THE 1990s were a great decade economically. Manufacturing plants were humming, businesses were turning profits, and even the government posted a surplus. At least for a while.
Why was that? What made it possible? Politicians were quick to explain that it was their policies that brought us prosperity. But in our view, if any politician should get credit for the economic boom of the 1990s, it’s Adolph Hitler.
Seriously? Yes, because without Hitler leading the world into World War II, we never would have had a post-World War II baby boom. And without the Baby Boom, we would have had a very different economy in the 1990s.
It’s simple demographics. Yes, America benefited tremendously from the rapid advancements in computer technology and the emergence of the Internet during that decade. New approaches to manufacturing such as JIT and cellular manufacturing made our factories far more productive. But it was this mass of humanity—men and women born 40 years earlier who needed stuff and had plenty of money to pay for it—that provided the fuel for our economic engine.
Some people were not at all surprised when the economy grew so strong in the ‘90s. Some were even counting down the years until the boom arrived. The people who saw it coming had been paying attention to demographics.
Twenty years earlier, US News and World Report published a study that predicted an incredibly prosperous economy for the United States during the 1990s. The analysts weren’t clairvoyant visionaries who could peer 20 years into the future and see the arrival of personal computers, CNC equipment, or new ways to manage plants and warehouses. They just knew one very simple fact: all those babies who were born right after World War II would be entering their prime earning years during the 1990s. This group of people who created an unprecedented demand for diapers, toys, bicycles, the kids who swamped elementary schools and cramped colleges, would be entering their prime earning years.
In a way, studying demographics is like looking at life through a telescope. You might miss some bumps that are right in front of you, but a telescope can provide a pretty good idea of what things can look like when you eventually get there.
By contrast, economics is more like looking at things through a microscope. It’s a detailed view of what is right there in front of us. It’s looking at the pieces and seeing how things fit together. And a good economist—or market analyst—can put a complex organism under the glass and figure out what makes it work and where it’s likely to go in the future.
Attendees at this year’s Truck Trailer Manufacturers Association convention were given a look at the trailer market through a microscope and a telescope. Steve Tam with ACT Research operated the microscope, offering a detailed analysis of the trailer market, past, present, and future. The industry has been turning in a ‘90s-like performance recently, and Tam believes the good times will continue to roll for the next several years. (See our report on his presentation beginning on Page 26).
But if you are in this business for the long haul, it’s also wise to peer through the telescope. Demographer Ken Gronbach brought his telescope to the TTMA convention, and what he showed looked a lot like what Steve Tam saw though the microscope. His view, though, was based on completely different data.
Despite the differences between economics and demographics, both men had similar messages for truck trailer manufacturers—great things are in store for this industry. For Gronbach, it’s just a matter of numbers.
“If you see big populations, head toward them. You know sales are going to go up because big groups of people consume more than small groups.”
Generation Y—those born between 1985 and 2004—is bigger than the Boomers, Gronbach said. As was the case with the Boomers a few decades ago, this big group is beginning to move into the workplace and out from under their parent’s roof. As they do, it will be their turn to buy. It will take time, but that’s the view through the telescope.
Meanwhile, under the microscope, economic variables also point to strong demand for trucks and trailers as the next few years unfold.
So the question for each of us is what to do about it. How can we best take advantage of what appears to be an excellent operating environment for this industry? Is it time to implement something new or different at your company? A rising tide may lift all boats, but untying them from the dock enables them to go places. ♦