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Photo courtesy of Forklift Simulator

Photo courtesy of Forklift Simulator

The forklift operator trainee climbs into the lift truck’s cockpit. He fastens his seat belt, turns on the ignition switch, puts the vehicle into a forward gear and immediately slams his 4-ton vehicle into a stack of pallets loaded with laptops and other expensive electronic equipment.

A training disaster that costs the company tens of thousands of dollars in lost revenue?

No, it’s just another day for a new virtual reality training simulator that allows new operators to learn how to safely operate their vehicle without the risk of property damage, injuries or lost revenues.

Virtual Reality Forklift Training

Forklift Simulator is a new product that was recently unveiled by a tech startup company of the same name based in Mechelen, Belgium. It features a realistic forklift driver’s seat and dummy vehicle controls, as well as virtual reality headgear that displays a 360-degree computer-generated warehouse.

This type of risk-free, computer-based training is ideal for the new generation of forklift operators who were raised playing video games. It allows newbies to develop their skills and learn safe driving habits without putting themselves — or other people or property — at risk.

Forklift Simulator allows can be used with a series of standard scenarios, or users can upload customized layouts and schematics that are the same as their own warehouses. This allows operators to gain practical “on the job” experience without actually being on the job.

Design Your Own Scenarios

It includes modular software that can be expanded and upgraded to fit a business’s specific needs. For example, you can build your own environment and scenarios, or allow forklift safety trainers to observe multiple users at the same time.

The environment builder allows trainers to adapt and create their own virtual reality environments. It includes a 3D library of objects that can be inserted into the program using drag and drop functionality.

The lesson builder lets trainers adapt or build specific exercises for any driver. Targets to guide the driver to specific locations and objectives can be added and edited. Other elements, such as designated danger and speed limit zones, also can be included.

The training comes with two main setups: A basic S Sim setup and a more advanced M Sim setup. Both can be equipped with a regular LED screen instead of the virtual reality headgear if desired.

Award-Winning Software

So far, Forklift Simulator is being well-received by the material handling industry. It received the “Best New Innovation” award by the material handling trade group MHI at the recent ProMAT trade show held in Chicago last month.

Other awards handed out during ProMAT included the “Best Innovation of an Existing Product” award, which was presented to Cubicam 25 for its dimensioning and weighing system. Created by Quatronix Inc., of Farmington, Utah, the device measures small and oddly shaped packages to optimize cartonization. It also reduces the amount packaging material that is required and can help save money on dimensional weight shipping charges.

 

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Editor’s Note: In this week’s Thursday Feature, we take a look at a revealing new survey that explains what manufacturing executives really think about the future of robots in America’s factories and what the implications could be for US workers.

File:KUKA Industrial Robots IR.jpg

Photo courtesy of Mixabest via Wikimedia Commons

Factory workers who fear they could be replaced by a robot sometime in the not-so-distant future may be right. A recent survey found that nearly three-quarters of leading manufacturing executives expect robotics and automated systems to replace human workers in US factories.

The latest PwC Manufacturing Barometer — which was released last week — found that 79% of US manufacturers are already using robotic systems in their plants and that 58%are planning to install more robotics and automation within the next 24 to 36 months.

But the survey also found that 73% agreed with the statement: “Increased robotics will replace workers and reduce our overall workforce.”

And 77% said that one of the values of adding robotic systems to their manufacturing plants was that they reduced labor and healthcare costs.

Use of Robotics Growing

The quarterly survey polled 58 senior executives of large, multinational US manufacturing companies. It found that manufacturers are implementing robotics for a wide variety of applications, including assembly, consistent high-speed work, and material handling and packaging.

The Manufacturing Barometer asks industry executives about their current business performance, the state of the economy, and their expectations for growth over the coming year. But this quarter’s survey included an additional section entitled, “Special Topic: Robotic Systems”.

