COVID-19

The Suez Canal and Industrial Distribution

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As you all probably know, there is a ship stuck in the Suez Canal, which is blocking transit. You may not think this directly affects you, but it will. It’s just a matter of time.

I own an HVAC distributor, and HVAC is a subset of industrial distribution. Most manufacturers are still reeling from last year’s Covid issues. Commodities like copper, steel, aluminum and sliver were already spiking in price before this latest logistics issue.

I spoke with one of my major component suppliers this week. The cost of a container from Asia to the US was $5k last year. This year it is $15k. And there simply aren’t enough to go around.

While the Suez blockage doesn’t directly affect this trade route, it does affect the overall global logistical issues – and wreaks havoc on just in time producers.

I have one manufacturer of HVAC equipment that suspended all new orders a few months ago as they grapple with staffing issues.

When you combine all of this, I don’t think that there is any question that there will be finished good shortages again this Summer. First affected will be stuff made “over there”. We are already seeing shortages on things like ductless mini split systems because of the continuing port slowdowns on the west coast of the USA. It isn’t even Summer yet.

Here is where it affects you. The guys who have the stuff will win. Hands down. I made an enormous inventory investment this Winter and Spring, placing orders far in advance of what I normally would. I’m not going to let that investment go to waste – and I’m not spending basically every waking hour getting stuff in my barns to help my contractors get their jobs done for nothing. If I’m the only guy who has it (and trust me, on some things, I will be) – the price just went up. It’s nothing personal, just business.

Believe me when I say that I wish my life were easier and yours cheaper, but I won’t be alone in this. If you end up with an issue with anything from car parts to electrical to something as simple as a washer breaking down, you will be paying more in the very near future.

Sorry.

A (partially successful) attempt at a reasoned response

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to Harris/Biden in Atlanta on Friday. Or an exercise explaining Why I swear at the tv. Mid-way to rational thought, it is at least better than ***!!!###. Aside: Posting here is a great gift. Writing – like speech with others – forces us to use words. Our founders would use the word deliberate, to move from gut response to reason. Let’s begin with them for perspective:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed . . . “

“Hate crimes” violate not only our laws but our core belief that in each (and all) is a divine spark, that is one way we are truly equal. However, “hate” for an individual or a random act of pointless violence is also hate. Inchoate anger is hardly virtuous. Haters choose the weak, the dependent, the isolated, the outlier; they want neither consequences nor pricks of conscience. “Knock out” punches throw the weak, the elderly, the unprepared to the ground and are often too random to easily assign blame; knowing society identifies less with such victims makes quick punishment less likely; an important distance comes from convincing one’s self such a victim is not “equal”, is not human – that stills the conscience.

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Industrial Distribution One Year Into Covid

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It was around a year ago now when we started to hear about this thing called Covid. My kneejerk at that time was “it’s just the f1cking flu”. Quite the year.

For those not acquainted, I own an HVAC distributor, and we are a subset of industrial distribution. I have written some updates along the way of this new Covidian world. Here are a few more thoughts of where we were, where we are, and where I think we are going.

1) I thought our AR was going to be ravaged. Boy was I wrong. AR is as healthy as it ever was. We probably have some PPP money being used improperly by some customers, but the fact of the matter really is that HVAC in general has been very, very strong. People had to stay at home and with extra money from not going on vacations decided to upgrade their HVAC systems. Indoor Air Quality (IAQ) was obviously a very good driver for us in both residential and commercial segments.

2) I originally thought that replacement parts would be an issue. Nope. It was all about finished goods, and still is. Our main domestic provider of HVAC equipment is digging out of the hole that seemed infinite in nature, caused by all of the distributors cancelling everything during the original shutdowns, and then re-ordering everything x 2 or more when the weather got hot in Summer. It was brutal, but we worked through it. All of the favors were called in, and I scoured the USA for new trading partners to come up with some solutions. That work paid off and will pay off in the future as now I have more partners to rely on. I have never worked so hard to get product – one week I worked 100 hours. I have had one day off since last February that wasn’t a holiday. Not looking for sympathy – these are things that you do when you are the boss but I’m glad we have a bit more normalcy now.

3) Right now, the ports on the West Coast are a mess, and there is a major container shipping issue to/from Asia. This is already causing hella problems with items such as ductless mini split systems, PTAC units, window airs, dehumidifiers, and the like. We are going to see major issues in these segments when it warms up.

4) Inventory controls are out the window. Product comes in surges rather than the patterns we were used to that had been developed over decades. We are still getting orders in on some items from last July. It is very tough to manage. We don’t dare send anything back to the manufacturers for fear of not getting the items again, but our turns are a farce right now. There really isn’t a solution, and we hope that our normal buying/supply patterns return later this year. I have rarely used my line of credit in the past, but until this thing normalizes, I have no choice.

