What will it be like to do business when the United States has the world's second-largest economy? Or perhaps even the third largest?
Most of us will live to see that happen if the predictions of one of the speakers at this year's Truck Trailer Manufacturers Association convention come true.
Don Reynolds, president of 21st Century Forecasting, told his TTMA audience that the United States can expect to lose its status as the world's largest economy in less than two decades.
If present trends continue, China — already the world's most populous country — should surpass the U S as the world's leading economic power within 12 to 15 years.
And India will be right on its heels.
But for those of us who build trailers to haul things and work trucks to do things, what difference will that make? Does being Number Two equal going into decline?
The answer, of course, is no. For years, we have feared that America has been losing its manufacturing base to other countries — including India and China — where operating costs are substantially lower.
But a recent study by the National Association of Manufacturers (NAM) indicates that America has been holding its own in an increasingly competitive global market.
Still the world's largest manufacturing nation, the United States produced approximately 25% of everything that was manufactured in 2004, according to NAM.
The study shows that over the past two decades — years marked by cataclysmic changes in the U S automotive industry — that the U S share of the global manufacturing market hardly has hiccupped. Yes, China has posted gains. India is up. And Korea is growing.
Yet back in the USA, the economic engine continues to purr. According to the NAM numbers, the gains in global market share that Asian nations are enjoying seem to be coming principally at the expense of Western Europe. Germany and France in particular have lost market share, and the Japanese have as well.
A growing global market presents opportunities for people in transportation — and not just for those who build the ISO containers that will be moving those goods across oceans. As Bob Costello, economist and vice-president of the American Trucking Associations, predicted in his TTMA presentation, trucking will play as great or even greater role in transporting freight in the coming years — approximately 70% of everything that is shipped.
When we focus strictly on market share, we by definition view someone else's gain as our loss. But the size of the market isn't fixed. The world economy undoubtedly will grow significantly in the coming years. With a much bigger pie to cut up, it's still possible to wind up with more pie — even when the pie is cut into more pieces.
But there are no guarantees. Instead, there will be plenty of challenges for American manufacturers in the coming years. Virtually every company attending this year's TTMA convention — trailer manufacturers and suppliers alike — can expect to feel the impact of international competition. Foreign companies increasingly will target U S markets, but that will not be the only way they will compete with U S manufacturers. They also will compete for commodities, bidding up the price for materials such as steel, nickel, aluminum, and hardwood — not to mention the petroleum that truck and trailer customers need to operate the equipment we produce.
According to a graphic that Costello showed at the TTMA convention, India and China combined have almost twice the population of industrialized countries (37% of the world's population vs 38% for more developed nations), yet the two countries currently consume only 11% of the world's appetite for oil. But with 30,000 cars being added each week in Beijing alone, that percentage is bound to change. And so will our price for fuel.
There was a time that the trailer manufacturing industry was relatively isolated from the rest of the world. Even when the first influx of Japanese cars began arriving on U S shores, trailer manufacturers could be confident that they would not struggle against the same type of international competition that had established a beachhead in the domestic car and truck industry. After all, it was not feasible to ship trailers across the ocean for sale in the U S. But today, Asian companies build trailers and are gaining acceptance in the U S market.
It's an increasingly shrinking world. And what goes on across the globe sometimes can be as important as what happens in our own backyard.