Or, do you also rely on these types of materials for your business? If so, could you suffer a shortage? What could you do to prevent suppliers from downgrading your importance if/when materials go on allocation?
And, given the significance of the private-public partnership, where else could this type of agreement take place? Or what other agreements will this likely spur on?