Archive for the 'Business' Category

As I retired from a relatively uneventful career in the peacetime Air Force in 1997, I’ve been out of the military for longer than I was in it. I don’t hang around so much in military veteran circles online as I did early in the decade afterwards, when my daughter was serving in the Marines after 9/11 and deployed to Kuwait and Iraq. But she does venture into veteran social media circles, on a local basis through organizations and outlets like Bourbiz, Grunt Style, Ranger Up, and Black Rifle Coffee … and she called my attention to what amounts to a dumpster fire ongoing in veteran circles. Holy heck, it’s more a raging nuclear inferno than your plain ordinary social media dumpster fire. Read the series of articles, she said, it’s jaw-dropping – and so I did. Oh. My. G*d. I thought the Vietnam-era “stolen valor” incidents so thoroughly documented in this book were the far frozen limit, but this Steele character appears to have ventured into hitherto unexplored dimensions. Read the rest of this entry »

As the Deity is my witness, I swear that certain of our elected officials at the state and municipal level are holding a contest to see who can be the most petty, obnoxious, contradictory, and unreasonably dictatorial boot stamping on a human face in the wake of the Wuhan coronavirus. (Yes and I will call it the Wuhan coronavirus, or maybe even the Chinese Commie Crud; I owe nothing to the Chinese Communist Party, nor do I expect to sell books in China, so bite me, Premier “Winnie the Poo” Xi, you and your running-dog lackeys in the American media.)

Lets’ see – Governor Gretchen “Karen” Witmer was making a strong showing for most of the last few weeks; stupid and illogical orders as to what was essential and what was not; yea, even to the point of roping off aisles in general-purpose stores. You could go to the store, look at the merchandise which was sitting right there, in plain sight … but because Governor “Karen” had ruled, in her inexplicable wisdom, that certain items were not essential … you could not purchase them. You could, in fact, order them through the store website … but you could not actually pick up the item and schlep it to the cashier yourself. Governor “Karen” also, in her infinite wisdom, decided that the same quarantine/isolation practices that were marginally appropriate for the Big City in her state were also appropriate for the far-distant rural counties, where one might have to actually arrange for someone with the Wuhan coronavirus to come and cough on you. Governor “Karen” also claimed to see Nazi and Confederate banners at public protests objecting to her idiotic policies. So, not only stupid and illogical … but delusional. If she was auditioning for a spot as the Dem VP-nominee, I suspect that she has bombed the audition. (But one never knows. Like idiocy, there seems to be an infinite and boundless supply of delusions of competence on the part of our current political leadership in blue states.) Read the rest of this entry »

The consulting firm Kearney updates their numbers on the foreign sourcing and US manufacturing of products.  Lots of interesting data.

Malls were the latest, trendiest, most oh-there thing in retail development about the time that I was in high school and college. There were a couple of them that I went to, early on, and they were … OK. A nice diversion if one was in the mood or purse for retail therapy. Most of them were enclosed, two or three levels, almost always expensively decorated, adorned with plantings, sometimes with dabs of architectural creativity here and there. All of that made sense in places where the weather was bitterly cold for at least half the year or boiling-hot for three-quarters of it – still does, in the upper mid-west and mountain west, especially in snowy winters. It was, however, a serious and time-burning excursion to go to the mall; finding a place to park nearest an entrance, walking … and walking, and walking, and carrying whatever you had purchased. If there was a nice and varied selection of shops, not wall to wall big chain outlets, exactly the same as every other mall – so much the better.
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There are, of course, many items that could be placed in a risk register for our ongoing management of COVID-19. I find myself drawn to those categorizable as, or perhaps triggered by, human perception and behavior. By way of limiting the scope of this post to reasonable attention spans, here are my current top 3: Read the rest of this entry »

There are lots of hopeful reports — despite the USA COVID-19 infections being over 1/2 million and the total deaths of over 20,000 people — that the pandemic will soon be “Over.”

This is fantasy thinking at best.  SARS-CoV2/COVID-19 won’t be over, until it is over, for YEARS.

“Over” being defined as world wide mass vaccinations to the tune of 70% of humanity or human herd immunity.  Assuming such a thing is possible, which it may not be, given this recent report from the UK Daily Mail on post SARS-CoV2/COVID-19 infection immunity —

Blow to Britain’s hopes for coronavirus antibody testing as study finds a THIRD of recovered patients have barely-detectable evidence they have had the virus already

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– Nearly third of patients have very low levels of antibodies, Chinese study found
– Antibodies not detected at all in 10 people, raising fears they could be reinfected
– Explains why UK Government repeatedly delayed rolling them out to the public

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https://www.dailymail.co.uk/news/article-8203725/Antibodies-prove-difficult-detect-Chinese-coronavirus-survivors.html

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Related studies:
Wu F et al. Neutralizing antibody responses to SARS-CoV-2 in a COVID-19 recovered patient cohort and their implications. medRxiv 2020.03.30.20047365; doi: https://doi.org/10.1101/2020.03.30.20047365

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and

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Zhao J et al. Antibody responses to SARS-CoV-2 in patients of novel coronavirus disease 2019, Clinical Infectious Diseases, , ciaa344, https://doi.org/10.1093/cid/ciaa344
total by July 1st 51,197

Or this South Korean story on coronavirus “reactivation” —

South Korea reports recovered coronavirus patients testing positive again
APRIL 10, 2020
Josh Smith, Sangmi Cha

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https://www.reuters.com/article/us-health-coronavirus-southkorea-idUSKCN21S15X?utm_campaign=trueAnthem%3A+Trending+Content&utm_medium=trueAnthem&utm_source=facebook

The issue with most COVID-19 tests, like the ones mentioned in South Korea, is they detect SARS-CoV2 RNA. They do not detect whether the viral particles are active or not. The issue here is whether these people are shedding active viral particles that can re-infect people.  We don’t know if that is the case here from the story text.  Given how infectious it is.  This coronavirus will tell us in due course.