What Executives Had to Say

This quarter’s Barometer’s findings included:

  • 79% of US manufacturers surveyed are currently using robotics systems and nearly half (48%) are heavily involved or using them moderately. Another 31% said they have limited use to date and 21% don’t use robotics at all.
  • Over the next two to three years, more than half of the executives surveyed (58%) said they planned on buying more robotics systems and 31% are planning many or moderately more automated systems.
  • When asked how important robotics will be to their company’s business and profit growth over the next couple of years, 44% said robotics will be important and 19% said they believe they will be very/extremely important. But a majority (52%) said they didn’t consider robotics to be as  important to their profit growth.
  • How companies planned to use robotics varied widely, according to the survey. The leading use was assembly (64%), followed by material handling and packaging (51%), visual sensors linked to computers (49%), machining (46%), highly dangerous/onerous tasks (41%), higher quality work such as arc welding (36%), and artificial intelligence linked to robotics systems (28%).
  • A strong set of business values is delivered by robotics, according to the survey, with 87% or respondents agreeing that robotics offers greater productivity, as well as bottom line profits (85%), costs controlled or reduced (80%), labor and healthcare costs reduced (77%), higher throughput (72%), and leaner and more efficient manufacturing cycles (67%).
  • How long will it take to recover the initial cost of robotics systems? The average response was 2.5 years while 59% of executives said ROI would be more than 1 year and only 18% said costs could be recovered within the first year.

Barriers to Acquiring More Robotics

The PwC Marketing Barometer also asked manufacturing executives about the chief barriers that might prevent their companies from purchasing new robotics systems. A majority said it was the high cost or lack of cost effectiveness (56%) while 48% said it was because it is hard to find or hire skilled workers with robotics experience.

The report also asked executives whether they agreed or disagreed with a series of statements regarding robotics and automation:

  • “Robotics plants in the US can compete on costs/quality with present offshore manufacturing installations.” (81% agreed)
  • “Robotics will create new job opportunities to engineer advanced robots and robotic operating systems.” (77% agreed)
  • “Increased robotics will replace workers and reduce our overall workforce.” (73% agreed)
  • “Price and ROI for robotics systems must be notably reduced before we can consider more installations.” (69% agreed)
  • “Quality of robotics must significantly improve before we can consider more installations.” (44% agreed)

The PwC Manufacturing Barometer, which is conducted by the consulting group Price Waterhouse Coopers, captures participants’ opinions about the direction of the US and world economies and their company’s performance and expectations in such areas as revenue growth, margins, inventory and costs. Other sections explore plans for investment, mergers and acquisitions, and hiring, as well as potential barriers to growth and much more.

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scissors liftMore US workers are killed by falls from elevated platforms and other heights than any other type of workplace accident, according to an official from the US Occupational Safety and Health Administration.

Jordan Barab, US Deputy Assistant Labor Secretary for OSHA, reported during last month’s International Powered Access Federation conference that 574 US workers were killed in fatal falls in 2013, up from 281 in 2012 and only 255 in 2011.

Falls from height remain the leading cause of occupational fatalities in the US and many other countries. Preliminary data for 2013 show 284 fatal falls in construction and 88 in residential.

But Barab commended the powered access industry for its commitment to providing safe equipment for work at height, and also praised the IPAF for providing training in multiple languages, including Spanish and Chinese, so that more workers can understand the dangers and be aware of work rules and safety procedures.

Barab told the group that safety is not a luxury, but a necessity that every worker deserves.

Causes of Fatal Workplace Accidents

Other leading causes of workplace deaths included:

  • Workers struck by vehicles and other objects, which killed 82 workers in 2013, compared to 79 in 2012 and 73 in 2011.
  • Electrocution, which killed 71 workers in 2013, compared to 66 in 2012 and 69 in 2011.
  • Caught in or between objects or vehicles, which killed 21 workers in 2013, compared to 13 in 2012 nd 18 in 2011.

Barab reported that more than 4,000 US workers die as a result of workplace injuries every year, and as many as 50,000 more die from illnesses in which workplace exposures were a contributing factor.

And there were another 3 million workplace accidents which resulted in non-fatal injuries to workers, according to Barab, who spoke at the conference held March 26 in Washington, DC.

Most Dangerous Industries

The most dangerous industry is construction, which saw 806 fatal accidents in 2012 or 9.9 deaths per 100,000 workers. But agriculture, forestry, fishing and hunting sector had the highest fatal work injury rate — 22.8 per 100,000 workers — even though it had fewer total deaths, 509.

