Wednesday, December 17, 2008

One-Liners for a Gray Day in December

It's grey, cold, icy and snowy here in NE Ohio and we're about to commence with a company Christmas party. So before I leave my desk and head down to the festivities, I thought I would share these one-liners from repair orders, courtesy of Andrew Markel at Brake & Front End. Who knew technicians had a sense of humor?

Service Advisor: Dead bugs on windshield
Tech: Live bugs on back-order
SA: Evidence of coolant leak found on passenger floorboard
Tech: Evidence removed.
SA: Customer can not turn on car.
Tech: Can I see the customer?

SA: Brakes make the car stop suddenly
Tech: That is what they were designed to do?
SA: Volume of tire noise unbelievably loud.
Tech: Tire noise volume set to more believable level.

SA: Suspect worn brakes
Tech: Suspect you're right.

SA: Driver says the engine missing.
Tech: Engine found under the hood after brief search.

SA: Vehicle handles funny.
Tech: Vehicle warned to straighten up and be serious.

SA: Heater fan hums.
Tech: Replaced with heater that knows the lyrics.

SA: Mouse in engine compartment.
Tech: Cat installed.

SA: Noise coming from under instrument panel. Sounds like a dwarf pounding on something with a hammer.
Tech: Took hammer away from dwarf.
(I just envision that little guy from the Blue Nun commercials hanging out under my hood now...)

Tuesday, December 16, 2008

Increasing Market Share - One Customer at a Time

There are examples of good marketers all around us. Some are in our industry, some are outside. Anytime you see an example of good marketing, I think you should take a minute or two to examine their success, and see if there is a way to turn their experience into something you can use in your own business.

Shaw's Auto Care, a little independent repair shop in Cuyahoga Falls, OH, has a nice little thing going. A Babcox colleage recently referred a friend to Shaw's for some minor automotive work. She needed a front exhaust pipe replaced. I don't even know if the invoice exceeded $250. But she received excellent service and came back to the office and reported her pleasure with the work she received.

Ok, end of story?


Today, my colleage received in the mail, a $10 gift card for Wendy's (home of the old-fashioned hamburger). This amounts to maybe 4% of the total bill that Shaw was paid.

But what did Shaw receive in response to their 4% investment?

1 - 1 happy customer who told at least 1 other person about her experience.

2 - 1 happy long-term customer, who told at least 1 other person about the gift card

3 - 1 publisher who thought this was an inexpensive, but effective way to build customer loyalty.

In theory, if that 1 customer experience, combined with the $10 gift card, turns into one additional $250 sale......that's a 98% return on Shaw's investment. We should all be so market-savvy.

This experience reflects both excellent customer service and excellent marketing. Make your customer happy the first time with your service. Keep them coming back for more, by remembering their loyalty. How can you apply the same principles to your business to increase your market effectiveness?

Wednesday, December 10, 2008

Open Letter from a Ford Distributor

This Ford dealer (Pittsburgh region) really puts into words everything many of us are feeling…whether you agree with him or not, it's a great letter! Please share this with your friends and family.

Editor: As I watch the coverage of the fate of the U.S. auto industry, one alarming and frustrating fact hits me right between the eyes.

The fate of our nation's economic survival is in the hands of some congressmen who are completely out of touch and act without knowledge of an industry that affects almost every person in our nation. The same lack of knowledge is shared with many journalists whom are irresponsible when influencing the opinion of millions of viewers.