There are some viral diseases like Herpes that hide inside your body and reactivate to make you infectious. We do not know enough about the SARs-CoV2 virus to say whether that is the case here.

If the SARS-CoV2 virus is like Herpes in that once contracted, it never goes away and flares infectious several times a year.

And there is no herd immunity for some people no matter how often they are infected.

Then we will need multiple, cheap,  out-patient style “cure-treatments” as well as multiple vaccines, based on co-morbidities, and possibly to account for racial differences like sickle cell blood mutations, as SARS-CoV2 may well be more a blood disease than a respiratory infection in terms of it’s killing mechanism.

See:

There is not enough reliable data, d*mn it!

Until we get to “Over,” our old economic world of Just-In-Time, Sole Source anywhere, but especially in China, is dead without replacement.

The world is in the same position as Germany was from August 1944 – April 1945 or  Japan from August 1944 until August 1945 versus the Allied strategic bombing campaign.  We have entered the world of  “End Run Production“ as world wide supply chains grind to a halt from various fiddly bits of intermediate parts running out without replacement.  The on-and-off hotspots world wide of COVID-19 at different times and places in the world economy is no different than WW2 strategic bombing in terms of causing random damage to the economic life support.

See also  “End Run Production” here from this one volume WW2 history book The Great Crusade:

https://books.google.com/books?id=5L-bwPZK7PQC&pg=PA420&lpg=PA420&dq=%22End+Run+Production%22&source=bl&ots=kc30FQflCj&sig=ACfU3U2kmF-kTPo0Tgr2A9_ESPKpEQAEOg&hl=en&sa=X&ved=2ahUKEwjfpurOnOPoAhUKA6wKHemwBMcQ6AEwAHoECC4QKQ#v=onepage&q=%22End%20Run%20Production%22&f=false

Be it automobiles, self propelled construction equipment, jets, power plants or the latest electronic gadget, anything that has thousands of parts sourced world wide with lots of Chinese cheap/disposable sub-component content anywhere in the supply chain simply won’t be produced for the next 18 months to three years.

This “random damage to the economic life support” effect is amplified by the unwillingness of Western private industry to invest in building the capitol equipment to produced those intermediate parts.  Because of the threat of China coming back with predatory pricing — using bought politicians to cover for them — means those parts won’t be built without massive cost plus contract government buy out of the investment risk like happened in the USA in the 1942 WW2 mobilization.

The story of  one American n95 mask manufacturer’s experience with the Obama Administration in 2009 with the Swine flu is a case in point.  The n95 mask is a 50 cent item where China pays 2 cents a mask for labor versus 10 cents a mask for American labor.  When the American manufacturer geared up to replace Chinese mask production.  China came back on-line and the Obama Administration refused to keep buying the American mask producer’s 8 cents more expensive mask when the Chinese masks were available.

Unlike almost 80 years ago, current Western and particularly American politicians are too corrupt to go too massive cost plus contract government buy out this private investment risk.  Mainly because these political elites  can’t be bothered to figure out their 10% cut.  Instead we are getting more “fiscal stimulus” AKA boondoggles that the elites will saddle the rest of us with high interest payments on huge public debts.

It will take local small to mid-sized business to get the American economy going during the COVID-19 pandemic via making products and services that don’t use the intermediate products China threatens with when the pandemic ends.

My read on what comes next economically is local/distributed production with limited capitol investment that is multi-product capable.  The name for that is additive manufacturing, AKA 3D Printing. Here are a couple of examples:

1. The idea of 3D Printed Sand Casting Molds For Automobile Production

voxeljet enters alliance to industrialize core tooling production using 3D printing

https://phys.org/news/2019-09-stock-d-future.html

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But, like developing SARS-CoV2/COVID-19 vaccines, this new locally distributed manufacturing economy will take time.  The possible opening of the American economy in May 2020 will not bring the old economy of December 2019 back.

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That economy is dead.  It cannot, will not, come back.

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We will have to dance with both the sickness from SARS-CoV2/COVID-19 and the widening “End Run Production“ product shortages that the death of the globalist  just-in-time, sole source in China economic model causes for years.

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And this is a hard reality, not a fantasy, we must all face.

I can’t decide which is the more dispiriting element of the Wuhan coronavirus pandemic; the fact that so many local authorities in America and Britain are letting their inner authoritarian out for an untrammeled romp while sanctimoniously insisting that it’s all for our own good whether we like it or not (or agree or not), that a large number of ordinary citizens are falling all over themselves in volunteering to inform on neighbors who are doing nothing more than going for more than one walk a day, visiting a park or beach, or exercising in their front garden, and that representatives of our National Media Establishment are as malicious a set of scurvy, biased, panic-sowing incompetents as ever crawled out of a journalism school armed with delusions of adequacy along with the degree. Age 27 and know absolutely nothing, as Ben Rhodes remarked. Read the rest of this entry »

What I’ve got so far:

