Are We Destroying the Dignity of Work?

April 19th, 2021

I had a conversation with a friend last week.  He is the classic American success story.  He came to the United States in 1997 from eastern Europe.  He had virtually nothing.  He worked hard and eventually started his own landscaping business.  He did what countless immigrants have done: he made sure his daughter did well in school.  He told me how she came to work with him one day as a teenager and she could not fathom how hard he worked.  He said, “I told her I do this so you do not have to.  Make me proud.”  She has.  His eyes lit up when he told me she just graduated with a master’s degree and secured a very high paying job.

He then told me that he is concerned about his business.  He is down from 7 to 3 full-time employees.  One former employee is collecting disability based on a claim my friend called “dubious.”  The other 3 are collecting unemployment because “it is easier than coming to work.”  His business has more work than ever but he is unable to get it all done.  He told me in a voice of someone who learned English as a second language, “Brian, I do not understand how the system can survive.  You cannot have three people working to support the other four.  The math does not work.  I do not understand how someone does not want to work.  One of the happiest days of my life was cashing my first paycheck.  What are we doing?”

As rumors of another stimulus plan are coming out of Washington D.C., I think he raises a great question: what are we doing?  An advanced society should have a safety net but people respond to incentives.  If that safety net encourages people who are capable of working to not work, that is what they will do.  Twenty five years ago, President Bill Clinton said, “Simply put, welfare reform worked because we all worked together.”  It is amazing and scary that no politician from either party today talks about getting people back to work; they talk about sending checks to people, even those that are working.  Our labor force participation rate is low again. This will not end well. 

Pay Attention to Washington D.C.

April 12th, 2021

While the country starts to open up and the population focuses on vaccine, Janet Yellen, the US Treasury Secretary gave a VERY important speech.  She is calling for a global corporate minimum tax rate.  Essentially, the US will agree to similar corporate tax rates as the rest of the world.  I don’t recall voting for any Europeans in the last election, do you?

Yellen said, “It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods.”  Why do I want to worry about (and indirectly pay for) European social programs?  This global tax initiative is yet another example of government entities taking more control.  We will be told this initiative is about “fairness.”  I wish we could ban the word fair from the English language.  It sounds good but is a meaningless word.   Will a government official ever talk about our spending problem? 

https://apnews.com/article/janet-yellen-minimum-global-corporate-income-tax-0a839a4705566a8b9f8bd5411bfe62d5

As if on cue, that great socialist, Amazon founder Jeff Bezos, said he supported higher taxes.  What a great guy.  If I were worth over $150 billion, I would want you to pay higher taxes too.  Higher taxes create barriers to entry.  Even when Amazon made no money, investors projected after tax income as part of their analysis.  Higher tax rates = lower future returns.  Amazon’s start up competitors will face a higher cost of capital.  Brilliant business and public relations move yet again, Mr. Bezos.  Well played.  PS, feel free to donate to the government if you so desire.  You can always pay more than what your taxes are.

It is somewhat ironic that a democrat, Tip O’Neill, is credited with saying, “All politics is local.”  Today’s democrats seem to have forgotten that messages.  Globalism sounds good in an ivory tower.  Remember how good China entering the World Trade Organization was going to be for the US?  Consumers benefited but the US worker got decimated.  Wall Street has done well in China too.   Did NAFTA help the US worker?  Any time a politician says something is good for us, I get nervous.    

Life Lessons and the Future of Office Work

April 5th, 2021

Our teenage son is playing high school lacrosse.  His team had a very intense game.  At a crucial moment, his team got called for a sideline penalty.  After the game (they won by one with a great comeback), we asked him what happened.  Verbatim, he said, “A kid swore on the sidelines.  It was a bull-$*&#* call.”

Without missing a beat, my wife quipped, “That was a good call.  We aren’t sending you to school to learn to swear.  If we wanted you to swear, we’d keep you home and #&(@&@ teach you to swear ourselves.  And we do it better than any kid or school could teach you!”  (Fortunately, she does not suffer the George Costanza-esque affliction as me. I think of what to say a few minutes too late.)  We had a good discussion about keeping your composure during tense situations.  It was a good life lesson for a fifteen-year-old that knows everything. 

As the debates rage on about what the future of office work will look like, I more and more side with the position that most people will be back in the office.  There are a lot of business behaviors that cannot be learned holed up in your basement by yourself and getting on zoom calls.  Just as kids need to be put in situations in order to learn how to act, so too do adults, especially those just entering the workforce.  For example, a young account executive cannot overhear a seasoned professional handling a difficult customer if she is not in the office.  There is a lot of learning by observing that takes place in professional environments.

