My absence from the blog over the past few weeks is the product of a ridiculous travel schedule, and not only have I missed out on blogging, but quite a bot of important news has cropped up while I was out. I can't begin to cover it all, but I thought I'd share a few of the high points before we all wind down for the weekend.
You Got To Pay The Piper
And the amount you have to pay is, of course, a function of value. A guy by the name of Eric Wasser, who owns a company called Powell Flutes, knows this only too well. He cut the ribbon to open a new plant in Elkhart, Indiana to make his flutes – bringing production back from China and elsewhere – and said, "It cost us 20-percent of our sales because that’s what the import line represented, but that was a strategic decision on our part to stand for something." His take on China, value and technology is worth a read.
Along the same lines, our friends Down Under have caught on to the inevitable sweep of the value bandwagon. Coles merchandise director John Durkan says, "We don't have all the overheads of a huge marketing budget, all that proprietary stuff, so it's a much lower cost and that translates into the price the customer pays." So much for the notion that marketing adds value.
Rob Evenden from Woolworth's said, "Every product that we put on the market, we grab the market leader in the category and benchmark our product against it . . . if it comes up as acceptable to customers it goes into the range and if not, then we go back and reformulate it until we find something customers do like."
That value in the eyes of customers trumps everything else when it comes to the products we make is less and less debatable.
Gee … Ya Think?
I took macroeconomics at the University of Cincinnati – which barely qualifies as a real college – a long, long, long, long time ago, and approached the endeavor driven by the 'A C gets a degree' strategy, which means my understanding of economics is on par with your average middle school janitor. From the vantage point of my appalling ignorance the nature of the recession was obvious even to me a year and a half ago when I wrote that the economy "won't come back until Wall Street can line up more fools to pool their money to buy that high interest, high risk debt."
So what does that say about the academics and politicians who make up the Financial Crisis Inquiry Commission? These guys plan to "distill input from 700 interviews, millions of documents and testimony from hearings in Washington, Sacramento, Bakersfield, Miami and Las Vegas for a final, book-length report to be delivered to Congress by Dec. 15." When they are done distilling they will have figured out that, "The rush to profit from turning subprime mortgages into top-rated Wall Street securities encouraged loan originators, investment bankers and speculators 'to push risk tolerance to its limits.'"
Could of save a whole lot of time and money by just asking me … or by asking any middle school janitor.
This Oughta Be Good
Blockbuster Video is stiffing creditors for a billion bucks plus in bankruptcy court, and plans to keep its 3,000 company owned stores open, along with another 400 franchise stores. They apparently don't see anything wrong with the basic business model that led them to the courthouse steps.
In related news, "International manufacturer Flextronics this May joined with its customer Coinstar to announce its manufacturing plant in Creedmoor, N.C., had built and shipped 25,000 redbox kiosks to locations all over North America. Since then the plant has built and shipped a couple of thousand more of the devices that had a hand in changing the way consumers obtained, paid for and returned movies and video games."
"The plant has been focused on building one redbox unit at a time with a single-minded devotion. The 250 employees led by general manager John Mainey use the Six Sigma Lean manufacturing techniques designed to cut waste, reduce excess effort, address defects and keep the assembly line moving."
Who do you suppose is going to win that one?
It's A Cultural Thing
Some of the media is making a big deal because "autoworkers in Detroit were caught on camera drinking beer and smoking marijuana before heading to work at the Chrysler plant that President Obama praised in a speech just two months ago." I think they are missing the bigger picture. I don't think its a coincidence that these guys start drinkin' and smokin' at 11:00 AM in Detroit. That happens to be 5:00 in Turin – the home of Fiat, Chrysler's new owners, and 5:00 is the universal start of happy hour. I think the media might want to consider the possibility that Fiat leadership should be praised for their inclusive attitude – when the boss drinks everybody drinks. Give these guys a break.