U.S. Chamber Member Ingredion Speaks Out on Impact of Infrastructure Degradation on American Business
Blog by Janet Kavinoky, originally posted on the U.S. Chamber of Commerce Website on February 26, 2015
Ingredion to Senate EPW: Reauthorize MAP-21 with Long-Term Solution
Dave Gardner decided he could no longer afford to remain silent about the state of the nation’s infrastructure system – so he took his case to Capitol Hill.
Gardner, vice president of supply chain and customer experience at U.S. Chamber member Ingredion Inc., testified Wednesday in front of the Senate Environment & Public Works panel, which has jurisdiction for MAP-21 re-authorization. The message was clear: American businesses need a long-term solution to today’s nationwide transportation mobility issues.
Ingredion produces hundreds of value-added ingredients for the food, beverage, pharmaceutical, corrugating, paper and animal feed industries, and is headquartered outside of Chicago, with a global R&D center is in Bridgewater, N.J. The company employs nearly 2,000 in the United States (11,000 globally).
Gardner’s remarks marked the first time Ingredion has testified before Congress. He provided Ingredion-specific examples of the impact of U.S. transportation system woes – troubles that are applicable to many other Chamber members.
With 13 North American manufacturing plants – seven in the United States, scattered from California to the Carolinas – a smooth-functioning surface transportation system is essential to Ingredion’s business and impacts the bottom lines of both the company and its customers. Because logistics represents a significant portion of its corn and delivered finished product costs, the company sees real and anecdotal effects of the failing system – from increased costs, variability in supply, poor service and even competitive disadvantages.
In 2014 alone, the company’s transportation costs increased by 3.6 percent, significantly outpacing inflation. Additional impacts include:
- More time to transport corn from the storage elevators to plants, resulting in millions of dollars in increased freight costs, higher manufacturing costs due to plant downtime and curtailed production.
- Decreases in average train speeds and increases in train delay time, causing an increase in product inventories, shortage of rail cars to transport Ingredion’s products and issues meeting customer demand.
- Increased rail volume through Chicago causing unprecedented delays – up to three days just to exit the Chicago metropolitan area. It can take up to five days to reach for rail customers that are just seven hours by highway.
- Because of these rail-related delays, Ingredion must often revert to trucks, which cost significantly more than rail and are prone to their own challenges, including limited capacity compared with demand, tightening regulation on driver hours of service, and deteriorating highway infrastructure.
As noted in Gardner’s testimony, increased transportation costs are impacting the broader American business community; in fact 87 percent of executives said that aging infrastructure had an impact on their operations in recent years, according to The Economist Intelligence Unit. As further support from the business community for a long-term solution, Chambers of Commerce in 42 states this week sent a letter to Congressional House and Senate Republican leaders and the chairmen of each chamber’s transportation committee, urging them to make passing a long-term extension of the Highway Trust Fund and reauthorization of the surface transportation bill “a top legislative priority.”
MAP-21 ended years of short-term extensions that had created a great deal of uncertainty for businesses like Ingredion; after several years of Band-Aid approaches to funding America’s transportation infrastructure, that uncertainty hangs over U.S. businesses and communities. It’s time to lift that veil for the benefit of Ingredion and all other U.S. businesses that play a role in driving our economy in the right direction. That starts with EPW leadership and a long-term solution that funds America’s highway and public transit networks and keeps us moving forward.
Janet Kavinoky is Vice President, Americans for Transportation Mobility Coalition & Executive Director, Transportation & Infrastructure at U.S. Chamber of Commerce