By Andelman, David A.
Management Review , Vol. 87, No. 3
Every day, businesses send out delivery trucks to cover rough and crumbling terrain so that they can meet customer demand. Unbeknownst to them, the highway fund issue also continues to deteriorate, but in political debate.
Last year, 3M Corp. moved 900,000 trucks more than 100 million miles on America's roads, bringing supplies to its manufacturing facilities and delivering finished products to customers. This process has become increasingly laborious, time-consuming, expensive and even dangerous. But 3M and most other American corporations have no other choice.
The problem stems from the state of America's highway system, which is crumbling and getting worse. Of 3.9 million miles of public roads and 575,000 bridges more than 20 feet in length, nearly one-third are in poor or mediocre condition, needing repair or replacement.
"We need to increase what we spend on roads and bridges by $20 billion a year just to keep them the way they are, which isn't very good," says William Fay, president of the American Highway Users Alliance. "We'd need to spend $40 billion a year more than we're spending now to improve them."
The U.S. transportation system just hasn't kept pace with the way America travels or does business. High-tech inventory tracking and just-in-time delivery make the on-time arrival of raw and finished products more important than ever before. As an example, a senior official of Wrangler jeans recently attributed 24 percent of the lost market for his products to not having a pair of custom-made jeans in a store when the customer wants it. Increasingly, manufacturers are telling their suppliers that they expect parts they ordered weeks ago to be on the loading dock between 2 and 3 p.m. on the promised day. If the parts arrive after 3 p.m., they cancel the order.
"The supplier knows [the product is] coming off the assembly line at the right time," says Fay. "The unknown is whether the beltway around Columbus is going to be congested once it gets there." A number of factors can cause these traffic jams: too many vehicles for too few highways, the collapse of weak and deteriorating pavements and bridges and emergency roadwork. In fact, according to the Keep America Moving coalition, congestion costs the U.S. economy almost $1 billion a week, or 551 billion a year--including the costs of travel delays and excess fuel consumption.
While the condition of American highways and bridges is clearly the problem, the solution--additional funding--also requires attention because the money needs to be more efficiently allocated and spent. Debate over highway funding, one of the most highly charged issues before any Congress, creates an impasse. And, as have many in the past, the last Congress passed the buck to the new one. Once again time is running out. In fact, it has officially done so.
Last September, the six-year federal highway authorization act expired without Congress having approved a new one. A $218.3 billion renewal of the Intermodal Surface Transportation Efficiency Act (ISTEA) died amidst partisan and regional disagreements. While senators and representatives from the old Northeastern states, which have deteriorating infrastructures, clashed with their Southern and Western counterparts over how much money each region might claim, Senate Democrats sought to hold their Republican colleagues hostage by staging a filibuster on the highway measure until Senate Majority Leader Trent Lott agreed to take up campaign finance reform during the next session of Congress.
Instead, the last session of Congress passed a six-month extension of existing highway-funding legislation that allows 1,900 projects already in the pipeline to continue uninterrupted. All sides, however, recognize it's just a short-term fix.
"The majority of work on our federal highway system is in just maintaining that system," says William D. Toohey Jr., senior vice president of the American Road and Transportation Builders Association. …