Sounds of Silence

Nov. 19, 2007
Perry A. Trunick, chief editor, [email protected] There werent any reports of crates of tea floating in Lake Michigan, but the state did witness
Perry A. Trunick, chief editor, [email protected]

There weren’t any reports of crates of tea floating in Lake Michigan, but the state did witness a quick and decisive tax revolt.

With corporate resources stretched thin, it’s difficult to know what’s happening in every corner of the world where you operate. But a major multi-national customer of one Michigan 3PL knew enough about a tax provision that would affect warehousing in the state to approach its 3PL and raise the issue. Luckily for the CEO of that 3PL, he could report his company and the industry were already responding.

The Michigan case was truly an 11th-hour effort by legislators to meet a constitutional deadline to balance the state budget. In their rush to plug a gap in the budget, the lawmakers invoked the law of unintended consequences. While they were aiming for the self-storage industry, the tax bill included independent warehouses.

In a stunning example of just how quickly and effectively an industry group can mobilize, Michigan warehouse operators and 3PLs and their trade association, the International Warehouse Logistics Association (IWLA), hired a state lobbyist, contracted with Michigan State University for a study of the impacts of the service tax on independent warehouses, launched a Web site, and mounted a letter writing campaign and petition asking law makers to reverse the warehousing provision of the 6% service tax.

This isn’t the first time state lawmakers have aimed a tax at the self-storage industry and managed to levy an onerous tax on independent warehouses. Pennsylvania warehousemen and the IWLA successfully reversed a similar tax in that state in 1991. The issue resurfaced in 2006, but the warehousemen saw it coming and took proactive steps to stop the tax.

The narrow window of opportunity between passage and implementation of the tax was barely sufficient for a reasoned response, but the industry was able to support its argument and, at this writing, it looks like they’ll carry the day.

Bob Koerner, president and CEO of Michigan-based Total Logistic Control, acknowledged both the efforts of the IWLA and the challenges it and other industry groups face in finding leadership and support from the time- and resourcestarved executives in companies they serve. “It’s sometimes hard to see the fruits of your efforts,” says Koerner, but he finds they do accrue over time.

For industry groups to be effective, they need access to a lot of eyes and ears and hands and feet to identify issues and mobilize appropriate action on behalf of their constituencies. If it’s true that most associations are supported by a minority of those who benefit from their efforts, it’s also true that only a subset of those who pay dues can also provide time and manpower. That’s not a criticism; it’s a fact of life. With supply chains extending across international borders as easily as they cross state lines it’s increasingly difficult to know where you find your best return for your company’s (and your personal) investment. The need is as great as the resources are small, but as Koerner points out, “If you’re silent, you get what you deserve.”