Other dangerous professions included:

  • Transportation and warehousing, which saw 741 deaths or 14.6 per 100,000 workers.
  • Government, which saw 453 deaths or 2.0 per 100,000 workers.
  • Professional and business services, which saw 409 deaths or 2.7 per 100,000 workers.
  • Manufacturing, which saw 327 deaths or 2.2 per 100,000 workers.
  • Retail trade, which saw 273 deaths or 1.9 per 100,000 workers.
  • Leisure and hospitality, which saw 232 deaths or 2.2 per 100,000 workers.
  • Wholesale trade, which saw 204 deaths or 5.4 per 100,000 workers.
  • Other services, which included such things as public administration, which saw 199 deaths or 2.7 per 100,000 workers.
  • Mining, quarrying, and oil and gas extraction, which saw 181 deaths or 15.9 per 100,000 workers.
  • Educational health services, which saw 141 deaths or 0.7 per 100,000 workers.

Relatively safe industries included financial activities, which saw only 85 deaths or 0.9 per 100,000 workers; information, which saw 42 deaths, or 1.5 per 100,000 workers, and utilities, which saw 23 deaths, or 2.5 per 100,000  workers.

The next IPAF Summit will be held March 17, 2016, in Madrid, Spain.

 

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Here’s a special sneak preview of some of the stories you will find this week on the Bahrns blog:

  • Cyber security is expected to be the next big concern for many US businesses. We’ll tell you what that means for your business and how you can protect your business against hackers and cyber-criminals …
  • What’s the number one cause of death in the workplace? The answer may surprise you. We’ll tell you what it is and how you can prevent it from affecting your business …
  • Are you good at video games? Then you may be qualified to be a forklift operator! We’ll explain why …
  • Plus, in this week’s Thursday Feature: Robots have been replacing human workers for decades. But a recent survey of manufacturing executives reveals they plan to rely even more on androids and cyborgs in the coming years.

All this and much, much more can be found this week on the Bahrns blog … so stay tuned!

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Information Technology

Photo Courtesy Marko Puusaar via Wikimedia Commons

Today, operations in warehouses, distribution centers, manufacturing facilities and other businesses are more wireless than ever before.

People can direct material handling machinery from their desktop, or even their tablet or smart phones. Some machines, such as automated guided vehicles (AGVs) or driverless forklifts — can even perform an increasing number of task autonomously.

Then there’s all the data that is collected, stored and compiled. Rapid advancements in processing speeds and digital storage capabilities now allow businesses to collect a vast amount of “big data” that can be used to learn more about customers wants and needs and even predict their future buying habits and other behavior.

Increased Connectivity, Increased Risk

While all of this adds to productivity and, ultimately, profitability, it also comes with a high amount of risk. All of that wireless data, all of those instructions, even a company’s sensitive customer information — including credit card numbers, home and email addresses, and past purchases — can easily be hacked by someone with even a small amount of computer skills.

That’s why a growing number of material handling companies –and other industries — are now focusing more attention on cyber security. Securing computing resources, networks and applications helps protect businesses, their employees and their customers from being targeted by hackers and other cyber-criminals.

The risk is real. According to a report issued by the consulting firm Frost &  Sullivan, the large amount of connected devices make businesses especially prone to cyber attack. And it’s already happened to such high-profile companies as Target, Home Depot and others.

This increased risk exposure is motivating companies to adopt more comprehensive security solutions, including developing various levels of cyber security in order to protect against data breaches and other online attacks.

Criminals, Spies and Terrorists

While some of these attacks on industry come from amateur hackers who are simply seeing how far they can penetrate into a business’s most protected digital assets, others are more malignant. These include such things as corporate espionage, online theft, and even international terrorism.

And the problem is likely to get worse before it gets better, according to the new study. Thanks to the increased connectivity allowed by the “Internet of Things”, once one company is breached, it can open up innumerable attacks on every business and individual that is in any way connected with it.

