Ken Nelson

 
A good thing

Somehow, about a year ago, I got on an auto dealer sales “how to” e-mail list. Normally, I just unsubscribe, but this look into the heart of the beast interested me.

Now, my subject above reads more into this article by Dennis Galbraith, and is clearly biased by my firm belief that car dealers (new and used) are among the most amoral evil rationalizing humans that exist in polite culture.

I’ve always been dismayed that the same car, even at the same dealer, would cost different based on the negotiating savvy of the buyer. I recognize their right to sell that way, but it always seemed wrong because it took advantage of people that really couldn’t afford to be taken advantage of.  One of the leading causes of financial distress of my employees is stupid car deals. Well, let me re-phrase that… stupid employees doing stupid car deals. Sure I know they are dumb, but basing a business model on exploiting the dumb seems… wrong.

According to Mr. Galbraith ubiquitous information about pricing, both OEM and from other dealers, means that the negotiated price sales model will become slowly dead.

With transparency into market prices, negotiating does not make as much sense as it once did. Posting a higher starting price, rather than an aggressive offer price, results in fewer shoppers contacting the store.

This is very true. I just bought a van. I used online tools to find exactly what I wanted across a very wide geographic area. I ended up scoring an excellent deal in Texas, buying the van based on about 60 photos and excellent recommends from other customers of the dealer.

There was no negotiation. The sale was pleasant, easy, and quick. Hallellujah!  It only took 100 years.

Negotiated pricing is still with us. The VW place I visited here in St. George used it when I briefly considered a Jetta TDI instead of a van. But they were never getting my business. I needed to see the car. But I had, in my pocket, a smart phone with prices and options for hundreds of TDIs from here, Las Vegas, Phoenix and Southern California.

Thank you Internet!

We charge for this               but provide this

Intel CEO says it costs $1 BILLION extra to put a $4 billion dollar factory in the U.S. :

The rub: Ninety percent of that additional cost of a $4 billion factory is not labor but the cost to comply with taxes and regulations that other nations don’t impose.

In return for that extra money he then gets an ongoing fight with hostile state and federal governments, higher wage and labor costs, a zillion lawyers, and the 2nd highest corporate income tax rate in the world.

Gosh.. wonder where the jobs go?

I’d have done this, but had no ketchup at our table

I’ve been traveling for 1.5 months now.  This has me eating out a lot more than normal, as well as shopping and interacting with “staff” a lot more than in my typical life.

And it hasn’t been pretty…

Service has declined. I’m pleased to report that surliness hasn’t increased, blessedly, but I’m definitely experiencing consistently poor service.

First… kudos… Allegro Towers in San Diego. A fine, helpful staff that was awesome. Second, Aqua Adventures – kayaking in San Diego, terrific as well. As were the folks at the San Diego Bike Shop (on C street).  These folks are all at the tip of the recession – in businesses where people can cut back first. They know it and respond with excellence.

Alas, elsewhere, the picture wasn’t so pretty. At movie theatres (audio fails, 1/2 hour wait), restaurants (30 minutes, no sushi), sailing charters (boring), car service centers (left tires 30 pounds low resulting in freeway blowout), and ESPECIALLY hotels (how many beds did you need?), service has been consistently poor.  I hate arriving at a hotel at 9PM after a driving struggle, and taking 15 minutes to check in. How hard is it?  I booked a reservation, you have all my info, GIVE ME MY KEY! Yet, even now in 2010, I’ve got people taking rubbings of my credit card and needing to know my license plate number. Silly.

Others have noticed as well. As we waited in line at Borders last night, the folks around us were restless. They reported bad service as well.  I speculated it was because of staff cutbacks and that the existing staff were just overworked, and possibly that because they were likely newer (cheaper) workers, or relatives, they might not have the chops to do it right.

As you may know, my house flooded (broken water line) whist in San Diego.  It will be a big repair job, and since I’ll be living out of hotels for the next couple months, I’m not looking forward to more of this “Obama” era service.  Nope… I long for the good old Bush days, when folks were too busy to help you, but when they did, they generally did a good job of it.

