COVID-19

Port Congestion on the West Coast

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For those not aware, I work in the world of industrial distribution. Today I received an interesting note from one of my vendors.

They are experiencing product shipment delays to their USA customers due to “congestion at the ports”. First one of these I have received.

This particular product (it is a finished good, not a part) is made in Korea, so I have to assume this is the West Coast.

So, let me try to understand this.

Covid isn’t a problem “over there”? They are making so much stuff that our ports are clogged? Or is it a problem and they just don’t care?

As I mentioned in a previous post, the mighty struggle right now is getting finished goods from factories in the USA due to covid related sick outs and factory slowdowns due to new safety procedures. If the rest of the world is working in a normal fashion and able to make enough stuff to clog our ports, why aren’t we?

Or are we getting so many sickouts at the ports that they can’t unload the ships? And why is this happening now instead of a few months ago?

I’ve been in business long enough to know that something smells. Bad.

Industrial Distribution 9 Months Into Covid

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Around every three months or so I am trying to put up a post on how it is going in the always exciting world of industrial distribution. I own a HVAC distributor, which is a subset of industrial distribution.

Not too much has really changed as far as my job goes over the past three months, with a few notable exceptions.

The really big bugaboo is finished goods. Things like furnaces, condensing units, evaporator coils, etc. are still difficult to get and are being rationed. All of the favors are being called in, and it is all hardball, all the time. Very stressful. I have incurred freight costs like never before sourcing equipment from regions of the country that perhaps over ordered, or don’t need particular products. But it is job number one to keep my contractors busy and making money. Their success is our success. I have never worked so hard and so many hours – I am really, really tired. Basically all I do all day is go over my inventory reports and try to fill holes. Then in the evening or on weekends I do my “regular work”.

Parts and pieces are, remarkably, a much different story. There has never been any sort of real disruption in parts. I expected things in this area to go south rather quickly, as many components and parts are made “over there”, but it really never happened. Sure, there is an issue here and there, but nothing to really talk about.

I expected AR to be a complete and total mess but that never really happened either – yet. I don’t know if companies are using PPP money to pay their bills, or maybe we just have a more resilient industry than most but AR is really in damned good shape.

Covid in our company – we got our first positive a month or so ago and have had a few since and several spouses who were positive. All cases were asymptomatic or had mild symptoms. At first it was a huge deal, now we all know the procedure and just do it. We are doing everything we can at our facilities to stop the spread such as installing bipolar ionizers, staggering shifts and reducing hours, disinfecting common areas, along with mask wearing and distancing (and a number of other things). We are pretty proud that all of our cases were able to be tracked to events outside of our workplace thus far. But we aren’t counting any chickens.

HVAC is about as essential as an industry can get in the Winter months and we are hoping to keep as fully staffed as possible and keep things moving. This year has been exhausting with all of the changing rules between different states, different counties, and all the rest. I haven’t had a day off since February and don’t expect one any time soon, as we need a decision maker on hand at all times until sh1t calms down, just a bit. We will squeak out a single digit increase in volume through it all, and we are very thankful to the man upstairs that we are so fortunate to be in an essential industry, unlike so many others.

Don’t forget about all of the maintenance people and mechanics – they are heroes too, not just medical people in all of this.

MERV 13 Filters and Unrealistic Expectations

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So here we are around nine months into this covid deal, and things are getting more unrealistic by the day.

We are hearing, but don’t have proof, that municipalities and other governmental orgs are requiring MERV 13 filters for buildings. Which brings us to a couple of problems.

I run an HVAC distributor and we are getting lots of calls for MERV 13 filters. We represent four filter companies. Two aren’t taking orders for MERV 13 product and of the other two, our best lead time is 4-6 months. For those who want to wait, we are encouraging them to buy a years supply and just store them.

We are even having trouble getting our standard pleated MERV 10 product due to factory production slowdowns because of covid. So we are getting some of the shooting of the messenger by our customers, but we can handle that OK.

Why the long lead times? Besides the crushing demand, the same companies that make media for masks, make media for MERV 13 filters. You can guess where priority is right now. Also, nobody has told me if the filters, presumably loaded with covid, will be someday declared a hazardous waste by OSHA, making their changeout completely ridiculous. Not to mention that MERV 13 filters create enormous amounts of static pressure, which will be terrible for a lot of systems, especially older ones. There are already rumblings of certain equipment manufacturers engineering departments getting ready to go to war with the authorities mandating these filters, and declaring “no warranty” on equipment failure due to lack of return air and MERV 13 filters putting their equipment out of engineering spec. This is super fun.

We have been recommending for a long time that people use standard pleats in combination with a bipolar ionizer or UV product, both of which in the past few months have received covid killing certification. We are hoping this MERV 13 train isn’t fully out of the station just yet and that everyone will start to get a bit more realistic. But since it is 2020 we aren’t expecting much.