Cyber Security a Growth Industry

Cyber security solution providers is expected to be a growth industry in the coming decades. These are companies that focus on providing organizations with vulnerability assessments, in addition to traditional security services.

The goal is to identify and nullify threats before they can penetrate a business’s computer network, equipment and communications because once hackers get in, they can cause a lot of damage — much of it irreparable — before anyone even knows they are there.

Future technologies are expected to focus on predictive threat analysis, machine learning, and network and device behavior analysis in ordert to create proactive cyber security solutions.

 

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MSSC

Photo courtesy Wikimedia Commons (in the public domain)

In the coming year, businesses plan on spending more for material handling equipment and supplies, but they are going to paying closer attention to where their money is being spent so they can make sure they are getting full value from every dollar.

That’s the feedback received from the Peerless Research Group’s (PRG) 2015 State of Warehouse/Distribution Center Equipment Survey, which was released earlier this month.

Warehouse and DC operators are more confident about future economic growth, but at the same time have been burned by the past so they want to take a more cautious approach to spending.

Norm Saenz, managing director of St. Onge Co. — a warehouse and DC consulting firm — said the survey’s results indicate that companies want to be smarter about the way they are spending their money. Many of the firm’s clients are seeking to invest in the right technology that will support a steady growth in business volumes, he said.

‘Survey Says …”

Among the surveys findings:

  • About 60% of warehouse professionals surveyed said they plan to spend less than $250,000 on material handling equipment in the coming year. And 25% said they plan to spend $1 million or more. About 25% of all respondents said they plan to use at least one new supplier.
  • About 35% of respondents said they are willing to move forward with investments right now, compared to only 27% last year and 19% in 2013. About 35% said they would take a “wait and see” approach to buying material handling equipment, compared to 43% last year and 51% in 2013.
  • The average amount respondents said they planned to spend on material handling equipment this year was $345,550, the same amount as last year and the year before  that.
  • About 43% of the planned spending will go toward material handling equipment. Of that amount, most respondents said they planned to buy lift trucks and accessories (52%), followed by racks and shelving (46%); bar coding equipment (40%) totes, bins and containers (33%); and mobile and wireless solutions (31%).
  •  The most pressing issue among respondents was safety (89%), followed by training (65%), labor availability (57%), and ergonomics (52%).
  • Among manufacturing operations, 57% of respondents said they planned to focus on lean manufacturing during the coming year. A total of 42% of people said they planned to focus on just-in-time production, and 29% said the planned to focus on just-in-sequence production.
  • Among warehousing and distribution operations, the biggest concern in the coming year was labor productivity (59%), followed by keeping inventories lean (50%)
  • About 50% of the industry leaders surveyed said they outsource the maintenance of their automated material handling systems, and only 12% said they always maintain it in-house. Another 35% said they use a combination of the two. Vendors and maintenance suppliers were mostly used for maintenance (49%), upkeep/upgrades (46%), consulting (43%), and data analysis (17%).
  • About 10% of the warehouse and DC leaders surveyed said they use automated guidance vehicles (AGVs) in their facilities right now. These were used mostly for transportation (41%), but they also were used for storage (38%), bin picking (23%), truck loading (20%), uploading (14%) and order fulfillment (20%). About 18% use robotics for other functions such as palletizing, pick and place or part transfer, packing/packaging, depalletizing and unpacking.

The survey was based on 448 qualified respondents from manufacturing, warehousing, corporate and aligned logistics professionals.

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Editor’s Note: In today’s Thursday Feature, we travel to exotic Singapore, where the lessons gleaned from a forklift accident can help protect drivers and pedestrians here in the US.

chemical spill

Courtesy of the Minnesota Historical Society via Wikimedia Commons

Singapore, the Southeast Asian island city-state located just south of Malaysia, has a reputation for being strict and conservative. Something as innocent as chewing gum or jaywalking is a serious crime there.

So perhaps it’s not surprising that a forklift driver was ordered to be jailed last week after he accidentally injured four people when a load of pipes he was lifting crashed into a double-decker bus.

On Friday, a Singapore court ordered that Zhang Xiang Guo, 37, be jailed for one week in connection with the April 12, 2013, accident that seriously injured one person and sent three other people to the hospital.

