The economic woes of 2008 have burdened the trucking industry into 2009. Some say relief is on its way, but how long will it take?
After 31 years working for General Motors, Victor Pizana of Lansing, Mich., accepted a buyout in 2006 to chase the dream of starting his own business. He bought a big rig and started E&A LLC with his son Alex.
Pizana maintained some ties to GM, hauling for the company. “I wasn’t getting rich, but I was making all my payments and the guys were making money and prospering,” Pizana said in a CNN interview. “We were thinking, ‘What could go wrong?'”
Less than two years later, Pizana handed his last truck over to the bank just to avoid bankruptcy. “I never thought I’d get in this world of a mess after I retired, because the business was working so well,” he told CNN. “But I lost all my retirement money and all this stuff, my truck and my equipment and everything like that, so now I just got to start over again.”
Pizana is one of many victims of a mightily struggling economy. More specifically, he’s one of many in the trucking industry who’ve seen hard times as a result of the freight slowdown.
To an umemployed driver, relief may seem far in the future, whereas many fleets remain optimistic that it’s just around the bend. Based on history, relief will come. The question is when.
How we got here
The roots of the downturn can be traced to problems in the housing sector. In 2005-06, adjustable mortgage rates began to skyrocket. Many consumers defaulted on loans, resulting in 1.3 million home foreclosures in 2007.
Banks began failing. In March 2008, investment giant Bear Stearns was bailed out by a $29 billion non-recourse treasury bill; in September, Lehman Brothers declared bankruptcy, and Bank of America agreed to purchase Merrill Lynch for $29 a share. The U.S. government bailed out mortgage powerhouses Freddie Mac and Fannie Mae, then tossed a total of $700 billion at the financial sector in hopes of staving off even worse economic times. Meanwhile, stocks plunged.
Fuel prices soared, as did unemployment. On Sept. 5, 2008, the U.S. Department of Labor issued a report that unemployment rose to 6.1 percent, the highest in five years. In total, the DOL says the U.S. economy lost 2.6 million jobs in 2008, and 1.9 million of those came within the last four months of the year.
The myriad problems fed cancers in the automotive