1. Everything’s on the table. The likelihood that your preexisting ideology or priorities are an entirely adequate match to what this situation truly requires of us is close to nil. “In a time of drastic change it is the learners who inherit the future. The learned usually find themselves equipped to live in a world that no longer exists.” ― Eric Hoffer
2. That said, your life experience will give you insights. Privilege your experience over your ideology and nominal priorities.
3. All disasters are local. Concentrate on your meaningfully immediate environment, which in this case will be the local market for medical resources. For most of the US, that will be our MSA. For those outside an MSA (metropolitan or micropolitan) that will be their county; and for some it will be the group of counties that feed into the one hospital in the region.
4. Deprioritize pandemic news from outside your local area. There are people in the massive NY/NJ/MA outbreak that I worry about, but what happens there will only modestly resemble what happens in the KC MSA, not least because of the difference in population density, which can approach 20x.
5. Mitigate or avoid your own risk (including the risk you pose to others) by both following the hygiene advice we’ve all heard and minimizing your physical interaction with anyone outside your immediate household. Internalize R₀ = b × k × d, where R₀ is the reproduction number of the virus, b is the probability of infection given contact with an infectious person, k is the contact rate, and d is the infectious duration. While the nominal R₀ of COVID-19 is ~3, your personal R₀ can be driven to < 1 by your own behavior.
6. The general form of the challenge confronting us is abrupt wide variation in formerly relatively constant phenomena. In Talebian terms, we have migrated from “mediocristan” to “extremistan.” The multiplicative nature of a novel viral pandemic, especially by comparison to the relatively predictable seasonality of influenza viruses, has a thick-tailed (power law) probability structure and complex payoffs (notoriously ranging from large numbers of nearly asymptomatic cases to abruptly life-threatening “cytokine storm” reactions). For detail, see The Fourth Quadrant: A Map of the Limits of Statistics.
7. So we find ourselves at serious risk of running out of ventilators, ICU beds, and even hospital beds generally, to say nothing of supplies (but see “all disasters are local,” above), raising the prospect of significant second-order mortality among those unable to obtain adequate care for entirely unrelated illnesses and injuries.
8. In this connection, many prior customs, techniques, tools, and materials are being revealed as highly dysfunctional and, if all goes sufficiently well, will be swept into the dustbin of history. The bad news for me is that my earlier fears about easily-bottlenecked processes have been realized. But we may look forward to significant adaptation, including deregulation of medical services.
9. Similarly, a large number of purported fixes and remedies will fail. Folk remedies, in particular, seem likely to be disastrous, and this blog’s audience needs no persuasion that attempts at central planning will fail thanks to the Hayekian local knowledge problem. In that connection, and to quote something I wrote a few years back: “John Gilmore famously said that ‘the Net interprets censorship as damage and routes around it.’ The future adaptation of representative democracies will depend on our capability, as individuals, to interpret endemic institutional dysfunctionality as damage and route around it.”
10. The relatively vulnerable are closer to the center of the network: affluent, living in high-density major cities, well-traveled, extroverted, socially active, with large numbers of regular contacts (even if mostly in a “bubble” as per Murray’s notorious quiz). But some are the alienated and defiant who reject risk avoidance or even risk mitigation tactics (or attempt folk remedies instead), ordinarily associated with …
11. The relatively invulnerable, who are at or near the edge of the network: impoverished, living in rural or low-density metro areas, untraveled, introverted, socially isolated, rarely in face-to-face contact with others. Many of these people have mental health issues and associated substance abuse problems. But the relatively invulnerable are also the intelligent and conscientious who promptly adopt appropriate risk management strategies.
12. The post-pandemic preferences of the relatively invulnerable will have massive economic and cultural effects. I expect a reasonably quick partial recovery from the economic shutdown, but full recovery may take several years. Many of the “third places” which have done well over the last few decades will not regain their patronage, and as of early April 2020, we can only guess which ones. Fond hopes of some of my co-religionists aside for a sudden revival, I believe church attendance and involvement will be well down in the aftermath, and will not significantly grow until the next “Awakening,” which per Strauss and Howe should occur at mid-century. Until then, believers will be culturally marginalized and congregations will be smaller—but comprised of relatively fervent, active members.
13. Geopolitical risks are heightened, especially US-China tensions, and if Xenakis’ “58-year hypothesis” holds, this very year will see an echo of the Cuban Missile Crisis.
14. The most important output of this process—and it is a process, with inputs, providers, outputs, recipients, etc—will be a collective lessons-learned database, comprised of both tacit and explicit knowledge, and somehow transmitted to future generations.

GE Healthcare, which is ramping up ventilator production, is using 3-D printing both to make parts directly and to make molds for injection molding.  However, the chief engineer for advanced manufacturing at Healthcare says that some of the 3D-printing companies he has been talking to are shut down due to government edicts that deemed their work nonessential.

It sounds like they will get around this barrier…“We have a map of all the companies that have excess capacity, and so we’ll divert whatever print work we need to whatever company has got the ability right now, on top of the equipment we have at GE”…but I expect that there is going to be a lot of this sort of thing. There is no way that local or state officials can understand the supply chain dependencies that exist between a seemingly-minor local business and a major national priority somewhere up a level or two (or more) in the product structure. In some cases, all it might take is a letter from the top-tier manufacturer certifying the importance of the work the supplier is doing, but in many cases I suspect that the only rapid solutions will require Federal involvement.

The Navy hospital ships promised by President Trump to deploy to New York and Los Angeles arrived on-station as ordered a few days ago. MSNBC’s Rachel Maddow, presumed for some obscure-to-me reason to be associated with the provision of news to the public, and most recently famed through peddling Russian conspiracy theories regarding Trump’s election for the past three years, had ridiculed the President’s proposed schedule as “nonsense. ” She, or whatever pronoun she goes by, had loudly and publicly claimed that it would be “weeks” before the hospital ships arrived. Instead, the hospital ships arrived more or less to schedule. A lesser news-person would have the decency to be embarrassed over how transparent a prediction-flop this was. Not this Maddow person, it appears. This is not a good thing, and not for the reason first assumed. PBS’ Yamiche “Rolie-Polie-Olie” Alcindor baldly admitted, and in nicer words, that the name of the game for the national establishment news media is “Get Trump!” and anything goes, fair or foul (mostly foul) will serve that end. Well, really – those of us who have been paying attention, especially for the last decade and a half (or longer) have known very well that the name of the game as far as the establishment national news media is concerned, is to enthusiastically smear Republicans and their conservative supporters (no matter how mild or harmless) the pretext, and to excuse Democrats and their supporters, no matter how vile the offense and actions. Nothing new here, move along. SSDD, as we used to say in my active duty days. (Same sh*t, Different Day.) Read the rest of this entry »

In the blue corner, we have the joint statement on multiple patients on ventilators by the Society of Critical Care Medicine (SCCM), American Association for Respiratory Care (AARC), American Society of Anesthesiologists (ASA), Anesthesia Patient Safety Foundation (APSF), American Association of Critical‐Care Nurses (AACN), and American College of Chest Physicians (CHEST) which recommends letting people die when spare ventilator reserves run out. And in the red corner, we have the VESper by Prisma Health fresh off of its recent victory to get regulatory approval under emergency use rules to allow ventilators to be used by up to four patients.