Just Doing His Job

Zhang, a Chinese national, was working for a company called New Funnels, which provides materials to marine companies working offshore. About 7:45 p.m. that night he was using his vehicle to lift three 40-foot-long steel pipes approximately 11 feet into the air.

Zhang had been using a co-worker, Muhammad Haikal Jelani, to help guide him because he was working near a public road, according to Deputy Public Prosecutor Zhang Hongchuan. But his spotter had walked away to sign off on some paperwork, so Zhang decided to proceed on his own.

That proved to be a terrible mistake.

On a Collision Course with Danger

Saravanasamy Senthilnathan, 29, an Indian national, was riding on the upper deck of the Number 225 bus along Tuas Road near Gul Circle, in Singapore, when suddenly the pipes Zhang had been lifting smashed through the glass windscreen.

The pipes struck Saravanasamy in the face, breaking a face bone, tearing his nose and eyelid and causing two puncture wounds in his head, as well as multiple injuries to his right cheek.

Three other men — Qiu Yu, 21, Win Ko Ko, 22, and Kang Boon Leng, 31 — sitting on the upper deck also were injured by the pipes.

Admits Negligence

Zhang admitted to investigators that he failed to check for oncoming vehicles before pulling his vehicle onto the public road. He saw the bus heading towards his forklift and honked his horn, but it was too late.

The driver of the bus slammed on the brakes, but not before the protruding metal pipes ripped through the left side of the upper deck, injuring the four men, the prosecutor said.

Saravanasamy was taken to a local hospital, where he underwent skin grafting. He also had to have “foreign glass bodies” removed from the puncture wounds in his head. He was hospitalized for a week and was off work for more than two months as a result of his injuries.

Pled Guilty But Still Appealing

Zhang, who pleaded guilty to one count of causing grievous injury to another person by performing a negligent act, also was forbidden from driving for one year.

He could have faced up to two years in prison and fines of up to $5,000.

His attorney, Chia Boon Teck, said Zhang plans to appeal the verdict. He was offered $15,000 bail pending the outcome of his appeal.

Dangers of Using Forklifts in Public Places

Laws regarding forklift accidents may not be as strict here as they are in Singapore — you probably won’t be imprisoned unless you intentionally injure somebody with your vehicle — but forklift operators and the companies they work for can be held liable in a civil suit involving a forklift injury.

Whether it’s a busy Singapore street or the parking lot of your business, forklift operators need to be extra careful when operating their vehicles where other people are present.

Forklifts are commonly used to offload pallets of materials from trucks, train cars and other delivery vehicles. Usually, this action is performed on private property, namely, the warehouse or materials yard.

But in some instances, due to extenuating circumstances, such as inadequate or non-existent delivery docks or setup for special events forklifts must be operated in publicly accessible places, such on sidewalks or sales floors, where you are likely to encounter the general public.

Know Your Responsibilities

If this is the case, make sure you are familiar with the local codes and ordinances regulating the use of public walkways and through ways. Violating local laws could result in fines, penalties or even imprisonment, not to mention bad public relations.

Given a forklift’s size, weight and potential for crushing injuries, operating one in any public area is extremely dangerous. Whenever possible, consider alternative solutions, such as less dangerous power jacks or hand jacks.

If you must use a forklift, minimize your risk and liability by always making sure you use rope lines, day-glow pylons or wooden horses to block off the area you will be working in. It’s a good idea to have a second employee, or “spotter” direct people away from the area, as well as a supervisor monitoring the work action. In fact, for some businesses, this is a requirement that could result in dismissal if not followed.

Whenever Possible, Don’t Use Forklift in Public Places

Scheduling times of use for forklifts that have to be in publicly accessible areas is also a good idea. Schedule forklift use in public areas during times when there are less likely to be pedestrians in the area, such as early morning or overnight.

Operating a forklift in a public place is risky and dangerous and should only be considered when there are no other alternatives. Use extraordinary safety methods and common sense so that you can reduce the risk of injury and limit your liability.