Sen. Richard Shelby of Alabama has doomed the industry, calling it a dinosaur. No Mr. Shelby, you are the dinosaur, with ideas stuck in the '70s, '80s and '90s. You and the uninformed journalist and senators that hold onto myths that are not relevant in today's world. When you say that the Big Three build vehicles nobody wants to buy, you must have overlooked that GM outsold Toyota by about 1.2 million vehicles in the U.S. and Ford outsold Honda by 850,000 and Nissan by 1.2 million in the U.S. GM was the world's No. 1 automaker beating Toyota by 3,000 units. When you claim inferior quality comes from the Big Three, did you realize that Chevy makes the Malibu and Ford makes the Fusion that were both rated over the Camry and Accord by J.D. Power independent survey on initial quality? Did you bother to read the Consumer Report that rated Ford on par with good Japanese automakers. Did you realize Big Three's gas guzzlers include the 33 mpg Malibu that beats the Accord. And for '09 Ford introduces the Hybrid Fusion whose 39 mpg is the best midsize, beating the Camry Hybrid. Ford's Focus beats the Corolla and Chevy's Cobalt beats the Civic.
When you ask how many times are we going to bail them out you must be referring to 1980. The only Big Three bailout was Chrysler, who paid back $1 billion, plus interest. GM and Ford have never received government aid.
When you criticize the Big Three for building so many pickups, surely you've noticed the attempts Toyota and Nissan have made spending billions to try to get a piece of that pie. Perhaps it bothers you that for 31 straight years Ford's F-Series has been the best selling vehicle. Ford and GM have dominated this market and when you see the new '09 F-150 you'll agree this won't change soon.
Did you realize that both GM and Ford offer more hybrid models than Nissan or Honda. Between 2005 and 2007, Ford alone has invested more than $22 billion in research and development of technologies such as Eco Boost, flex fuel, clean diesel, hybrids, plug in hybrids and hydrogen cars.

It's 2008 and the quality of the vehicles coming out of Detroit are once again the best in the world. Perhaps Sen. Shelby isn't really that blind. Maybe he realizes the quality shift to American. Maybe it's the fact that his state of Alabama has given so much to land factories from Honda, Hyundai and Mercedes Benz that he is more concerned about their continued growth than he is about the people of our country. Sen. Shelby's disdain for "government subsidies" is very hypocritical. In the early '90s he was the driving force behind a $253 million incentive package to Mercedes. Plus, Alabama agreed to purchase 2,500 vehicles from Mercedes. While the bridge loan the Big Three is requesting will be paid back, Alabama's $180,000-plus per job was pure incentive. Sen. Shelby, not only are you out of touch, you are a self-serving hypocrite, who is prepared to ruin our nation because of lack of knowledge and lack of due diligence in making your opinions and decisions.
After 9/11, the Detroit Three and Harley Davidson gave $40 million-plus emergency vehicles to the recovery efforts. What was given to the 9/11 relief effort by the Asian and European Auto Manufactures? $0 Nada. Zip!
We live in a world of free trade, world economy and we have not been able to produce products as cost efficiently. While the governments of other auto producing nations subsidize their automakers, our government may be ready to force its demise. While our automakers have paid union wages, benefits and legacy debt, our Asian competitors employ cheap labor. We are at an extreme disadvantage in production cost. Although many UAW concessions begin in 2010, many lawmakers think it's not enough. Some point the blame to corporate management. I would like to speak of Ford Motor Co.
The company has streamlined by reducing our workforce by 51,000 since 2005, closing 17 plants and cutting expenses. Product and future product is excellent and the company is focused on one Ford. This is a company poised for success. Ford product quality and corporate management have improved light years since the nightmare of Jacques Nasser. Thank you Alan Mulally and the best auto company management team in the business.
The financial collapse caused by the secondary mortgage fiasco and the greed of Wall Street has led to a $700 billion bailout of the industry that created the problem. AIG spent nearly $1 million on three company excursions to lavish resorts and hunting destinations. Paulson is saying no to $250 billion foreclosure relief and the whole thing is a mess. So when the Big Three ask for 4 percent of that of the $700 billion, $25 billion to save the country's largest industry, there is obviously oppositions. But does it make sense to reward the culprits of the problem with $700 billion unconditionally, and ignore the victims?
As a Ford dealer, I feel our portion of the $25 billion will never be touched and is not necessary. Ford currently has $29 billion of liquidity. However, the effect of a bankruptcy by GM will hurt the suppliers we all do business with. A Chapter 11 bankruptcy by any manufacture would cost retirees their health care and retirements. Chances are GM would recover from Chapter 11 with a better business plan with much less expense.
So who foots the bill if GM or all three go Chapter 11? All that extra health care, unemployment, loss of tax base and some forgiven debt goes back to the taxpayer, us. With no chance of repayment, this would be much worse than a loan with the intent of repayment. So while it is debatable whether a loan or Chapter 11 is better for the Big Three, a $25 billion loan is definitely better for the taxpayers and the economy of our country.
So I'll end where I began on the quality of the products of Detroit. Before you, Mr. or Ms. Journalist continue to misinform the American public and turn them against one of the great industries that helped build this nation, I must ask you one question. Before you, Mr. or Madam Congressman vote to end health care and retirement benefits for 1 million retirees, eliminate 2.5 million of our nation's jobs, lose the technology that will lead us in the future and create an economic disaster including hundreds of billions of tax dollars lost, I ask this question not in the rhetorical sense. I ask it in the sincere, literal way. Can you tell me, have you driven a Ford lately? Jim Jackson Elkins