It is triage with its ugly logic of letting patients die vs hope and technical advancement to save everyone, live in the United States at Covid-19 virus hot spots across the nation. This may affect you personally so it is important that you know whether or not the hospital you might depend on to save your life has picked one side or the other in a thoughtful way.

Everybody could ask the question but it would be better if our press did ask and broadcast the answers. At the time of writing, they’ve had two days to do so. Are you informed on the issue? Are your neighbors? Is your hospital?

This lack of discussion is the death of journalism. This time ignorance can have deadly consequences for us all.

Seriously, I do wonder if there isn’t a strong antipathy against all things Official-Mainland-Chinese/ Chinese Communist Party and all its works building among Americans, in the wake of the almost-universal infection by the Wuhan Corona-virus epidemic. I mean – the damn plague started there, despite what all the official CCP agencies and bodies, and their sympathizers and hired media can and will insist. Bungling containment, concealing practically everything about the epidemic (the third devastating epidemic originating in China, by the way, the swine flu and the H1N1 virus being the first two) and then having the unmitigated gall to blame it on the United states – that takes the absolute cake, as far as I am concerned. It reminds me of the books I absorbed, growing up; most by English and American authors of the mildly popular sort (some fiction, some non) and dating anywhere in the first half of the 20th century whose detestation of Germany and Germans hung in the atmosphere of those books like a particularly dank fog. It was an almost visceral dislike, for all that we generally had been inclined favorably towards Germany before the turn of the previous century. Martin Luther, Johan Sebastian Bach, the Brothers Grimm, Schumann, Beethoven, Goethe, scientific, technological and medical advances all flowed to the rest of Europe and to the Americas, making us all the richer for it – but German ‘frightfulness’ in World War I, and the horrors inflicted by Nazi Germany burned through that enormous fund of respect and favorable opinion, leaving a very bad taste in the mouths of those old enough to have been exposed to them, either directly or at first and second remove. That bad taste may only now be fading with regard to Germany, but I wonder if it isn’t now about to be replaced with burning resentment of China, or at the very least, the Chinese Communist Party. Read the rest of this entry »

Regular readers here know that I own a small business that is in the trade of HVAC wholesale distribution, which is a subset of industrial distribution. Today I came out with a statement to the employees and I am interested in what the readers here think about it. If you are interested, please see below the fold and thanks in advance for any comments, good or bad. Some parts redacted or altered to preserve privacy.
Read the rest of this entry »

A lot of people…office workers, students…are going to be getting their first experience of remote working, and a lot of organizations are going to be getting either their first experience or a greatly expanded experience in managing this kind of work.  What will be the long-term effects of this?…will people eagerly return to their brick-and-mortar working environment as soon as it is safely possible?

Certainly, there are a lot of workers who would welcome the opportunity to avoid their daily commutes.  And there are a lot of employers who would be happy to save a lot of money on office space.

And there are surely some parents who would welcome the opportunity to keep their kids at home…there are also more than a few who have arranged their lives and their work schedules around the assumption that their kids will be in school for several hours every weekday.

Many of the remote working experiences are surely going to be suboptimal, however, given that there has been little if any leadtime to prepare systems, content, and procedures.

So what do you think?..a return to things the way they were, or permanent change?

… whom the woke-mob bays for; it bayeth for thee… to paraphrase John Dunne. As no less than Woody Allan may testify at this point, as the article linked here outlines. So the woke mob claims another scalp; yay, wokesters of New York City Mainstream Publishing Division! Take a bow, having thrown a glorious temper tantrum and bent your employer to your will! Today, Woody Allen – tomorrow? Who knows?! N.K. Jemison, a notoriously woke science fiction writer and beneficiary of the current system, weighed in on behalf of the mob, which is … not a good look for someone dealing in speculative fiction. She is supposed to possess some talent, but again – encouraging the mob, even joining in – not something which a thoughtful person with a sense of events and historical recall ought to do. But never mind.

Frankly, as far as I am concerned the mainstream publishing establishment, which is centered in New York (as if that wasn’t sufficient punishment) may ride off into the sunset any time now. Words like “incestuous” and “culturally-blind” come to mind, as well as “arrogant” and “exploitative.” Read the rest of this entry »

The themes of this update will be on issues of

– COVID-19 spread,
– World Headlines,
– US Good News,
– US Mixed News,
– A sample of US Relevant Coronavirus Stories,
– Medical Information of the Day,
– The SARS-CoV2 Virus and it’s COVID-19 infection ARE NOT THE FLU
– The On-Going Just-in-time, Sole Source in China Supply -Chain Crisis, and
– The social media and videos COVID-19 tracking source section.

Top line, There are currently 85,996 confirmed COVID-19 cases worldwide, including 2,942 fatalities as of the 29 February 2020 at 2:46 p.m. ET time hack on the BNO News corona virus tracking site (https://bnonews.com/index.p…/…/the-latest-coronavirus-cases/) There are 59 and growing nations including China plus three “Chinese special administrative regions” (Macao, Hong Kong and Taiwan) that have reported COVID-19 infections. China, Taiwan, Hong Kong, Japan, Thailand, Singapore, Italy, Iran, Germany and R.O.K. all appear to have local, or endemic, spread of the disease.

