The monthly report on factory activity from the Institute for Supply Management shows a little increase in manufacturing for December.

“Manufacturing is finishing out the year on a positive note, with new orders, production and employment all growing in December at faster rates than in November, and with an optimistic view toward the beginning of 2012, as reflected by the panel in this month’s survey,” says ISM’s Bradley Holcomb.

In recent months more sectors usually show growth than contraction, but that wasn’t the case in December. Nine went up, nine went down.

The niches that expanded, in order: Apparel, Leather & Allied Products; Printing & Related Support Activities; Textile Mills; Petroleum & Coal Products; Machinery; Food, Beverage & Tobacco Products; Computer & Electronic Products; Primary Metals; and Paper Products.

Those contracting, in order: Plastics & Rubber Products; Nonmetallic Mineral Products; Furniture & Related Products; Chemical Products; Wood Products; Miscellaneous Manufacturing; Fabricated Metal Products; Transportation Equipment; and Electrical Equipment, Appliances & Components.

To quantify the December gain in manufacturing, ISM’s Purchasing Managers Index registered 53.9 percent, an increase of 1.2 points from November’s reading of 52.7 percent. That indicates manufacturing expansion for the 29th consecutive month.

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You probably didn’t notice any fanfare on Dec. 13 when the Compliance, Safety, Accountability (CSA) enforcement program marked its first anniversary.

This was quite a contrast with the hand-wringing for more than a year that preceded it. The industry was concerned that it would be crippled with excessive penalties, out-of-service drivers and enough red tape to stripe the interstate highway system.

Nothing that dramatic came to pass in CSA’s first year. Nevertheless, carriers have noted structural problems, such as how violations are weighted. For example, requiring a driver to exceed the 11-hour driving limit or the 14-hour on-duty limit has a severity rating of 7, the same rating as not wearing a seatbelt.

Even as the industry wrestles with such problems, there are things to be gleaned for leased and independent owner-operators, based on data from the first 10 months in 2011. These stats were gathered by Overdrive’s sister magazine Commercial Carrier Journal from the Federal Motor Carrier Safety Administration:

[bullet]Lights are a glaring problem. Under the equipment violations, the two most common involve missing, broken or defective lights or reflective devices, for a combined 17 percent of all violations.

[bullet]Tread depth is a deeper problem. Following lights/reflectors, the most common equipment violation (5 percent) was having tread depth less than 2/32 of an inch. However, with a severity rating of 8, it’s much more critical than the light-related items, rated at 2 and 3.

[bullet]Logs are as important as ever. “Form and manner” log violations and “record-of-duty status not current” together account for 28 percent of driver violations.

The first two points can be easily controlled. Turn on your lights, see which ones are out. If you don’t have a tread depth gauge, get one (they’re cheap) and use it.

As for logs, buckle down and keep up with them. If you’re not already using an electronic onboard recorder, get ready to do so. Their use probably will become industrywide, whether through formal mandate or practical necessity. Compliance is expected to be quite the challenge under the new, more complicated hours rule, which was to have been announced by year-end.

Because CSA is so ambitious, many carriers have received little scrutiny. More than two-thirds of carriers had two or fewer inspections during a 24-month period ended in October, according to analysis by Randall-Reilly TruckIntel, owned by Overdrive’s publisher.

Most initial efforts have focused on larger carriers, so there are thousands of independent owner-operators who have yet to experience the long arm of CSA. Its first year might have seemed benign to you, but it’s still warming up. Be prepared for a closer acquaintance in 2012.

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You might have noticed the powers that be are not striving to make your work environment more trouble-free next year.

A new, and likely more restrictive, hours of service rule is expected. Carriers are steadily adopting electronic onboard recorders. More emissions-related regulations start in California during 2012, and medical certification will be more closely tied to the CDL. Then there’s the economy, favorable to trucking lately but still showing signs of serious weakness.

What’s an owner-operator to do? You could form an Occupy Trucking movement and protest over-regulation of the 99 percent by the clueless 1 percent in Washington, D.C. Then there are those troopers who are too picky with inspections. What about those slimy brokers, pushy dispatchers, rude shippers and receivers and insane four-wheelers? And don’t forget the economy…

Likewise, the Occupy Wall Street movement and its worldwide spawns cite a list of ills, with little focus other than general wrongdoing in the financial sector perpetrated by the ultra-rich “1 percent.” But exactly what to do about income inequality or any other grievance is another question.

