Posted on 05/25/2008 2:11:36 PM PDT by kellynla
WASHINGTON — This is not your economy. It's not even your parents' economy. To a surprising degree, this is your great-grandparents' economy.
Quietly, while attention has focused on the technology, finance and service sectors, businesses that stood astride 19th century industrial America but then collapsed have been resurrected to meet the needs of a feverishly industrializing world. In the process, much of what Americans think they know about their economy is being upended.
Steel makers, railroads, mining concerns and agriculture, long considered part of a fading past, suddenly have bright futures. And segments of the economy long lauded as the wave of the future are undergoing an old-fashioned, and very painful, consolidation.
"The wheel has turned. What was up is down, and what was down is up," said San Francisco investment executive Frank Husic. "And it's all because an emerging world wants to eat, drive and live in houses, things we take for granted and have for well over a century."
Dan Basse, president of AgResource Co., a Chicago agricultural forecasting firm, agreed. "The tech industry offered us things to occupy our minds and entertain us. But we're moving back to a world of stuff, whether that's vegetable oil or copper or zinc or cotton. Stuff that you can hold in your hand and drop on your foot."
The twin turns of fortune for the nation's old and new economies are letting once-struggling behemoths such as U.S. Steel Corp. put modern marvels such as Microsoft Corp. to shame. The price of U.S. Steel's stock has shot up 1,000% in recent years, while Microsoft's has essentially flat-lined.
(Excerpt) Read more at latimes.com ...
I’m looking at infrastructure right now as the next thing will be rebuilding it. Companies like Babcock Brown, URS etc.
All things come round again. Oy. Talk about age.
Kellynla, I believe the high gas prices will turn out to be the blessing our America has been waiting for. High oil prices will make shipping in good from other countries prohibitive, so it will be necessary to crank up all the textile mills in rural America. The steel mills will need to be productive again, as will the furniture makers in the Carolinas. We need the good we consume to be produced here in America because of shipping costs. Think about it... I bet we will see the laws of unintended consequences at work very soon — and too our benefit.
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from an old Connecticut/New Englander
The high price of diesel fuel is having a devastating affect on the trucking industry.
But the goods still need to get from there to here.
Railroads, even though they use diesel fuel, are more efficient, per freight mile, than 18 wheelers.
Thus, strictly on speculation, I have taken small positions in some rail companies. I figure to give them a year and see what happens.
Trucks will still be needed to move goods from the rail terminal to the customer. But I doubt that run would exceed 100-200 miles at most.
I completely agree. I wrote a paper about this in college 10 years ago. It was like talking to democrat trying to tell anyone that railroads were more efficient and would make a comeback.
I needed this today. My husband works for a railroad, so hopefully it will be good for us too!
I guess I'm at the halfway point where I live. The nearest railroad is 200 miles north and 200 miles south. My kids were in their early teens before they ever saw a train.
Santa Fe, all the way! BTW I bought BNSF stocks a few months ago. Doing well.
Also, water transportation may see a revival as well.
There is much discussion of short sea shipping or short sea transporation, namely loading goods on small coastwise ships or barges pushed or towed by tugboats and carrying the goods between two American ports say Portland, Maine and Tampa Florida thus reducing congestion on the highways and reducing fuel usage-a small ship can replace a five hundred or so semi trucks.
I recall a class in mine valuation some decades ago. It turned out that it was cheaper to ship bulk cargo from Japan to Los Angeles than it was to ship it by rail from Salt Lake City.
You’re right — railroads are far more efficient than 18 wheelers. I think the railroads will see more expansion in the years to come. 1 year may be too short a horizon, maybe 3? as the pain from oil won’t end until 2009 year end, and folks will change their minds only slowly this year, so you may only see substantial increases in EBITDA in 2009/2010
and I read something about these massive container cargo ships and how cheap they turn out to be — can’t remember the link to that, but it was fascinating.
it makes sense that a cheaper dollar makes it less expensive to buy everything here, including labor. isn’t that why everyone complains about China holding the value of their currency down?
It’s ironic how the contract the railroad has been trying to pass for years is just seeing the light. I think even the company is waking up to the their needs of good people.
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