Why Advertise in a Recession

Well, now that the Senate has declined the opportunity to extend a loan to the Big Three, you may be wondering - what the heck will my business look like next year? As I've said before, I don't believe the future of the aftermarket is all gloom and doom. Yes, our economy is a little shaky, but people still need to get their cars fixed. And tools will break, and worn-out equipment will need to be replaced.

How do you get your share of the sales? Besides continuing to improve on your "blocking and tackling" I would put forth another recommendation: look at your advertising and improve upon it in 2009 to gain market share. It's easy for me to say - just advertise more.... but it is not that simple. You truly must examine your message. Is it still right for current conditions? Does it say what you want to express to your customers? Will it help sell more tools or equipment? Does it meet your needs? If not, you need to adjust.

Today, there exists a large body of data that clearly shows there is a direct cause and effect of increasing or decreasing advertising during recessionary periods. In summary, they show:
Advertising builds brand strength: Companies that invest more in advertising over a period of years experience faster growth than those that spend less.
Advertising speeds recovery: Companies that have increased their advertising during a recession have recovered more rapidly than their counterparts that have maintained or reduced advertising.
Advertising affects sales: Organizations that have continuously increased their advertising investment have enjoyed similar increases in sales. For example, Meldrum & Fewsmith Advertising and the BPA studied 64 business-to-business companies that advertised during a recent recession. Thirteen firms cut advertising an average of 20 to 50 percent during the two years of recession, while the remaining firms increased their advertising investment 30 to 70 percent during the period. Those firms that increased their advertising stance not only continued to grow but also grew at a more rapid rate when the country's financial picture improved. This growth was achieved in both sales and net income. The results have been similar in every advertising investment study conducted since the 1920s.

The first study, conducted by Roland S. Vaile, covered advertising and sales of 200 firms between 1920-1924. He concluded that a definite spread occurs between sales of firms that increase their advertising and those that decrease it. He added that, when intensive advertising during the depression was part of the sales technique, sales were maintained in better volume than when advertising appropriations were cut.

Recessions and Competitive Edge
For more than 80 years, advertising agencies and publications have been telling client management that a recession provides a unique window of opportunity for those firms that are market driven. Marion Harper, former president of McCann-Erickson once said, "A time of recession is the most favorable time for a change in competitive positions. Companies that are second in their fields, by applying extra pressure and devising creative strategies, can gain advantages that they can carry into times of prosperity. Whatever their position, if companies wish to be growth companies, they must certainly behave like growth companies." Charles Brower, former president of BBDO, stated, "Instead of waiting for business to return to normal, you should be cashing in on the opportunity your overly cautious competitors are creating for you ... the fact that your competitors are pulling back can make your advertising dollars look and act even bigger. There are few things as detrimental as a lapse in advertising. It costs much more to get advertising momentum up than it costs to keep it going. Once you let momentum die, you must start almost from scratch again."

The producer who maintains his or her normal level of promotion when competitors have reduced theirs soon finds that they gain a similar increase in competitive share of market. It provides a rare opportunity for management to change market position. Then when business improves, they will grow at a much higher and more profitable rate. One of management's most important roles is to exploit competitive opportunities. While most management teams tend to hold off on being aggressive until all of the marketing variables are favorable, this action puts you right back in the middle of the pack so that you are competing with all of your competitors.

