Lee Bright: My Story
Business is tough and Washington is not making it any easier.
The relentless destructive forces that Federal government policies inflict on American business and employers are exactly why I’m running for United States Senate.
Between 2007 and 2011, there were over 43,000 bankruptcies just in South Carolina. That number grows substantially when you include businesses that failed or closed-up even if they did not end in a technical bankruptcy. Unfortunately, my own business was one of them.
Please allow me to tell you my story and explain why I think I understand better than most what is happening to our country.
In 1997 I was working very hard and had been successful as a salesman in the trucking brokerage industry when I made the decision to forge ahead and start my own business.
That year I incorporated On Time Transportation and On Time Trucking in Roebuck, South Carolina: On Time Trucking was a brokerage while On Time Transportation was a nationwide logistics company specializing in volume LTL (less-than-truckload) shipments.
With a lot of hard work, the business grew substantially. In less than six years we were grossing in excess of $10 million and running scores of trucks to all parts of the continental United States. At the peak of the business I was able to create jobs for over 100 people.
Anybody who has ever run a business can testify to the mind-boggling costs of government regulations. Naturally, we also had to hire accountants, lawyers and consultants, just to keep compliant with 48 different state-regulators, the Federal government (particularly the IRS and Interstate Commerce Commission), all the while fending off the Teamsters union.
And then there are the taxes and fees. As a business-owner I paid income taxes, corporate taxes, capital gains taxes, property taxes, Social Security taxes, unemployment insurance taxes, Heavy Highway Vehicle Use Tax, excise taxes, fuel and mileage taxes in every state we so much as drove through (and each state has a different tax rate), USDOT fees, Federal Motor Carrier Safety Administration fees, an annual fee for Unified Carrier Registration, and on and on.
Our biggest single headache, however, was the maze of legal paperwork that is the worker’s compensation system. On top of that, you can add the trial lawyer industry which is perpetually scouring the earth for clients to sue companies like mine. This means we had to carry substantial insurance coverage as well.
In business you make many decisions. Sometimes they turn out to be smart and sometimes they go sour. Of course, I take full responsibility for the decisions I made but, if you’re not directly involved in the private sector, you may not realize exactly what our government — Federal, state and local — is doing to American business.
When terrorists attacked America in 2001, there was an enormous increase in government subsidies, mostly to the airlines and the financial sector. Spending increased even more once the wars in Afghanistan and Iraq were launched.
The Bush tax cuts helped some, but government interference in the economy continued to negatively impact business and employers. Nevertheless, in 2003, On Time Transportation was named by the S.C. Chamber of Commerce one of the top 25 fastest–growing companies.
In May 2004, in anticipation of growing the business with a large customer I signed a 3-year warehouse lease. Unfortunately, the textile trade which was huge in the Upstate was draining away as a result of NAFTA and other government policies.
When that customer bailed at the last minute, I was stuck with a $15,000-per-month lease in a market flooded with the empty warehouses of once thriving textile businesses. I had made a decision based on the expectation of growing with that customer, but I had been wrong.
By 2006, I continued to see a steady drop as more of my customers were being driven out of business. This left us with over $300,000 of unrecoverable accounts receivable. Although not yet readily apparent to the general public, the American economy was slipping into severe recession.
But, of course, the Federal government is always there to help, right?
Even though trucking companies were struggling, the Environmental Protection Agency announced new “green” regulations for all American-owned trucks. Diesel engines, which for a hundred years had been powerful, durable, and efficient, would now be “fixed” by bureaucrats.
The EPA and Department of Justice sued seven diesel engine manufacturers, and forced them to pay civil penalties of $83.4 million. They also had to agree to spend over $850 million to develop the new engines Washington wanted. These costs were passed right along to consumers.
A trade publication, Fleet Owner, tallied the costs: “About $1,800 to $3,000 was added to the base cost of a Class 8 truck [any vehicle above 33,000lb GVWR] in 2002 to meet the first round of emissions regulations. For 2007, an extra $5,000 to $10,000 got tacked on to Class 8 sticker prices, followed by another $6,700 to $10,000 extra in 2010 to meet the final round of emission mandates.”
By 2010, that meant roughly $13,500 to $23,000 extra per truck to satisfy the bureaucrats.