Employees using a forklift in a public area should operate with more care and at a slower pace than they would normally.  To reduce liability, make sure the driver is fully trained and certified on forklift operation and that the records are up to date. While forklift drivers are not required to have a motor vehicle license, often a forklift operator’s license may be required for an employee to operate one.

 

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linde a subsiduary of KION

Photo Courtesy of Lukas Horacek via Wikimedia Commons

The average age of of material handling system is 15.3 years old, and these aging tools can have a negative impact on a business’s overall productivity, according to a new study released this month by a North Carolina material handling consulting group.

Tomkins International surveyed dozens of retailers, manufacturers, wholesalers and third-party logistics firms about the age and condition of their existing material handling equipment. What they found was that companies are holding on to equipment longer than ever before, but that they also are experiencing more breakdowns, lost productivity, and repair costs.

Old Equipment Leads to Problems

About 35% of all the companies participating the survey reported that they have at least one material handling system that is a minimum of 20 years old. And companies on average have 2.7 distribution centers with material handling systems that are at least 15 years old.

Aging equipment can lead to multiple problems, according to the survey. The two biggest reported by companies participating in the survey were:

  • Lost productivity (18/2%)
  • Downtime (18.2%)

Companies Aware of their Aging Systems

Of the executives polled in the survey, 83% stated that they were aware that the material handling systems they were using in the day to day operations of their business were aging.

Older equipment breaks down more frequently, can be unreliable, and can require costly repairs more frequently. All of these thing can reduce productivity and lead to a higher risk of injury for employees operating this equipment.

Most companies use depreciation to allocate the cost of a particular piece of material handling equipment over a specified time, usually its useful life. When the equipment has been fully depreciated, it’s usually time to replace it.

Risks of Using Equipment Too Long

But some companies seek to stretch out their equipment by using it longer than it was intended. This is not only potentially dangerous, but it prevents the company from taking advantage of technological improvements to that equipment, which could improve efficiency, safety and productivity in the long run.

Generally, the company that manufactures a particular piece of equipment or the place where you bought it will be able to tell you its maximum anticipated useful life. Depending on the material handling equipment, this can be anywhere from a few years to ten years or more. Most equipment isn’t designed to last longer than 10 or 15 years.

New Systems Can Save Money

Replacing material handling equipment when it has reached its useful life can actually help reduce a business’s overall costs. The cost of maintaining an aged piece of equipment — including replacing worn parts and servicing it more frequently — along with the lost productivity and downtime can often add up to more than what it would cost to replace it with a newer, more efficient version.

If your material handling equipment is approaching or has exceeded its scheduled useful life — especially if it has already been fully depreciated — you should consider replacing it. Not only will it save you money in the long run, but it will  make your operation safer, more efficient, and more profitable.

 

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Here’s a special sneak preview of some of the stories you will find this week on the Bahrns blog:

  • Many businesses are using their material handling equipment long past its expiration date. While they may think they’re saving money, they could actually be costing themselves more in repairs, maintenance and inefficiencies.
  • Singapore has a reputation for being a strict, conservative nation. They proved it last week when a forklift driver involved in an accident that injured 4 people was sent to prison for negligence. We’ll tell you what happened …
  • During the coming year, businesses plan to spend more on material handling equipment. But they also will be more careful on how they spend their money. We’ll give you the details from a new survey …

All this and much, much more can be found this week on the Bahrns blog … so stay tuned!

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US Department of Transportation

US Transportation Secretary Anthony Foxx

The US Department of Transportation has launched what may be a “Hail Mary pass” to extend the Highway Trust Fund by reintroducing a new version of the same transportation bill that failed to get passed last year.

The HTF will expire at the end of next month if no action is taken. It was extended last August when the US Senate passed a $10.8 billion stopgap bill.

Labor Secretary Anthony Foxx called on lawmakers to pass a $478 billion spending bill to keep the nation’s highways, bridges and transportation waterways functional.

“All over the country, I hear the same account: The need to repair and expand our surface transportation system has never been greater,” Foxx said in a news release. “And yet federal transportation funding has never been in such short supply. Our proposal provides a level of funding and also funding certainty that our partners need and deserve.