Taking this approach, some of your advertising investment is an expenditure since you have to vie head-to-head and toe-to-toe with your competition rather than taking advantage of opportunities. In today's refinement of marketing warfare, the winner is the one who takes optimum advantage of every strategic and tactical marketing blunder by his or her competition. The smart marketeers acknowledge that economic cycles are elements in the marketing battlefield that have to be used to advantage if the firm is to improve its position and increase marketshare.

Back To Basics

The Smith Center High School football team has won 51 games in a row and has outscored opponents this season, 704-0 (2007).

Blocking and Tackling. Blocking and Tackling. If you have a team that can conquer the basics of blocking and tackling, chances are you'll win most of the games in which you compete.

When we talk about the basics of marketing and selling strategies, we begin with research and planning. My dad used to say, "you'll never know where you're going without a roadmap." It's the same for sales growth, and marketing research can help you determine your path.

Your research should help you:

  • find out what customers want and expect, in both a product and a purchase experience

  • find out what customers like and don't like about your company, product or services

  • find out what they would like to experience in a product or purchase

  • determine what is working/not working

  • determine the age, gender, lifestyle etc. of your customer

  • determine what is working/not working for your competition

  • determine who your competition is different from you

  • determine your competitor's long-term plans

As part of your research, do an internal SWOT analysis with your management team, and with your sales and marketing team.

With your research completed, you should be able to assemble your sales and marketing team to review the results, and then write a marketing plan that addresses your customers desires and competitive issues against your company goals. The physical action of writing a marketing plan requires your team to think about your overall sales, marketing and profitability goals, and determine the best way to meet those goals. This research and planning period will also provide direction as you consider the tools you'll need to use to meet your goals: advertising, sales promotions, POP materials, employee training, PR and community relations.

Use your marketing plan to outline how to leverage what your customers want against what you want (increased sales and profits). Your marketing plan should help you determine if you need to target segments of a market or investigate new markets. It should help you understand the best approach you should take to build your brand in a market.

After the marketing plan is complete, the next step is to outline your communications plan, and the budget required to support it. This budget should include marketing communications such as advertising, promotion, publicity, and trade shows.

Marketing plans should be carefully planned to acheive both your short and long-term sales goals. They should be flexible, so they meet the changing needs of your customers' needs and wants. But they should also be fairly well fleshed out, so you guidelines that are easily understood and undertaken by your entire sales and marketing team.

Once you've finalized your plan, communicate it to your team. In an average economy, this time of year can be challenging in our business. Given our current economy, now might be the right time to upgrade your sales team. I've heard many manufacturers and distributors are letting sales people go and not replacing them. I think that's a big mistake. (You needed sales people last week, but all of a sudden today you don't?) I wouldn't advocate keeping someone on because they've always worked for you. You need the right people on the bus, and they need to be able to perform the right functions. If they can't, stop the bus and ask them to get off......With the average cost of a business-to-business sales call costing over $500 (double the cost of 5 years ago), and on the average, each sale requiring at least five sales calls* - you need to be confident you have the right salespeople in position. *info courtesy of
In today's industry, advertising is being used to assist in reducing the overall cost of doing business. The average cost of a business-to-business sales call has risen to over $500 (double the cost of 5 years ago), and on the average, each sale requires at least five sales calls. If advertising can substitute for one or more of the personal sales calls, the effect can be accomplished for pennies.

Monday, December 8, 2008

Perspective on Salaries

In 1815, U.S. senators made $6.00 per day, representing their constituents. By 1817, their salaries were raised to $1,500/year. By 1983, the salary was $69,800, and by 1993 it almost doubled to $133,600. Today it stands at $169,300. The 100 U.S. Senators represent the entire U.S. population of 305,835,798 (living in the U.S. and abroad).

In the last period reported (2007), GM's G.R. Wagoner Jr., was paid $1,558,333 in salary, and an additional $12,857,581 in stock, options, and incentives, for a total gross income of $14,415,914. I think he'll be ok with making $1 in salary next year. He (and G.M) represent hundreds of thousands of working, middle-class Americans, that are manufacturing stuff. Not just cars of course, but they represent machinists, and printers, and parts manufacturers, etc. With all the tier one and tier two suppliers underneath the car manufacturing industry, newspeople tell us one out of ten people's lives are touched by these guys.
The top 3 highest paid celebrities made $410 million last year. Oprah Winfrey grossed $275 million. Tiger Woods made $115 million and Angelina Jolie made $20 million. Oprah and Tiger represent themselves. Angelina represents Brad and her 6 kids.