Do certain jobs allow more work from home flexibility than others?  Of course.  But business is still a contact sport.  To advance your career, you need to be in the arena.  A flexible work schedule does not mean staying at home every day.  It’s time to get back in the $#&&#) office.

Dress For Success

March 29th, 2021

During Covid, I have had numerous conversations with a close industry friend.  We have laughed together, cried together, yelled a lot, and shared ideas about dealing with the challenges of the last year.  I think I can speak for him and say we have helped each other keep our sanity or what is left of it.

We had a discussion last week.  I will provide a sanitized version:

Me: “I have a real meeting tomorrow.  We will sit safely apart with masks on.”

Him: “I’m sick of zoom.  Wait – you have a real meeting?  What are you going to wear?  It’s been so long since I wore real clothes, I don’t think I’d know what to wear for a real meeting.”

Me:  “I’ve actually been dressing somewhat professionally when I go into the office now.  No suit and tie, but I’m not dressing like I’m working in the yard like I did for most of covid.  Remember what Gap and Blockbuster employees used to wear?  Button down or polo and khakis?  I’m dressing like that.  I think it helps me feel a little more professional.  Hopefully, I act that way too.”

Him:  “That’s a great idea!  Dress for success!  Change your dress, change your attitude.”

The next day, he texted me a picture of himself in khakis and a button down with the caption, “Pants are a little snug.”    Let’s stop feeling sorry for ourselves and embrace the present.  We cannot change the last year but we can change what we do starting today.  Don’t wait. 

Hello Inflation!

March 22nd, 2021

These headlines were on the front page of The Wall Street Journal on March 17th:

Housing Boom Boosts Prices for Wood, Copper and Bricks

Toyota, Honda to Halt Some U.S. Production Over Supply Shortages

Texas Freeze Triggers Global Plastics Shortage

Anecdotally, I talked to a friend that day who does a lot of business in the beer industry.  Lead times on cans are 8 weeks versus less than 2 weeks normally and the price of beer cans is up 30% this year.  It is one thing to have to wait to get a new car but God help us if there are canned beer shortages.  The outdoor drinking season officially kicked off on St. Patrick’s Day for those of us in the north.  Canned beer is the beverage of choice for safety reasons. 

I recently went to Costco.  A sign above the paper towels said, “Due to cost increases, we have changed the amount of paper towels on a roll from 160 to 140.  The number of rolls in the package and the price remain the same.  Thank you for your understanding.”  Let’s do a little math:  160 – 140 = 20.  20/160 = 12.5%.  For those of us keeping score, that is effectively a 12.5% price increase.  But the price of the package remains the same!  Costco is apparently taking lessons from ice cream manufacturers.  They started reducing the amount of ice cream in a package years ago.

Across the globe, there is too much money chasing too few goods.  Paying more for things is a challenge but the bigger challenge is going to be actually getting things.  We are used to having things in abundance.  Remember, we essentially shut down industrial production for several months last year.  We are feeling the effects of last year’s shut down in today’s supply chain.

It seems like decades ago but just about this time last year, there was a run-on toilet paper.  Stores put in purchase restrictions, comedians made jokes about it, and we moved on with our lives.  I hope things go that smoothly this time.  Hold on to your hats.  It is going to be a wild ride for the next few months. 

A Little Effort Goes A Long Way

March 15th, 2021

We recently moved and wanted to find a dentist closer to our house.  Unfortunately, I put it off until I had an emergency.  I cracked a tooth last weekend.  I woke up Monday morning in considerable pain.  I went down the list of dentist offices near our house and started calling around 7:30 am.  The first few offices I called were closed.  I dialed another dentist’s office and someone picked up the phone and got me in for an appointment that day.  Guess who became my dentist?

The dentist performed my root canal later in the week.  That night, the dentist’s office manager called to see how I was doing.  I do not recall ever getting a follow up call after a visit to the dentist.  I joked with her and said I just opened a beer to numb the pain.  She told me, “You should probably drink more than one.”  Guess who now has a patient recommending her dental practice?

Getting to work a little early and taking the time to follow up is not really that hard.  Yet most of us do not do those things.  Show your customers you care.  Put in a little more effort and you will be rewarded.    