That was clear when I witnessed an Occupy Birmingham (Ala.) march this fall. Signs reflected themes as diverse as “Moms against bombs” and “Campaign finance reform,” and as vague as “The people united will never be defeated” and “This is a sign.”

The meandering discontent reminded me of the “mad prophet of the airwaves” in the 1976 movie “Network.” He encouraged viewers to scream out their windows: “I’m as mad as hell and I’m not going to take this anymore.”

I admire the eagerness of OWS participants to do at least a little more than scream out the window to change the system. Owner-operators, of course, have no time for extended camping trips in city parks, and for many, getting involved in local politics or attending a hearing in Washington is about as practical as delivering a load to Mars. Still, you could manage small acts of involvement: vote, file a comment on a Notice of Proposed Rulemaking, or serve on a driver council with your carrier.

Closer to home is your business. The successful owner-operators we’ve observed are not blind to pending regulations or other industry challenges. Rather, they focus on each one and work through it. For every trucker who swears he’s going to leave the industry because of onboard recorders, cross-border trucking and California emissions regs, someone else is figuring out the landscape and earning $50,000, $60,000, $70,000 or more a year.

If you’re short on such profits but abounding in frustration, “occupy” your business” in 2012. Count costs in detail and reduce them. Maintain your equipment better. Develop your load-planning skills. Improve relations with your carrier and others.

Instead of yelling vague threats out the window, look in the mirror. Decide precisely what you can do about whatever you’re mad as hell about. Then do it.

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Owner-operators with hauls tied closely to factory output should see good demand through year-end, based on today’s report from the Institute for Supply Management.

ISM says economic activity in manufacturing sector expanded in November for the 28th consecutive month, and the overall economy grew for the 30th consecutive month, says ISM’s Bradley Holcomb. That’s based on a poll of supply executives for the latest Manufacturing ISM Report On Business.

“Respondents cite continuing concerns about the general economic environment, government regulations and European financial conditions, but are cautiously more optimistic about the next few months based on lower raw materials pricing and favorable levels of new orders,” Holcomb says.

And you can take one of those concerns – European financial conditions – down a notch after Wednesday’s announcement that major U.S. banks worked out easier access to dollars to help Greece and other flailing economies over in the Motherland.

ISM says these eight sectors showed manufacturing growth in November: Wood Products; Textile Mills; Petroleum & Coal Products; Primary Metals; Food, Beverage & Tobacco Products; Computer & Electronic Products; Apparel, Leather & Allied Products; and Paper Products.

And for the actual numbers of ISM’s manufacturing index: “The PMI registered 52.7 percent, an increase of 1.9 percentage points from October’s reading of 50.8 percent,” Holcomb says. Readings over 50 indicate expansion.

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One benefit of good cash flow management is having leeway in covering costs. The end of the year is a good time to put that flexibility to use to reduce your income tax bill on April 15.

“If you’re going to have an expense coming, do it now – don’t wait till after New Year’s,” says Mark Miller, tax manager for ATBS of Denver, the nation’s largest owner-operator financial services provider. Tires, a laptop computer, major maintenance work – any eligible business cost made in 2011 reduces your taxable income dollar for dollar.

How much that reduces your tax bill, though, depends on your income bracket. Considering income tax and self-employment tax together, Miller estimates that owner-operators average a federal tax rate of 25 percent. So every $1,000 in costs could mean $250 off your tax bill, plus whatever it saves on your state income tax.

Other tax points to note:

SELF-EMPLOYMENT TAX. Congress is mulling whether to extend two provisions related to this. One is the reduction of the self-employment tax from 15.3 percent to 13.3 percent that’s in effect for 2011. If your taxable income is $50,000, you’re looking at a possible $1,000 tax hike if this 2 percent break gets taken away.

HEALTH INSURANCE DEDUCTION. “Up till now, self-employed truck drivers were able to deduct health insurance from income tax only,” Miller says. This year, that was broadened so that those insurance costs could also be deducted from the 13.3 percent self-employment tax. An owner-operator paying $2,500 in health insurance premiums, for example, gets a tax cut of $330 ($2,500 x .133). Whether this gets extended to 2012 is also up to Congress.