Postscript…. Even Google has let me down.  Normally, I document my experience with a business on Google Places (an app on the Android phone).  For instance, I wanted to caution folks about last night’s Days Inn, or yesterday afternoon’s 30 minute no sushi place. Alas, Google Places wouldn’t let me review or rate them and kept crashing.

That is what they are afraid of – low prices, always.

The WSJ details the activities of the Saint Consulting Group today. They specialize in anti-Walmart grass level activities. Who funds them?  WalMart competitors. Who loses? You do.

Supermarkets that have funded campaigns to stop Wal-Mart are concerned about having to match the retailing giant’s low prices lest they lose market share. Although they have managed to stop some projects, they haven’t put much of a dent in Wal-Mart’s growth in the U.S., where it has more than 2,700 supercenters—large stores that sell groceries and general merchandise. Last year, 51% of Wal-Mart’s $258 billion in U.S. revenue came from grocery sales.

They have a right to hire lobbyists.  The real problem is that government has too much power.

Tax witholdings are down.

Below is an update of the most recent US Treasury tax withholding picture. As one can very plainly see it is getting worse, on both a week over week, a YTD cumulative basis, and, probably most relevantly to some readers, on a 4 week running bucket cumulative basis.

For withholdings to increase,  workers have to get a pay increase, or more workers have to earn. Neither are happening.

I’m not hiring people, well except for Kay the intern who will work the summer (paid).  I’ve no serious plans to invest in new employees that take hundreds of thousands of dollars to pan out and then the government takes half the profit if what they build sells.  By minimizing return, they minimize my efforts. They reap what they sow.

They blame me, or anybody else, and will just try and impose a VAT or higher taxes. Because we work for them, not the other way around.

Our system is royally screwed up. Our leaders are narcissistic psychos. Our population dependent and generally stupid.

I feel like we are pretty hosed. Wish I didn’t. But my analytical mind sees nothing good ahead.

News reports will say that Glen Beck “made” 32 million dollars last year.

ACTUALLY… his company had REVENUES of 32 million dollars. A tidy sum, but hardly what he ‘”made”.

And no matter how much he took home, the government took home more.

You don’t want to get into one of those… believe me!

In statements and letters, Anthem and WellPoint have explained what the industry calls a recessionary death spiral: as unemployment and declining wages prompt healthy people to drop their insurance, the remaining risk pool becomes sicker and more expensive to insure, which in turn forces up prices and pushes more people out of the market.

I’m sure that Anthem is screwing its customers as much as it can get away with. But the ONLY reason that happens is that California and the Federal Government have driven out most insurers from California.

If Anthem is screwing you, switch. Ooops… nobody home?  Well, bitch to California, not to a business trying to earn a buck.

For Barry. Who, with his cabinet, has next to no business experience.

There seems to be some confusion by the President about why employers, like me, hire people.  He really doesn’t understand business very well.

Let me clear it up for our President…

We don’t hire people to improve the “jobs numbers”.

We don’t hire people to snare small amounts of one time government loot.

We don’t hire people cause we like people.

We HIRE people so they can MAKE MONEY for us.

Corollaries to the above:

We DON’T borrow money to hire people.  Once you pay a person that money is gone. Rare is the employee that can generate his pay + excess to repay money borrowed to pay him.

We DO borrow to purchase assets.  Money in an asset is just money shifted, not gone (we hope).

We DO borrow to smooth short term cash flow issues based on when we buy components and when customer pay for what we built. But that is AFTER the demand, not before.

And an FYI… money to purchase assets and smooth cash flow and other normal business lending is readily available. If you walked into a banker 5 years ago, or today, to borrow money to “hire people” you would be denied and then laughed at after you left.

The only way to fly – wish they went overseas too.

The airlines continue in their self-destructive cycle of mistreating customers. This time American Airlines will charge for blankets.

Beginning May 1, coach passengers on American’s domestic flights that last more than two hours, as well as those on flights to Hawaii, Canada, Mexico, the Caribbean and Central America, will have to pay $8 for a blanket and inflatable neck pillow. The airline will throw in a $10 off coupon for purchases of more than $30 at Bed Bath & Beyond stores.

Southwest, which isn’t unionized, will continue to grow, be profitable, not charge for baggage and get my business.

The US government has 2.15 million employees. Walmart has 2 million employees.