Detroit Diesel Corporation estimated that, as a result of the new rules, fleet maintenance costs increased an extra $367 on average per truck, per year. And that’s when the truck was new.
As a result, in order to stay competitive, we had to scratch up the capital and buy three year’s inventory of new trucks before the regulations took effect. After all, nobody wanted to absorb the high costs of the “new” engines or the potential problems with this untested technology.
These mandates had a perverse effect. While creating a short-term boost for new truck dealers, the used market was flooded. Since only American-owned companies were affected, Mexican truckers could buy at fire sale prices and, thanks to NAFTA, compete directly with us.
The Feds weren’t done yet.
Largely as a result of the U.S. government’s so-called energy policy, the price of diesel fuel rose 400%, and by Summer 2007 diesel prices were closing in on $5 per gallon. The Feds then required trucks to use new ultra-low-sulfur diesel (ULSD). Research by the American Trucking Association showed that ULSD added between 5¢ and 13¢ per gallon to the price at the pump. In a highly competitive market with very narrowing margins, that’s a killer.
As the economic slowdown became more pronounced, consumers continued cutting back on their spending. That meant significantly reduced freight volumes and more bad news for trucking.
It should come as no surprise that during this time, trucking industry bankruptcies reached epic proportions. During the first three months of 2007, some 385 trucking companies, with a minimum of five trucks, went out of business; a 24% increase over the same period in 2006.
Of course, anybody who was trying to make a living in 2008 can never forget the economic collapse: the “Great Recession”. I remember distinctly sitting in my office that day in September, trying to figure out how to pay the bills, when they announced the collapse of Lehman Brothers.
The Federal government would ultimately spend billions of tax dollars bailing out banks and major Wall Street firms. We will never know exactly what went on when New York Federal Reserve Chairman Timothy Geitner and Treasury Secretary Hank Paulson were picking winners and losers, but one thing is for sure, nobody was looking out for ordinary American business.
One direct consequence of TARP on my business was that stricter banking regulations meant that in December 2008 the bank that had financed our receivables told me that, effective January 1, they were out of that business. We had 30-days during Christmas and New Years to find a new factor to finance our receivables and negotiate a contract.
At that time, I had agreed to run for the State Senate and took my seat in January 2009. I must confess that, as a part-time legislator, I was somewhat naive about the costs public service would impose. Time away from the office attending Session and committee meetings underscored for me why so few businessmen ever agree to run.
As the months moved on, we faced a growing attrition of customers and increased competition as larger trucking companies scrambled and moved into our volume LTL business. In November 2011, the factor we had rushed to hire, disputed our transactions and seized our outstanding accounts receivables. Lacking the cash to hire a lawyer and sue the factor, my business failed; I had to lay off all remaining employees. It was heart-breaking to say the least.
Several of my business advisers urged me to just fold up and walk away. I didn’t want to do that because I felt an obligation to my employees and their families. And I wanted to do my best to repay the folks I owed money to. Despite my best efforts, that didn’t work out and I’ve now been sued by a few creditors. We are in the process of straightening that out, but it is a long process. My goal is to repay every creditor as soon as possible.
Currently, I make my living working with a business development company and running a trucking brokerage business.
Despite these setbacks, it is encouraging to me to know that some of my greatest heroes have been failures in one way or another: Patrick Henry failed as a farmer and a store-owner; Sam Adams’ life included several failed business ventures and he was sued by the colonial government; and Thomas Paine was fired from his job, started a tobacco shop which failed, and he then had to sell his house to stay out of debtor’s prison.
In my last race for the State Senate, my opponent called me a dead-beat and a tax cheat. I expect the same treatment in this race, but I assure you nothing could be further from the truth.
America faces some serious challenges. If we don’t get the government off the backs of businesses and employers, the only option will be a slow descent into Socialism.
I don’t want that to happen.
Now you know my story. The question now is, during the 18 years Lindsey Graham has been in Washington, why hasn’t he done something to stop the government from ruining our economy?
I believe we need folks with common sense who understands the effect the burdens of the Federal government place on our economy. I hope I can earn your support.
Lee Bright represents Spartanburg County in the South Carolina Senate. He is currently a Republican candidate for the United States Senate.