And let's look at Forbes' Top 50 Wealthiest people in the U.S. With a net worth of $59 billion, of course Bill Gates still tops the list. He develops software and hardware and has most of it made overseas. Number two is Mr. Warren Buffett, at 77 years old he's worth $52 billion, all made by investing. Number three is Sheldon Adelson, worth $28 billion. At 74, he's Las Vegas's biggest bigwhig (though I guess not so big since the stock market tanked and he's having trouble filling his Venetian hotel with guests, even at $149/night). In the entire top 50 list there is only ONE MANUFACTURER represented, and it's Nike at number 30. Mr. Philip Knight is worth a paltry $9.8 billion. (And where does NIKE make most of their stuff?......)

My point is this - in the tool world, and even more specifically in the automotive tool world, there aren't many of us who will ever be "rich rich". There's no question you can make a great living in this business. We'll do well. We'll raise families, send our kids to school. We're all pretty much workers, trying to get ahead in this world by providing a product to a technician or shop that we feel will help them do their job faster, better, safer or more efficiently. You won't read about us in the gossip pages, and you won't see us hanging out with Paris Hilton or Barack Obama or the soon to be former Governor or Illinois.

But if you look at the people mentioned above, where does their value to the American people truly lie? And are they compensated justly for the "job" they hold? What are your thoughts?

(I apologize for the weird layout of photos. I have not mastered the art of dropping photos in throughout the posting. Need an advisor for that.)

Thursday, December 4, 2008

A Smart Start to 2009

As we have all heard and all said, these are unprecedented times in business.
We all read the news about how bad business is and hear about budget cuts and layoffs.
It makes us think about our approach to selling ads and how aggressive we should be in asking for the order.

In Today's Ad Age email was a guest article from an agency exec to other agencies.
I thought the following words could/should be adapted for any of us who write orders and sell stuff. (Italics and bolds are my edits.)

He writes, "Don't be afraid to sell stuff. Our clients sell stuff. Our job is to make sure they sell more of it and sell it more profitably. Retail drives the sales. Branding drives value and profit -- it's really that simple. It's your job to be nimble and savvy enough to see what's not working, pull it and replace it with something that does work, and you do it as many times as necessary to serve your client. If you are embarrassed to admit you sell stuff, you may as well get out of the business because my agency -- and those that think like us -- will run your ass over. The common logic right now is to retreat. And the common result is decreased budgets and, in turn, decreased sales, share and profitability. If you get caught in this downward spiral instead of working to stop it, you're finished. "

I'll repeat his words, Branding drives value and profit.

And I have to rephrase his comment - History has shown that if you foldup your tent during tough economic times, chances are you won't have a place to unfold when good times return. Why? Because the people who push forward, the people who don't give up, and the people who advertise, are the ones who will be successful. And they will take market share from those who hide behind budget cuts.

(Classic historical example is Post cereal v. Kelloggs in the 1930's. One was the premier cereal company in the world. One was number two. Number One quit advertising during the depression. Number Two did not. By the end of the Depression, Number Two had risen to become the Number One cereal company in the world, and the former number one? Well, they never fully recovered. You can tell which one won the fight by checking out the cereal aisle the next time you're in the grocery store.)

Tuesday, December 2, 2008

Tool & Equipment Trends - According to our Readers

A couple of weeks ago I reported on the "lifestyle" of today's technicians. Today, I can share the results of our survey on Tools and Equipment. These results reflect the shop owner's experience, not the technician. I have to apologize ahead of time for the manner in which I'm sharing this info - it was a little tough to pull into a cohesive format.

We surveyed the readers of our TechGroup magazines: Underhood Service, Import Car, and Brake & Front End in order to collect up-to-date information on the types of tools and equipment found in independent repair shops. This is another important distinction to make - this information all comes from independent repair shops - no dealerships. We also measured the importance of various attributes affecting tool purchases and the sources of information that shop owners use when they make their purchasing decisions.

