2019 Auto Show: Trucks Are Key To Industry Growth

The 2019 Auto Show in Chicago is the latest indication of where the industry is headed, and it is certainly pivoted toward growth in the truck segment. The growth of trucks, especially heavy- duty model types, or HD as the industry abbreviation denotes; represents a significant margin opportunity for auto makers.

This all comes within the backdrop of Ford announcing recalls for safety on over 1.5 million F-150 trucks from model years 2011 – 2013. This is a reminder that production realities still exist, and that no amount of money ensures that any particular vehicle will be fully free from defects or issues.

The truck market has evolved to where not just contractors, farmers, or other heavy labor job types utilize them. The HD truck market has become more mainstream over the past few years and is a trend that is expected to continue. The style of truck that was once exclusively for work has attracted casual drivers because of the towing power.

The ability to pull heavy loads is the key driver for HD truck models, according to industry experts, towing ability is the top priority for the consumer. The secondary priority is for the truck to have high tech options for entertainment and for driver and passenger comfort. Those types of examples would be a radio capable of attaching devices or heated seats.

The truck market has numerous options from small cabs, medium truck beds, and extended cabs. The heavy-duty class of trucks provide the best profit margin opportunity for automakers, especially American manufacturers. The market is dominated by Ford, Chevrolet is in a distant second, and Ram (parent company Daimler Benz) is in third.
The selling price on the new Ford HD is approaching six-figures it is hovering around $90,000 for the 2020 models. The demand is there and that is how the heavy-duty truck segment of the industry is going to move units and solve for other profit and revenue shortfalls within domestic automakers business models.

The Ram lineup of trucks is slightly less costly with their base HD Ram model at about $68,000 and the upgrades to the enhanced tech and other features packaged out at about $77,000 including the destination fees. The tech in the trucks provide amenities that passenger vehicles have currently: surround-view cameras, rear view cameras, lane warning systems, and bed-lowering systems.

It should be noted that Ram also issued a recall on their trucks on Wednesday as well for a problem potentially with the steering linkage system. The Ram series has the ability of getting a consumer into a HD model at a more modest price point than Ford, but Ford would counter with the amount of amenities and towing power that their packages provide to the consumer.

Chevrolet offers the Silverado HD with packages starting at $37,000 and with enhanced packages that drive the price up to around $70,000 per unit. The Chevy brand story is reliability, long-lasting truck performance, and the flexibility of financing the payments through GM Financial.

The Chevy also offers two V8 engine options and towing and hill assist features. They also have an “Infotainment” center option to bring entertainment to the driver and passengers for long hauls.

The Chicago Auto Show featured these Heavy-Duty trucks and Adventure SUVs and those are the two biggest trends in the auto industry. The American automakers desperately need something to differentiate themselves from their European and Asian competitors. These two categories have the added bonus of profitability.

The trend to watch will be what is already occurring at GM/Chevrolet where they are discontinuing making several passenger cars in favor of making more trucks. The executives at Ford are also weighing the streamlined approach to their regular automobile line to focus more on production of trucks, especially HD truck models.

The demand for HD trucks continues even as the price tag goes up, which for the automaker is a good situation for their profitability. The impact on the environment for these gas guzzlers and the impact of having people that are not regular truck users driving larger trucks for everyday use remains to be seen.

Zero Hour: EPA Superfund Follow Up

The EPA Superfund program has come under fire recently from the new Trump Administration which has cast a shadow of doubt over the future activity from this vital program. The significant amount of sites still being actively contained and remediated by the Superfund program has caused concern within residents of those areas.

The concern comes from the potential budget cuts for the program that could come from the Trump Administration in the coming months. The Superfund provides focused attention on the most contaminated or hazardous areas from past industrial, chemical, or other types of pollution.

The program also has a National Priorities List (NPL) designation for these sites as well. The specifics on the list and the foundation of the program can be found in my earlier article series on the Superfund program.

The follow up to that series will focus on some sites that have made the news recently, particularly in my home state of New Jersey and the New York metro area. The State of New Jersey has the most Superfund sites of any other state in the country.

The main misconception with Superfund sites from certain factions of the federal, state, and local governments as well as some groups of the general public is that the program is not producing results. The rationale behind that misconception is largely because of the many years it can take for a site with that level of contamination to be remediated.

The other component involved is the sheer time it takes for the entire Superfund process to move through all of the necessary steps prior to remediation work even beginning to take place. This process and the various steps it takes through the public and community input stages can be found in my earlier article series on the Superfund program.

The reality is that the program is effective in maintaining, treating, and remediating very complex areas of environmental contamination. The multiple steps involved are necessary – and the process, while taking a significant time horizon to transition from start to finish, has been proven to work in rehabilitating sites of increased pollutant exposure.

The EPA is currently focusing their efforts on the NPL sites that have been progressively difficult to contain and clean in particularly contaminated industrial areas throughout our country.

Diamond In The Rough

A Superfund site that is recently in the mainstream news here in the Northeast, is the former Diamond Alkali site in Newark, New Jersey. The site is part of the Passaic River Superfund cleanup focus area as well. It is a particularly complicated site because of the types of chemicals used there, and the level of widespread contamination of those chemicals and industrial materials.

The site has housed production of chemicals since the 1940s, when according to the EPA studies, DDT was manufactured there on the premises. The Diamond Alkali Company made several products there in the 1950s and 1960s including the herbicide known as “Agent Orange”, which the process to manufacture creates a dangerous by-product known as dioxin.