Except for the military, the US Government’s work force largely has a reputation for incompetence and bureaucracy. These are the people that bring you the TSA, IRS, and countless other lettered agencies designed to be as unresponsive to the customer (you) as possible.

Compare to Walmart, with 2 million employees, all devoted to bringing me better products for better prices. I’ve met a dud or two working at Walmart, and while many of them may not be rocket scientists, they do know how to get me my stuff cheap.

I’d rather Walmart’s 2 million solve healthcare than D.C.’s 2 million.

I’d rather Walmart’s 2 million get me my mail than D.C.’s 2 million.

I’d rather Walmart’s 2 million feed the hungry than D.C.’s 2 million.

Do you doubt they could do it?  I don’t.

Oh there are some things the Feds need to have workers to do. For instance, the military. And the State Department. And that is about it.

When I lived in D.C. it was clear to me that everything on the west side of Independence Avenue could fall into the Potomac and the nation would be just fine. I’ve modified that notion to believe that the nation would be BETTER off if that happened.

We’d be a lot better off if the Government did a LOT less and places like Walmart picked up the slack.

No bailer outers need apply

They laid off 11,200 jobs last year, and 300 yesterday:

Duke said an essential part of Wal-Mart’s culture is always striving for greater efficiency. He said the company’s new fiscal year, which began Monday, is off to a productive start.

I wish our government had a similar culture.  A flat tax would make everybody equal shareholders and force the government to be efficient.

vs
Who has a better balance sheet?

Toyota struggles. It reminds me that no matter how good you have it, things could go severely haywire overnight. Everything could fall to pieces and you stand there wondering “what the hell just happened”.   I know, it’s happened to me. And I survived only because I’d prepared for just that occasion. Prepared emotionally (how to handle problems), financially (building up reserves), and in relationships (people willing to help). They all work together.

The point… Toyota will suffer, but survive and thrive. They have the corporate culture to do so – and.. .A VERY IMPORTANT AND… they have bazillions in the bank.

Compare and contrast to the U.S.     How does our culture look? Is it getting smart? Less corrupt? Which direction would you say our culture heads?  And how much, exactly, do we have in the bank? And what trend do our finances follow?

In other words, I’d bet on Toyota more than us right now.

I know it isn’t patriotic to say we suck, but looking at the details, I can come to no other conclusion. Sorry. 

Pollyannas will cry “this is the greatest country ever”. I’d mildly correct “was”.

Ooops, I mean the Secretary of Transportation.

 
Not trusted and not that pretty. What’s with $14 mil a year?

Is Katie Couric worth $300K a week (or $14 million a year)?

No clue. But I’m pretty sure CBS knows if she is worth it. They have polls, q-ratings, viewer focus groups – they know what she is worth.

So I’m not going to bitch about what she makes. But I’d certainly ask her to recuse from reporting on other “over paid” executives. Or to note, during a report, that they could only dream of making what she makes.

Not that I’d ever see it. I don’t watch CBS news, or any other broadcast news.  Ever.

My own, admittedly uninformed view, is that while anchors used to be “trusted”, now they aren’t. So any pretty blonde will do.  Fox News has a bevy of them,make a $500K offer and I’m sure one of them would happily jump ship to read a teleprompter a few blocks over.

Obama promises $5K per new hire to employers that have payroll and employee growth in 2010

First off… $5K won’t entice me. That won’t even pay a 1/4 of a new hire’s healthcare costs, much less make a dent in their payroll tax costs ($12K on average).  And, you know what, I’ve got to keep paying them in 2011 and 2012.  Nope, my hiring, as for ALL other businesses, will be driven by core economic issues as well as opportunities that employees can help capture.

The knowledge, however, that our government continues to be idiotic and so wasteful does make me highly UNLIKELY to hire anybody.  And it makes me think that our economic woes, largely government driven, will continue for the foreseeable future.

This Obama plan reminds me of the rooster that claimed the sun came up because he crowed.

Some companies will hire and expand this year. Their accountants will notice this tax credit and apply it. The government will then claim those jobs as ones they helped grow, confusing correlation with causation.

At the end, no more jobs would have been created, debt will have risen, and an un-measurable number of jobs would have been stifled due to fear of more government stupidity.