The US may currently have endemic spread as the CDC has confirmed 62 cases of coronavirus in the US (and there late breaking news of a COVID-19 death in Washington State and the slimming of a senior care facility in Kirkland). These include 44 people who were aboard the Diamond Princess cruise ship, three people repatriated from China and 15 US cases.

Spread inside the US cases include:
California: 9
Massachusetts: 1
Washington state: 1
Arizona : 1
Illinois: 2
Wisconsin: 1

World Headline Summary:

o Health authorities in Texas and Oregon report 12 new coronavirus cases in US
o US coronavirus case total hits 63, 2nd case ‘of unknown origin’ confirmed
o US issues travel advisory for Italy
o Italy says first case discovered in Lazio
o China, SK release nightly figures
o Google says employee who visited Zurich office has coronavirus
o France confirms 57 cases
o Italy reports 3 deaths in Lombardy; nat’l toll now 21; total cases 821
o Google employee tests positive for coronavirus after visiting Zurich office
o British man becomes 6th ‘Diamond Princess’ passenger to die
o Two Japanese dogs tested positive for coronavirus
o Mulvaney says school closures, transit disruptions may happen in US
o Dr. Tedros said Friday that there’s no evidence of ‘community outbreak’
o Mexico confirms 1st virus case [More below]
o Fauci warns virus could take ‘two years’ to develop
o Kudlow says “no higher priority” than the “health of the American people
o Toronto confirms another case
o WHO says 20 vaccines in development
o St. Louis Fed’s Bullard pours cold water on market hopes
o Netherlands confirms 2 more
o United cuts flights to Japan
o Advisor to CDC says shortage of tests in US creating a “bottleneck”
o Nigeria confirms first case in sub-saharan africa
o South Korea reports more than 1,000 new cases in under 48 hours
o Italy cases surpass 700
o WHO says virus will ‘soon be in all countries’

Read the rest of this entry »

As I mentioned on these pages a few days ago, there will be supply chain issues with the Co-Vid 19 event, whether you think it is the next Black Plague, or just another version of the flu (from reading the comments on Trent’s post on the subject, we appear to have both reading here). As a reminder, I deal in HVAC distribution, which is a subset of industrial distribution. Most equipment for my market is made close to the USA or in the USA itself, but the component parts are many times made in China.

Today I got the first letter from a vendor talking about the possible issues. They are saying that they are preparing to see product shortages due to component supply problems and are actively trying to source from other places, but the information is very general in nature. It seemed more CYA than anything and almost could be a force majeure setup, recommended by their attorneys to get ahead of contracted jobs. I have no proof of that but have seen enough legal documents in my day to know that a lawyer or ten helped write their CoVid-19 letter rather than a bunch of HVAC dorks like me.

But let’s be real for a minute. The supply chain (in my industry) is long so we aren’t likely to see any problems for the Summer, as most of those orders for inventory are already in the tank and on their way to our warehouses. Fall/Winter is my estimate for issues in industrial distribution if the problem continues. And that could be a BIG problem for you if you have a house where a furnace breaks down and it is -20 outside. Critical infrastructure will get priority I am assuming (blood banks, etc) but you don’t know when that stuff will break, do you?

As I receive more communications from my vendors I will put up an occasional post here. I have a meeting next week in DC and will personally speak with many of my vendor contacts and may get more/better information at the cocktail parties when my contacts get loosened up from the booze. It’s going to be an interesting year in industrial distribution and I imagine that the Chinese are going to lose some business over this when it is all said and done, never to come back (the main reason I don’t think this whole episode is fiction/blown out of proportion – incentives).

I think President Trump is quite sincere about his oft-stated desire to drive up the wages of low-income workers…especially young and non-college workers…and he does seem to be having some success at this quest.  It has struck me for a while that while this is a very good thing from the standpoint of the overall society, it is also likely to pressure business profit margins, with possible consequences for the stock market as well as for Fed policy.

Yesterday the WSJ noted that “wages for 20- to 24-year olds are increasing twice as fast as for other workers…Overall job satisfaction in 2018 was the highest since 1994.”  At the same time, “90% of blue-collar businesses report operating with unfilled positions, and 29% say this has made them reduce output or turn down business.  Rising wages together with sluggish productivity growth are crimping corporate profits.  Between the fourth quarter of 2014 and the second quarter of 2019, profits for nonfinancial corporations  declined 17% and 46% for manufacturers.   The article quotes the Conference Board:  “The US will not be able to maintain its current standard of living unless the US government acts to significantly increase immigration, improve labor force participation, and, together with employees, raise labor productivity growth.”  To which the WSJ writer adds:  “Maybe the only short-term fix is to increase legal immigration–unless Americans want to see their living standards decline and more jobs exported.”

Higher wages do of course drive productivity improvement…the US has been a pioneer in the mechanization of work in large part because it has been a high-wage country, and that mechanization has helped to enable further wage increases.  This doesn’t always require any new inventions:  there are always productivity tools available that will make sense to a business that is paying $25/hour for labor but would not make sense to one paying $15/hour.  The process isn’t instantaneous, though.

Concerning immigration as a solution to labor shortages: commentators sometimes lose sight of the fact that GDP per capita matters for broad-based prosperity, not just absolute GDP.  And the only way to increase GDP per capita is through productivity improvements and higher labor force participation rates.  Increasing the raw number of workers doesn’t do this.