The Punches Keep Coming

March 8th, 2021

Last week, virtually every vendor we have sent us notices that they are expecting shortages of critical chemicals due to the recent weather challenges in Texas.  We are being put on allocation for several products.  These allocations are optimistically expected to last 4 weeks, realistically last 8 weeks, and pessimistically last at least 12 weeks.

  As I have written in the past, it does not take a PhD in economics to understand when demand exceeds supply, prices go up.  Get ready.  As I have also written in the past, price becomes less important when you cannot get products.  Get forecasts.  Plan.  Please.  For the love of God, please plan.  Carrying extra inventory in challenging times is not a bad thing.  You do not need to hoard, but I do suggest you keep a safety stock.  Fire your just in time inventory expert.

A wise industry buddy of mine remarked to me, “2020/covid is like a soccer game.  They keep adding extra time.  As a fan, you never know when the game will end.  That’s how this feels.”  Extra time is a concept Americans do not understand.  In our sports, overtime has set time limits.  We all hoped the challenges of 2020 would pass with the calendar change.  That has not happened.  Yet.  Good times are ahead for those that survive our latest challenge.

Hard Work Wins

March 1st, 2021

Our son, a freshman in high school, is trying out for his high school lacrosse team.  His high school fields a nationally competitive lacrosse team year in and year out.  Before tryouts, the coaches announced that due to the anticipated number of kids trying out, they would be cutting from all teams, not just the varsity team. 

I picked him up from tryouts one night and of course asked him how it went.  He said, “It went OK.  I did some things well, learned a few new things, and know what I need to work on.”  He paused and said, “Dad, whether I make the team or not, I know I have to work my butt off if I want to play next year.  I’m going to work harder than I ever had.”  I almost shouted with joy.  I told him that is the key life lesson sports teaches:  if you want something, you must work hard. 

Especially in today’s work from home environment, it is easy to fall into a routine.  It is easy to say, “I’ll do that tomorrow.”  Challenge yourself.  If you are in sales, make an extra phone call.  If you are in operations, finish that Kaizen project.  Work your butt off.  Your competitor is. 

A Great Reminder About How Lucky We Are

February 22nd, 2021

I recently switched optometrists and had my first appointment last week.  My new optometrist is an immigrant.  We did a perfunctory introduction and she started my eye exam.  She used some fancy equipment to check something in my eyes and remarked, “This technology is wonderful.  It is amazing that we get to use the technology on everyone in this country.”  I asked why she said that.  She replied, “Most of the world does not have what the US has.  No access to technology, no freedom.  Yet most Americans are unhappy and complain.  Most of us don’t have real problems.  I volunteer at the VA.  A lot of those people have real problems.”

I thanked her for volunteering at the VA.  She then asked if I had been to this location before.  I told her that we had recently moved and this was my first visit.  She replied, “Oh, it’s great here.  Great community.  But be careful of the police.  They pull you over for speeding.  I get pulled over a lot!”  She paused and said, “I feel like a real American.  I’m complaining about something that I should not complain about.  In fact, I should be happy that the police keep us safe.”  We both laughed.

Her message hit home.  We are certainly living in challenging times.  It is easy to complain and be dissatisfied with how things are.  If you take a step back, most of us should be very grateful for where we are. 

Order Early (and Order Often)!

February 15th, 2021

I was ready to write a positive, uplifting blog. It probably would have been something about the winter doldrums are ending soon, vaccines on the way, blah, blah, blah.  Then one of our executives forwarded an email he received from a major material vendor.  This line was included:

We are full, full, full, out through Oct 1st for 1st delivery with an order today, crazy I know…

This email was dated February 11th!  Please re-read.  Again.  One more time.  Thank you. 

I have read it numerous times.  It still has not sunk in with me that we have an EIGHT MONTH LEAD TIME for materials.  This is a major component for a major product line we sell.  This email came from a sales rep at a significant company.  I know we are not their biggest customer but we purchase a good amount of product from them.  I do not think we are the only customer to get an email like this.  The company might be doing some hedging on the eight months but “months” is not a word normally associated with lead times for materials in our business.  We are not having custom equipment built.

We are trying our best to explain to our customers that the days of short lead times are gone, at least for now.  While 8 months is a little extreme, we are seeing lead times that were normally a day or two stretch to three to four weeks.  We are doing our best to adjust inventory levels and production schedules.

The next several months are going to have their challenges.  Start contingency planning with your suppliers today.  Talk to customers about their forecasts.  Buckle up.  It is going to be a wild ride.