“This is an opportunity to break away from 10 years of flat funding, not to mention these past six years in which Congress has funded transportation by passing 32 short-term measures,” he said.

$176 Billion Bigger than the Last Proposal

Last year, President Obama called for a four-year, $302 billion extension of the bill. Last week’s version increases this spending by an additional $176 billion, which could reflect a “go for broke approach” inspired by the administration’s having little hope of getting its bill passed by Congress that is dominated by Republicans in both houses.

The Highway Bill has been a political football throughout President Obama’s tenure and the administration has indicated that is willing to play hardball to get what it wants.

In August, the Transportation Department announced that it would begin delaying and cutting payments to states for highway projects immediately after the Congress adjourned for its summer recess. That would mean Congressmen would have had to return to their districts and face constituent anger over halted road and transportation projects.

This time around, however, the lame duck president must deal with a Congress full of Republicans who probably wouldn’t be willing to pass him the salt at Easter dinner.

Dire Consequences

If the highway bill is allowed to expire next month, it could be devastating for the nation’s infrastructure. The HTF would run dry and states would no longer have access to federal funding for transportation infrastructure construction projects.

A proposal put forth from the Washington think tank the Eno Foundation in December called on Congress to get rid of the current system for funding federal highways and transportation infrastructure and instead pay for it out of the federal income tax.

The HTF currently uses the federal fuel tax to pay for maintenance and improvements to the nation’s 166,000-mile interstate highway system. But because the fuel tax hasn’t been increased since 1993 and politicians are reluctant to ask motorists for more money, it is constantly in danger of going broke.

Bailouts of the HTF since 2008

Since 2008, Congress has transferred a total of $65.3 billion from General Treasury funds to offset shortfalls in the HTF caused by the low federal gas tax.

The Eno Foundation report, which was funded by the conservative Rockefeller Foundation, calls on Congress to scrap the HTF altogether and instead pay for highways out of the federal income tax revenues.

“The US government’s current approach to funding surface transportation is not working,” the report states. It’s no longer a viable solution because the HTF is no longer bringing in adequate revenues “and neither political party wants to take the political risks of increasing it.”

The current HTF — which taxes gasoline at 18.4 cents per gallon and diesel fuel at 24.4 cents per gallon — expires in May and will need to be renewed by the Republican-controlled  Congress.

The US federal fuel tax is substantially lower than other industrialized nations. In the UK, motorists pay $3.55/gallon in federal taxes, in Germany it’s $3.43, in Japan it’s $2.00 and in Australia it’s $1.29. Even Canadians pays more than US drivers, 37 cents per gallon.

While the US federal fuel tax is lower than other countries, so is the amount of money it spends on its highways. The US ranked 19th among countries in rankings of its infrastructure. Germany, for example, ranked 10th.

Shift Burden to Income Tax Payers

The Eno Foundation called on Congress to stop bailing out the HTF and instead create a new funding structure that ensures the financial stability of the nation’s highway system.

“The transfers were more accurately viewed as bailouts of a trust fund that Congress has not effectively managed,” the report states in its conclusion, adding that “pay-as-yo-go” principle of user fees paying for transportation infrastructure — such as tolls for bridges and roads — no longer effectively exists.

“The user pay principle works in theory but has not worked in practice, at least as applied to federal transportation funding the United States to date,” the report states.

Maintaining the HTF the way it is not will result in continued “funding uncertainty”, which will lead to even more shortfalls.

Three Possible Solutions

The foundation proposed three solutions:

1. Spend less on highways to reflect lower revenues from the HTF

2. Adopt a hybrid approach that combines general funds with fuel tax revenues (which effectively is what is in place now), or …

3. Eliminate the HTF and pay for surface transportation through the General Fund, most of which comes from federal income tax revenues.

If Congress is unwilling to ask taxpayers to pay more in fuel taxes, the burden must be shifted elsewhere — namely, higher income taxes, the group concluded.

“While this solution represents the most dramatic change from the existing system, other countries have been at least as successful, if not more successful, at providing sustainable and effective funding for transportation without the use of dedicated gas taxes,” the report states.

 

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