The Conference Board statement appears to put a lot of emphasis on things that the government should do, and the WSJ emphasizes more (legal) immigration.  Some increases in legal immigration may well be a good idea…as would increases in American fertility rates…but the main issues, I think, are productivity and the labor force participation rate.  The actual productivity numbers don’t reflect all the talk about (and even the realities of) robotics and AI.  Maybe this is largely just a matter of implementation lags, maybe it reflects increasing bureaucratization and ‘compliance’ costs throughout our economy.

My concern is that margin pressure may lead (in conjunction with other factors, like already-high valuations) to a sharp stock-market decline, which could have electoral implications.  Such decline might also lead to many deferrals of productivity-improving investments.  Alternatively, Fed concerns about rising wage rates as a possible signal of incipient inflation could lead the central bank to increase interest rates excessively as a preventative.

And any electoral result which substantially increases Democratic party power could lead to massive upsurges in legal and illegal immigration, with consequent wage pressures, demoralizing many workers who are now on an positive track and deferring the need for productivity investments.  Any attempt to deal with such wage pressures by establishing high Federal-level minimum wages would add much rigidity to the systems, creating problems of many kinds.

Discuss, if you feel so inclined.

I live in the world of HVAC distribution, which is basically a subset of industrial distribution. The information flow concerning COVID-19 is interesting. There are some of my vendors who are in full freak out mode, as they are already getting short on items imported from China. Some of these items are part of a larger item being put together either in Mexico or here in the States. Other items are things that my vendors simply repackage and resell. I have also heard a rumor that certain chemicals and finished copper products are going to have issues in the near future. There are some vendors that are just “shoulder shrugging” the whole thing off at this point. The reactions are all over the board from my vendors.

I imagine that we will know a lot more when the Spring AC calls start coming as most vendors typically have a 30-60 day safety supply stateside.

This could end up quite profitable for other regions of the world vs. China, and it may be business that China will never get back. Time will tell.

In the wake of Ebola, NVD-68, and Zika, we should have all learned our lesson by now. We haven’t. This is 2020—Iowans took a week to count the votes of 5% of their population, and an elderly white Northeastern president is principally opposed by a gaggle of downright ancient white Northeasterners. There aren’t any quick fixes for emergent idiocies like those, but a few simple heuristics will go a long way toward avoiding panic over coronavirus.

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Amanda at Mad Genius Club posted last week with some musings on the current publishing scene – er, that is what I took to calling the Literary Industrial Complex, back when I first went indy around 2008 – Indy Publishing that is. When people ask me who my publisher is, I look at them loftily, and reply, “I own the publishing company!” Which I do – a nice little small enterprise that I came into as junior partner, and which the original founder sold to me when she regretfully concluded that she could no longer carry on. We do other authors’ books, as well as my own; regional and small-press stuff, nothing which would ever excite the interest of the Literary Industrial Complex or the minions thereof. No point to it at this late date; as one of the other indy authors I associated with at the time often repeated – “If readers love-love-love the book, they don’t really care who published it.”
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Retail businesses are associated with low pay and high employee turnover–especially in the case of those retailers who offer low prices–and the same is largely true of customer-service call centers.  It has been generally assumed that low wages in these operations are a necessary concomitant of low prices for consumers, and that only businesses serving a premium-price customer base can afford to pay high wages.

Comes now Zeynep Ton, arguing that the low-wage strategy is not the only one available to retailers and other customer-service businesses that need to offer low prices, and that indeed often–usually–it is not the best strategy.  She draws connections between the pay and hiring strategy of a business and the operational basis on which it is managed.  To wit:

Low pay and high turnover implies minimal employee training, because you can’t afford extensive training for employees who are going to leave in a matter of months.  Minimal training implies less operational flexibility, because employees will not be cross-trained for other functions.  An environment of high turnover and not-well-trained employees implies that employee functions must be strictly proceduralized, often to the point of excessive rigidity.  And the lack of flexibility driven by minimal training and experience makes it harder to build in appropriate staffing “slack” to handle peak demand situations.  The lack of slack and flexibility leads to endless emergency rescheduling of personnel, reducing morale and further increasing turnover.  (She provides some vivid examples of what this endless and short-notice rescheduling can mean to the personal lives of employees.)

On the opposite site, higher pay can contribute to lower turnover, making more-extensive training economically viable.  Better-trained employees can more easily perform multiple functions, so that absences or staffing imbalances have a less-harmful effect.  Better-trained and more highly-motivated employees don’t need micromanagement, either by human managers or by systems and procedures.

Ho, hum, you say, what’s new?…people, especially consultants and professors, have been writing for years about why employees should be treated well and how it pays off to do so.  How is this book different from a million of others?

The Good Jobs Strategy is, in my view, something quite different from the typical “just treat ’em right” sort of soft, warm, and cuddly advice often found in books and LinkedIn posts.  The author ties the feasibility of the high-pay / high-expectations strategy to effective operational management, with the right systems, procedures, and incentives to enable such operational excellence.

An interesting example the author mentions is that of Home Depot. She credits much of the chain’s early success to its high-quality associates–“knowledgeable and helpful and willing to do whatever it took to help you, even if that meant explaining to you that you didn’t actually need what you came to buy.”  The associates tended to be former plumbers, electricians, etc–and they were employed full-time.  HD grew very rapidly–“customers were driving two hours to go to its stores and, once they experienced the service and great prices, they kept coming back”

But, with the growth came problems.  There was a lack of discipline in the stores, in how the stores communicated with headquarters, how the company selected its products, and how it communicated with suppliers.  “In 2000, bills and invoices were still processed by hand, and headquarters communicated to 1134 stores via fax because there was no companywide email.”  In 2008, two senior IT executives (newly hired from Walmart) concluded that Home Depot’s IT systems were about where Walmart’s had been in 1991.  In summary, HD had become “a classic example of a service company that did not fully appreciate the role of operations in making customers and investors happy…Operations are all those factory-like activities that a business has to carry out in order to provide whatever it is that it sells. ..In a retail store, for example, operations involves things like having the right product in the right place, having a fast checkout, and having a clean store.” Zeynep Ton says that internal measurement systems often don’t focus on such matters–at one retailer she worked with, “Twenty percent of the (store manager’s) score had to do with the store’s customer interactions.” In this chain, “mystery shoppers” would score the store on things like how the employees greeted customers and made eye contact.  But, she notes, “kindness or friendliness won’t make up for operational incompetence. ..It is hard for your dry cleaner to make you happy if you can’t wear your favorite suit to an important interview because they didn’t get it cleaned on time.”

