BNSF chief says signs of recovery are lacking

BNSF chief says signs of recovery are lacking

Bob Cox
Fort Worth Star-Telegram
Oct. 27, 2011

FORT WORTH -- To get a pretty good idea of what's going on in the U.S. economy, Matthew Rose only has to look at what's going on inside his own company, Fort Worth-based BNSF Railway.

Right now the picture is mixed, the BNSF chief executive said Thursday in a speech to the Fort Worth Chamber of Commerce, and he's not looking for it to get a lot better any time soon.

Railroad shipments of industrial and consumer goods are good indicators of where the economy is and where it's going in the near term. Rose said BNSF executives track 22 categories of shipments, and "right now, six of them look pretty good, six of them look really bad, and the other 10 are just kind of bopping along about where they were last year."

That's not the rebound economic textbooks or BNSF's own history would have projected three years after a recession. "We thought we'd be back at our peak level [of 2006] by the end of this year," Rose said.

To show how closely the railroad's business tracks the economy, in 2006 it shipped a record 770,000 units in one week. By 2007, a full year before the U.S. economy tipped into a recession, shipments on BNSF's trains began to dwindle. By 2008 and especially in 2009, when shipments were down nearly 30 percent from the peak, BNSF was parking freight cars and locomotives and laying off workers. Rose is neither an economist nor politician, but as a member of President Barack Obama's Council on Jobs and Competitiveness (along with Southwest Airlines CEO Gary Kelly) he's got a close-up view of some of the key issues being debated by government to fix the economy. And he says there's no reason to expect a real surge in economic activity and job creation any time soon.

There's simply too much uncertainty about the economy, and government policies that affect it, for businesses to launch the kind of expansion projects that would put more people to work and stimulate economic activity. One of the biggest issues, which Rose said he is pressing through the competitiveness council, is a "pile-up of regulatory issues" imposed by government agencies at all levels.

Rose cited BNSF's attempts to gain all the permits required to turn an old truck terminal in Los Angeles into a rail terminal, which he said would reduce traffic congestion by taking trucks off local highways as well as put hundreds of people to work. Permitting has taken seven years and cost BNSF $30 million, Rose said, and it's not done yet.

The costs of the regulatory burdens are a key reason American companies continue to move manufacturing operations and jobs overseas, he said. Rose said the council is also working on proposals for a big infrastructure program to rebuild highways, airports and rail facilities, but the big question is where to find the revenue to pay for the projects.Until the U.S. addresses the big picture, long-term political issues such as budget deficits, healthcare and financial sector regulations, Rose said, there's just too much economic and political uncertainty for businesses to expand. And solving those problems will require national will and leadership.

How many times have I said this just this about the uncertainty Obama's regulatory explosion has created?

100