5) Competition isn’t working as hard as I am. I really am happy about this as I am seeing new customers and coming up with innovative solutions or new products/vendors, and a lot of my competitors have either given up or just aren’t that interested in trying new things. It has really opened some doors. Hard work does create luck.

6) I protected, and continue to protect, our long time, loyal customers when the availability sh1t hit the fan and shielded them fiercely when other contractors came calling as their distributors ran out of product. We immediately halted new dealer acquisition and allocated product to “our guys”. My customers were very thankful for very few product outages. This created some angst as these potential new customers were offended when I politely told them to “pound it”, but that’s too bad. We did the right thing.

7) The future is bright. If we can get a handle on the inventory, we feel that there will be a burst of commercial work coming as companies get fully back up and running. I think that residential won’t slow down any time soon either. This polar vortex we are currently experiencing pushed a lot of units over the edge.

8) Some items are still hopeless. MERV 13 filters are a complete joke, along with UV product. MERV 13 filter lead times still sit at 16-20 weeks. Want a backup generator for your house? 20 weeks minimum. Our Bipolar Ionizer manufacturer that we represent has done a fantastic job re-supplying so that fight is over for now.

There is a lot of work left to do, but in general, we are finally, mercifully seeing some light at the end of the tunnel.

Your “It’s Gonna Be A While Before You Get Vaccinated” Banana Cherry Nut Bread Recipe

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I have been rewarded with many correct calls so far while watching the botched and hilarious clownshow that is the vaccination rollout. Just about every single thing I predicted would come to pass, has. These predictions included:
1) Sensational tales of adverse reactions to a vanishingly tiny amount of people (I’m guessing these are the same communists that can’t eat peanuts)
2) Freezers “breaking down” and/or vaccines getting “misplaced” and heroic technicians vaccinating random people (Does anyone really believe these stories? Or at a minimum doesn’t everyone assume we are missing at least part of the story?). The media always, always has to have a hero.
3) Ridiculous systems and classifications of those supposed to receive the vaccine
4) Logistic and other failures
I have worked in industrial distribution all of my adult life, and know a thing or two about logistics. I also know a thing or two about government. I can’t think of too many worse combinations than logistics and government. Naturally, and predictably, the vaccination program is a total and complete farce. If we just would have left it to Walgreens and/or CVS and let them make some money at it, the whole shebang would probably be done by now, subject to availability of the vaccines of course. The whole debacle makes me sigh out loud, and creates hunger. I looked through grandmas recipe box and found a recipe that worked perfectly as I had exactly three bananas that were “on sale”, so to say, in my fruit basket.

This recipe is attributed to Alice Petersen, and is marked by my grandmother on the card as “very good”. I agree. It is very good.
Banana Cherry Nut Bread
1 cup sugar
2 eggs
1 10 oz jar cherries and juice – leave the cherries whole *I love ingredients like this. Upon going to the supermarket, it quickly becomes apparent that cherries are not sold in jars anymore, nor in 10 oz sizes. I saw a 15 oz can but was then faced with the choice of cherries in heavy syrup or water. I chose water and it worked out. I just cut the 15 oz can down to 2/3 (and naturally, began to snack down the other 1/3 of the can, before having to give some to my spousal unit, who threatened to burn my possessions in the street if I ate them all). I’m guessing back when grandma wrote this one up that the packaging for cherries was quite different than it is today.
1/2 cup butter or margarine
3 mashed bananas
2 cups flour
1 tsp soda
1/2 cup walnuts

Cream the sugar and butter; add eggs; mix. Then add bananas and mix thoroughly. Blend in flour and soda. Add cherries, juice and nuts and stir until mixed. Pour into 2 small loaf pans and bake one hour at 350.

Super simple and rewarding. Enjoy!

Smashing the State

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There won’t be any surprises in this one for anyone who knows me at all well, but I’ll try to at least make it entertaining.

My very first lasting memory of a news event with political content took place on the afternoon of Sunday 21 January 1968. A B-52 with four hydrogen bombs aboard took off from Thule AFB and crashed somewhere in the Arctic, location unknown.
Ten days later, the Tet Offensive began.
Nine weeks and one day after that, Dr King was assassinated.
Nine weeks less one day after that, Bobby Kennedy was assassinated.
Twelve weeks to the day after that, I first saw real human blood shed live on television via cameras above the intersection of Michigan and Balbo as the Chicago police attacked demonstrators during the Democratic National Convention.

I was eight years old.

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