When Robert Nardelli became HD’s CEO in 2000, the systems and procedures problems were rapidly addressed.  Gross margins and net profit margins increased substantially.

BUT, “the culture of cost-cutting was soon felt at the local level, where store employees, who were once at the center of Home Depot’s success and at the top of Home Depot’s inverted pyramid, became a cost to be minimized.”  The company started hiring part-timers, in the name of both staffing flexibility and cost…the knowledge level of the typical employee encountered by a customer fell noticeably.  By 2005, HD was ranked lower in customer satisfaction than was K-mart.  Same-store sales growth fell and even became negative.  Nardelli left the company in 2007.

Zeynep Ton summarizes:  Operational designs don’t execute themselves.  They depend on having the right people, and having those people motivated to do the right things.

The book discusses the actual complexity that exists in many seemingly-simple businesses, and the fact that individual employee decisions do make a difference. “If you are a supermarket employee shelving a case of toothpaste and all but two of the tubes fit on the shelf, should you take the two extras back to storage or would it be better to squeeze them onto the the shelf, even if it doesn’t look so good?  If a tomato looks just a little soft, should you take it to the back room now or wait until it looks worse?  Maybe it will be just fine for a customer who wants to make tomato sauce…it is hard, if not impossible, to make such work so simple and simple and standardized that anyone can do it without exercising judgment.  Things happen in real time at retail stores, and employees have to learn to react.”

(It is incredibly refreshing to see a B-school professor thinking and writing at this level of detail and specificity)

One interesting company discussed in the book is QuikTrip, a large chain of convenience stores combined with gas stations.  The company is very selective in its hiring….the author compares getting hired there with the difficulty of getting into an Ivy League college.  In the Atlanta area, 90% of applicants don’t even quality for an interview, and of those who do, only one out of five is selected.  Turnover rate among QuikTrip employees is only 13%, far lower than the industry as a whole.  The chain emphasizes speed and flexibility…”QuikTrip’s fast checkout is a site to behold.  One thing that makes it so fast is that any employee can use any register at any time without making the customer wait.  If you regularly shop at a supermarket, you know it’s no fun waiting for the cashier do a changeover.  The other thing that makes QuikTrip so fast is that employees have been trained to ring up three customer per minute.”  She says that the employees can even calculate change in their heads!

Other examples discussed include Costco, Trader Joe’s, In-N-Out Burger, and the Spanish supermarket chain Mercadona.

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For the life of me, I cannot recall who first observed that environmentalists now make the most perfectly hissable villains, because they almost invariably make matters worse in the long run. Absolute certainty in their own mind that their dictates are the one and only true way, combined with reluctance to consider any other method, and of late, just about all their prescriptions have had lamentable results … yes, there is a perfect villain. Smug, certain … and wrong. Catastrophically, earth-shatteringly, human-damaging, and economically-harmful wrong.
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In December, I announced an upcoming discussion of the future of the auto industry and, in particular, of the role and impact of electric cars.  In that post, I included a number of links to worthwhile reading on the subject.  Let’s do the discussion this week, in comments to this post.  I have a few thoughts to get things going:

–It is true, as Vitaliy Katsenslson points out in his essay, that electric cars are much simpler than conventional cars…but I would qualify this statement as mechanically simpler than conventional  cars.  They are significantly more complex electrically and especially in terms of the electrochemistry of the battery…a hidden kind of complexity, but important nonetheless. From what I have read, there seems to be considerable uncertainty about the expected lifespan of new lithium-ion battery models..which lifespan, of course, has a major impact on the overall economics of electric cars.

EVs are expected to have lower maintenance costs and requirements than conventional vehicles, based on their relative mechanical simplicity.  This is probably true, in general, although a lot of the problems with cars these days seem to be with systems other than the engine and drivetrain..airbag sensors, seat actuator motors, various sensors, etc.

–Range limitations and “range anxiety” have been significant inhibitors to EV sales.  Vitaliy K makes the excellent point that it is much easier to set up an electric-vehicle charging station than a conventional gas station, with its underground tanks and consequent regulatory complexities, and he believes we will see tremendous growth in the number of such charging stations and consequent reductions in EV range anxiety.

It takes about 45 minutes to an hour to fully charge an EV (using Tesla as a model and assuming a high-power charger such as Tesla’s “Supercharger’), which implies that people are going to need something else to do while their vehicles are charging, away from home or the office.  Restaurants and shopping centers become obvious venues for charging; however, this leads to another issue, that the driver may wind up being away from the car for a couple of hours or more, tying up the charger for that whole interval: this issue would need to be reflected in the pricing of the charging facility.

Also, while it is true that setting up EV charging is simpler than opening a gas station, it is not necessarily trivial if one is setting up multiple high-capacity chargers.  A Tesla supercharger draws 150KW, so putting 30 of them in a parking lot would result in an incremental peak demand of up to 4.5 megawatts.  I doubt if the electrical systems feeding many restaurants, or even shopping centers, could accommodate 4.5MW of additional demand without some work by the utility supplying the power.