Stopping the Insanity

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On a recent fishing trip with a group of politically conservative friends, we found ourselves lamenting the societal insanity that has evolved around the covid-19 virus. The question was, how long will this massive over-reaction to a low-octane viral illness continue? Half of the group admitted to continuing to wear their masks when going into stores, simply to avoid being hassled. This struck me as rather sheep-like behavior. Most citizens are used to listening to, and following the advice of their local officials, a natural pattern of behavior which helps maintain the general order of society. This virus, which due to its occult origin, originally appeared potentially disastrous, is in reality, very pedestrian in its lethality. It has however, succeeded in bringing out the inner tyrant in many state and local officials. The demand that masks be worn, despite the fact that they are little more than a talisman against an invisible boogey man, has created a degree of compliance in the population unlike anything since the legitimate threats of polio or the Spanish flu.

It is a universal truth that tyrants never cede their power willingly. For most of us, ‘sic semper tyrannis’ is not a good solution if one wishes to continue the course of one’s life. One might rob the tyrant of his, but it’s likely to be accomplished at the cost of one’s own life or liberty. Simple civil disobedience has been shown to be effective when many participate, but it too is often injurious to one’s liberty.

Many years ago, I worked for one of the giant American corporations that inhaled management philosophies like hits from a bong. In the mind of upper management, each new inhalation was sure to provide magic visions to cure all the ills of the business. I took to calling it ‘panacea du jour’. One hot philosophy in the early 1980s was called ‘leadership by example’. In practice, it consisted of putting hard hats on the managers and making them pretend to be workers. Someone exhaled, and the vision was gone. But the core concept will work for us in our present circumstance.

When you go into a store or other enclosed area that demands you wear a mask, do not. Simply go in, go about your business not as if you were dancing naked in public, rather you are treating the mask-less condition as entirely normal (as it should be). Be courteous, be pleasant and smile. I even sing along to whatever background music is being played in the background. You will get a lot of ugly looks from the karens around you. But when they glower, smile back. You will notice something that you may not have anticipated. Some of the masked individuals will look at you with obvious jealousy. For those few who also choose to not wear a mask, give them a wink and thumbs up. You have now assumed the mantle of leadership. Will you be in trouble? Nope. You have a trump card, HIPAA. The tyrants of the 1990s planted the seeds of their own destruction by making it illegal to demand details of your medical condition. On the off chance of a real confrontation, you have two magic words, ‘medical exemption’. A medical exemption means that you don’t have to wear a mask. The nature of your medical condition cannot be demanded by local authorities. HIPAA is over-riding federal law. States may in fact add to HIPAA law provisions, but cannot subtract from it in a way that forces you to reveal information.

If you choose a leadership position as outlined here, there are no absolute guarantees of personal safety from rogue tyrants or the fists of the ultra-aggrieved. But the tiny tyrants’ taste of dictatorial powers has intoxicated them and they will not swear off its sweet succor without our help.

COVID 19:The Value of Lives Saved versus the Cost of the Shutdown

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Economics is all about trade offs. In response to COVID 19 politicians have made these decisions. Ironically, the politician most directly responsible for well over 10,000 deaths, New York Governor Andrew Cuomo, has argued that human life is’”priceless”’ But politicians always put lives at risk and imply a value. Had a national health care system existed as progressives like Gov Cuomo support, his defense may well have been that those deaths were justified as a matter of national health care policy.

The practical pending question is who should get the vaccine first. Ezekiel Emanuel, Obama Care designer and Biden COVID adviser, would give the over 65 group, which accounts for 80% of U.S. deaths, the lowest priority for the vaccine based on their age, whereas the CDC recommends the opposite based on risk.

Productivity Finances Health Care

In a purely private system, the population would save for lifetime health care expense directly or through insurance companies and decide to what extent they would do so. Individual “value of life” determinations would depend on income and wealth, both reflecting individual productivity. In a fully socialized system, all lives would be valued equally based on the country’s ability to pay, reflecting average national productivity, I.e., still subject to aggregate fiscal and actuarial constraints. Whereas about 10% of households in the French National Health System top it up with private insurance and care, the British NIH system operates more like the Soviet System, with the political elite leaving the country for private care beyond the standard.

Market based systems require a large life cycle accumulation of capital, for retirement and medical expenses, both back-ended and virtually indistinguishable. Socialized systems could and arguably should – do the same.The U.S. has a hybrid (many would say Rube Goldberg) health care system, with Medicare, like Social Security, entirely pay-as-you-go with a faux Trust Fund. Social Security has relied on general tax revenues for over a decade and Medicare will as well in about four years.

National health care systems are funded entirely by progressive taxation. In the US. payroll taxes and progressive income taxes pay for about half of all insurance costs: Medicaid (20%) covers the poor, Medicare (15%) the elderly, Obama Care the working population (16%), the military (5%) and almost all the rest receive tax-subsidized employer insurance. Government also provides partial explicit unemployment insurance for lost productivity paid by taxing workers, with an occasional top-off in a pandemic.

Society benefits from the additional wealth accumulation of funded systems in the form of enhanced national productivity and economic growth, expanding the tax base. This allows the wealthy to opt out, but progressive politicians may find the increased longevity “unfair” and tax that wealth away, implicitly an advanced estate tax. Liquidating wealth has the same macro-consequence as increasing government debt to finance current health care, reducing future well being and potential tax revenues.

The Value of Life: to Whom?

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