DEPRECIATION. Nothing is expected to change here, but make sure you know how to play the game to your advantage. Just because you can buy a new truck and take accelerated depreciation up to $105,000 in the first year to wipe out taxable income doesn’t mean you should.

Miller has seen ATBS clients take that big deduction, then turn around and sell the truck in a year or two when it’s still worth a lot. Problem is it’s worth little or nothing in the eyes of Uncle Sam because the owner shifted its depreciation to the fast lane. That means a big tax on capital gains. Those owner-operators are “making a decision for the moment,” Miller says.

Another reason not to depreciate for the moment is that even if you keep the truck, most owner-operators do better with the stability of taking depreciation over the normal three-year cycle. That cycle usually plays out as a partial year for the first calendar year, then two full years, then another partial year.

If you’re unsure about these or other tax matters, consult your tax partner. There’s no need to leave money on the table when an informed decision can keep it in your pocket.

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I would’ve thought brake problems were the number one equipment-related violation under the Compliance, Safety, Accountability program. Not so, according to Jeff Davis of Fleet Safety Services. Davis participated in a “CSA: One Year Later” panel discussion at the Commercial Carrier Journal Fall Symposium in Phoenix this week.

Turns out the top equipment-related violation is lighting. Perhaps not a surprise when you consider that when the sun’s down, light problems are obvious. So stay on top of those turn signals, license plate lights, etc. If you need a thorough checklist (or if you’re having trouble falling asleep), you can always read the Federal Motor Carrier Safety Regulations section on lighting.

The biggest driver violation, by the way, is log book form and manner. Log book not being current ranks second, followed by the driver not being in possession of a medical certificate, a driver not speaking English and hours-of-service violations.

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There might be lots of computers and televisions under Christmas trees next month, based on an October survey of the nation’s supply executives.

Manufacturing continued growing in October, but at a slower pace than September, according to the latest Manufacturing ISM Report On Business from the Institute for Supply Management.

Among eight factory segments with expanding activity, the top one was Computer & Electronic Products. It was followed by Petroleum & Coal Products; Food, Beverage & Tobacco Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Paper Products; and Machinery.

The six industries reporting contraction in October, in order, are: Plastics & Rubber Products; Chemical Products; Apparel, Leather & Allied Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; and Miscellaneous Manufacturing.

ISM also noted that while new orders, production and manufacturing employment grew in October, supplier deliveries slowed and inventories contracted.

“Comments from respondents are mixed, indicating positive relief from raw materials pricing and continuing strength in a few industries, but there is also more concern and caution about growth in this uncertain economy,” said Bradley Holcomb of ISM.

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If earnings at Landstar System, the nation’s largest owner-operator carrier, are any indication, owner-operators are having a better year than they did in 2010.

Revenue from freight hauled by owner-operators and brokerage carriers in the third quarter (ended Sept. 24) was $626 million, compared to $574 million a year ago, the company reported Monday.

Landstar’s bottom line for the quarter was quite good, too. The Jacksonville, Fla.-based company reported record third quarter diluted earnings per share of 64 cents. Total net income was $30 million, compared to $22 million last year.

“Recent trends in September, and thus far in October, indicate continued strength in revenue per load and load volume,” said Henry Gerkens, Landstar’s chairman, president and CEO in a prepared statement.

The earnings report beat Wall Street estimates. Perhaps owner-operators, too, will be surprised by strong freight demand and rising rates as the year finishes out.

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The economy’s still sputtering, but it looks like there will be lots of freight through the holidays. At least consumer goods and other cargo related to retail sales are doing well, based on recent reports.

Retail sales in September were up 7.9 percent versus a year ago, and 8.0 percent for year-to-date sales vs. 2010, according to the U.S. Department of Commerce’s report today. The 1.1 percent sales increase from August to September was the biggest since February, notes Bob Costello, chief economist for the American Trucking Associations.

That strength isn’t limited to retail. Manufacturing has expanded for 26 consecutive months, according to the Institute for Supply Management.

“Overall, the latest numbers suggest that the U.S. economy is not in a recession at the moment,” writes Costello in his weekly roundup.

Your neighbor might still be getting unemployment pay, but you should be getting plenty of miles for the foreseeable future unless you’re in a niche that’s taken a hit.

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