–Efficiency:  It is true that the conversion of stored energy into motion is much more efficient in an EV than an internal-combustion-engine vehicle; this is mainly a matter of the engine thermodynamics.  BUT, if the charging electricity comes from a natural gas plant of a coal plant, you are looking at best at a 60% fuel-to-electricity conversion efficiency, and there will also be losses in power transmission and distribution.  If the electricity comes from solar or wind, then..depending on the time of day and weather conditions of the charging..you may be faced with a double battery storage situation, where energy is stored in a utility or home battery until needed for charging, and then stored again in the vehicle’s battery.  That double-storage situation carries both efficiency losses and, more significantly, additional capital costs.

EVs do have the ability to capture much of the energy that would otherwise be lost in braking, and this is especially valuable in start-stop driving situations, as with local delivery operations, and probably extends the lifetime of the mechanical brakes.

–Performance…EVs have excellent acceleration capability (when adequately powered) due to the torque characteristics of electric motors.  They may be able to achieve very good handling if battery installation provides for a very low center of gravity.

–Climate…not speaking here about ‘climate change’, but about climate in its ordinary meaning.  In a conventional car, heating is basically free, using rejected heat from the engine (ignoring the energy used to power the fan, but that’s a small part of the picture), whereas in an electric car, heat must be generated using electricity from the battery, which of course has a negative impact on range.  Also, the battery itself will have lesser performance in cold weather.  (And the regenerative braking feature is also limited in very cold weather.)

–Relative Costs…a high % of EVs today are either sold with subsidies by national/local governments, are built and sold in response to government edicts, or are bought in significant part for status purposes by individuals and organizations. Can EVs compete on cost head-to-head with IC vehicles on a nonsubsidized, free-choice basis?  This would seem to be largely a matter of how successfully battery costs are further driven down and how long battery lifespans turn out to be in actual service.

It should be noted that electric vehicle sales in China have cooled rapidly…down 44%…since the government reduced most subsidies at the end of June.  What would be the ‘true’ demand in the US without consumer incentives and mix requirement on the manufacturers?

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Free speech…free expression generally…is under attack in America and throughout the Western world to a degree not seen in a long time. I think there are some specific phenomena and (partially-overlapping) categories of people which are largely driving this attack–I’ve written about this subject previously, here, but the situation has gotten even more serious since that post, and some of the important factors were underemphasized.  Here are the current fronts, as I see it, in the war (not too strong a word, I’m afraid) on free speech.

The Thugs. As I pointed out in my post The United States of Weimar?, illegal actions against political opponents, ranging from theft of newspapers to direct assault and battery, have in recent decades become increasingly common on university campuses, and now are well on track to being normalized as aspects of American politics. Incidents of political thuggery are reported almost daily: just the other day, pro-Trump women at an upscale DC hotel were verbally attacked and apparently physically assaulted by members of a wedding party that was heavy on Democrat attendees; including, reportedly, some top officials from the DNC. A pro-free-speech film was reportedly interrupted by two men wearing masks. Interruption of movies they didn’t like was a tactic used by the Nazis prior to their obtaining official censorship powers. The film “All Quiet on the Western Front” was plagued by Nazi disruptions when released in Germany in 1930. And attempts to shut down dissident speakers on college campuses, such as this, have become so common as to now be almost the default expectation.

The Assassins. These individuals go beyond the level of violence practiced by the Thugs, and make credible death threats they attempt to carry out against those whose actions or believe they view as unacceptable. The majority of threats and attacks falling in this category have certainly been the doing of radical Muslims; however, some of the more extreme ‘environmentalist’ and ‘animal rights’ groups have also demonstrated Assassin tendencies. At present, however, it is those Assassins who are radical Muslims who have been most successful in inhibiting free expression. Four years in hiding for an American cartoonist. But see also Ecofascism: The Climate Debate Turns Violent, how long until this justification and practice of violence reaches the level of justifying and carrying out actual murders?

The Enclosure of the Speech Commons. Whereas the Internet and especially the blogosphere offered the prospect of political expression and discussion unfiltered by the traditional media, the primary social-media providers have taken various levels of controlling attitudes toward free speech; Twitter, in my opinion, is especially bad. Partly this is ideological; partly, it probably reflects their ideas about protecting their brands. Yes, there are plenty of ways to communicate online outside of the social media platforms, but their growth has been so rapid that a large proportion of the potential audience is not easily reached outside their domains. Note also that conversations that one would have been private friends talking at home, or over the telephone are now semi-public and sometimes made fully public. Plus, they become part of an individual’s Permanent Record, to use the phrase with which school officials once threatened students.

The Online Mobs. The concerns of the social media providers about providing online “safe spaces” does not seem to have in the least inhibited the formation of online mobs which can quickly make life unpleasant for their targeted individuals, and even destroy the careers of those individuals. Decades ago, Marshall McLuhan referred to the technology-enabled Global Village; unfortunately, it turns out that this virtual village, especially as mediated through the social media platforms, has some of the most toxic characteristics of the real, traditional village. See my post Freedom, the Village, and the Internet.

And the mobs do not limit themselves to attacks on the target individual: they frequently attack other individuals who fail to participate in the shunning of that target person. As an example:

A few weeks ago, shortly after I left my magazine gig, I had breakfast with a well-known Toronto man of letters. He told me his week had been rough, in part because it had been discovered that he was still connected on social media with a colleague who’d fallen into disfavour with Stupid Twitter-Land. “You know that we all can see that you are still friends with him,” read one of the emails my friend had received. “So. What are you going to do about that?”

“So I folded,” he told me with a sad, defeated air. “I know I’m supposed to stick to my principles. That’s what we tell ourselves. Free association and all that. It’s part of the romance of our profession. But I can’t afford to actually do that. These people control who gets jobs. I’m broke. So now I just go numb and say whatever they need me to say.”

Increasingly, it’s not just a matter of limiting what a person can say, it’s also a matter of edicting what they must say.

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