The company eventually sold the land, and the EPA conducted site studies in the early 1980s which yielded elevated amounts of dioxin, PCBs, and other dangerous toxins. The plan for the site, as with any other Superfund designated location, included immediate, interim, and longer term countermeasures to contain and remediate the area.

The process took many years and several steps and is still ongoing. The most recent plan to fully remediate the Diamond Alkali site and the greater Lower Passaic River project is slated to take 10 years to complete. The project made headlines recently when the EPA and municipal government officials announced that the companies involved in the pollution of the Passaic River are going to foot the bill for the cleanup.

The Lower Passaic River site encompasses an area of eight miles and it will take, according to NJ.com and other sources, 1 year to negotiate and 10 years to conduct the actual cleanup and remediation work. The cost of the entire project is $1.4 billion (yes billion with a “b”) and any enthusiasm regarding the corporations allegedly involved picking up the tab should be tempered by the fact that none of them have signed up to do so at this time.

The plan calls for dredging and draining of sediment from the river. The sediment will then go through a process known as dewatering, then the sediment will be transported to a remote area for disposal by train. Finally, the entire stretch of the site identified as the Lower Passaic River site (the entire 8 miles) will be capped, which is the process I described in my initial article series, it involves the application of a sand and stone barricade of about two feet in depth to seal off the area.

The companies involved will be in negotiations with the EPA regarding the cleanup costs, and I am certain that the pressure of public opinion will also help benefit this project. It is a long term and large scale job, but the proper cleanup of that site requires that type of diligence.

Ring of Doubt: Ringwood Ford Site

The EPA does not always enjoy the benefit of positive public opinion. The situation in Ringwood, New Jersey is a case in point of that type of scenario. The EPA, the residents, and the municipal government are all at odds over the course of action needed in the Ford site along a river in Upper Ringwood.

The residents are upset because the EPA has seemingly changed course over the plan to recover the site from years of pollutants. The original plan was for the excavation and remediation of over 160,000 tons of polluted soil from the site.

Instead, the proposal from the EPA is now pushing for the town to put a recycling center on the site. The pollutants would be contained by a “cap” and would not be excavated. The recycling center would cost the township about $5 million and the remediation work will cost the town around $30 to $35 million depending on the estimates.

Ford used the site as a waste dump essentially for all the chemicals and other toxic products from their plant in nearby Mahwah.

The 500 acre site has been relisted numerous times on the Superfund NPL because of repeated attempts to remediate the widespread contamination of the site. This latest plan by the EPA to cap the site has resulted in upset groups of local residents that want Ford to be held responsible for the cleanup and for the site to be remediated in a more comprehensive way.

The general public sentiment is understandable, the feelings of distrust of the EPA can also be completely valid in this case. Ford is a multi-billion dollar corporate goliath that used that land to get rid of waste from their plant for decades, and now they want to shirk the cost of the cleanup.

The resolutions proposed by the EPA would both entail the taxpaying residents foot the bill for the recovery of the site. This is patently unfair, and this is a case study example of why the EPA has been under such intense scrutiny in recent weeks. The two resolutions they provide in this Ringwood Superfund site will not address or solve the underlying pollution there in an effective manner.

The EPA has to consider other remediation alternatives, determine a whole new course of action, and they need to get Ford involved in the cost of the cleanup process. The whole situation there is a literal and figurative mess.

The legal ramifications of the process are another area where this situation could be very troublesome for all parties involved. It definitely merits watching in the weeks and months ahead.

Down to Zero

The new proposed federal budget from The White House carries huge cuts to a variety of agencies including the EPA. This obviously casts a doubt on the future of the agency and the Superfund program.

The cuts, according to CBS News and other major news sources, to the EPA budget are around 30% and the Superfund projects currently open or active face a great deal of uncertainty. The budgetary constraints take on an added significance when you take into account the duration of time it requires to remediate many of these highly polluted sites.

The Gowanus Canal site in New York City was one of the projects I featured in my series of articles on the Superfund. This project was in the news again on Tuesday with the Attorney General of New York and other Congressional representatives who held a media event at the site urging Congress to reject the budget.

The Gowanus Canal site is one of the worst in the nation as far as pollutant levels and toxicity. They have commitments from several companies to cover about $500 million in cleanup costs, according to estimates from the site proposal. The budget cuts could defund the entire project, which is in the “design” phase with remediation work set to begin in 2018.

In the event that the program was defunded that would essentially waste four years of time that many entities committed to pursuing a solution for this environmental disaster. I understand that big government waste is a real issue, but it should not come at the cost of environmental safety.

Conversely, there are other programs that function well, that is the real cost of some of these cuts: the time, money, and resources already dedicated by countless groups of people. Those groups include volunteers, concerned citizens, local government officials, and numerous professionals from a variety of backgrounds. In this specific case of the Superfund, the cuts or the defunding of the budget create a scenario where there are tax dollars already utilized to evaluate the respective site and develop the cleanup procedure, so the cuts essentially compound the waste of resources.

The future of the EPA and the Superfund program hang in the balance as the budget proposal moves through the legislative mechanism in Congress. The future of our environment, the potential for neglect of catastrophic waste sites, and the very real possibility of untold amounts of chemicals causing illness to Americans is all at stake.

The Superfund program, for the most part, was an example of a government program which actually was effective. The program got the polluters to pay for the damage they caused, which is also a novel concept when applied to a big government run scenario.

The sad reality is that without the Superfund in place, these big corporations would never comply with paying for the damage they caused to the environment. In the event that anyone thinks that these corporate giants will comply in the future, without the enforcement of the Superfund, they are sorely mistaken. That type of negligence comes at a cost, a huge cost, to our American society.