Surveys were mailed in September, 2008, and the responses were compiled in October. Once again, I'm just going to share the highlights. A complete copy of the survey results can be made available on request. Of course, I can never resist editorializing as I go....

  • 86% of our respondents were either the owner or partner, 12% were managers
  • 81.4% have complete purchasing authority on new auto service equipment, 12.2% share the authority with others
  • Average dollar value of all personal tools used professionally is $65,300
  • Average amount spent on tools each month is $455
We asked, "where do you receive the MOST information on new tools?". 73% said from Trade magazines. The next largest percentage was 17% from mobile distributors. Websites only scored a 2%, and the manufacturers' website scored 0%. I found that VERY interesting. On one hand, good for me because it means our readers still find quite a bit of value in our magazines, and (hopefully) so do our advertisers because their message is being sought out in trade magazines. On the other hand, possibly bad for the manufacturer who has invested quite a bit of $$ in their website, and they may or may not be getting a good return on their investment. You decide.

What makes a technician or shop owner buy a tool? Do you think it's brand, where it's made, price?

According to our readers, the BRAND drives their decision most often. Our readers specify a particular brand frequently or always 73% of the time. If they don't specify, it's because 77% know the brand the vendor will supply.

What helps drive a tool-buying decision? Number one answer is warranty, followed by brand, then availability.

When asked what the 3 most important purchase factors were after brand, 92% chose quality, followed by warranty and then competitive pricing.

Where do they buy their tools & equipment?
57% of their purchases are made from mobile distributors, 14% are purchased from tool & equipment WDs, and the other 29% is dispersed amongst retailers, full-line WD, online, direct from the mfg, and from dealerships.

Have their purchasing habits changed? For a few - yes. 17% have decreased their purchases from the mobiles. While 33% have increased their purchases on-line. (I would still guess that on-line purchase amount is small compared to the rest of their purchases, but can't substantiate my gut feel.)

Specific Product info
  • Battery chargers, compressor, tool box/cart - in 90% or more of the shops
  • Pneumatic tools, test equipment, shop lights - in 82% - 86% of the shops
  • Lifts, specialty hand tools, specialty sockets/wrenches and diagnostic tools are in 79% of the shops surveyed
  • 23% had hybrid specialty tools and just
  • 19% had flash reprogrammers

And the answer to my favorite question, "Would you find a Buyers Guide of Tools and Equipment useful? 87% said yes, and most said they would hold onto it for 6 months or more. Music to my ears, because we're getting ready to go to press with our 2nd annual Buyer's Guide early next month. And we're the only publisher in the industry that has a printed (as well as on-line) version. After all, our customers are still finding most of their product information from the printed page!

One last comment about this segment of our readers, they reported that they typically spend 46% of their time diagnosing and repairing vehicles. Even though they own multi-bay shops, and they employ 2 or more technicians, they are still spending an incredible amount of time IN the business, versus working ON their business. Only 8% of their time is spent meeting with suppliers. If you are a supplier to this market, you need to understand that as you go forward in your marketing plan. They see a supplier less than 40 minutes/day - and that "supplier" could be a sales rep, a mobile distributor, or a factory person. Ask yourself this question, When you are not in front of them, what have you done to make them remember you?

Tuesday, November 25, 2008

More Economic Theory

I'm not an economist by any stretch of the imagination, but I enjoy reading and hearing what people think about our current economic situation. It's all part of my ongoing education.

Since most respondents to our current survey don't believe the U.S. Government should bail out the Big Three Carmakers, I thought you might be interested in this viewpoint from the Misess Economics Blog (can be found at (I thought this was an Austrian economic think tank, but it's actually located in Auburn, AL., it merely works to "advance the scholarship of liberty in the tradition of the Austrian School" and honestly - I'm not really sure what that means..... But I still found the entire article interesting.

Best Explanation in One Sentence
November 25, 2008 3:08 PM by Jeffrey Tucker

From Llewellyn Rockwell in this piece: "If the money is used to prop up failing companies, that's particularly bad since it is an attempt to override market realities, an attempt that is about as successful as trying to repeal gravity by throwing things up in the air."

For me, reducing economic theory to a one-sentence anology is overly simplistic, yet sometimes quite effective. For a more in-depth analysis, go to the blog. One reader's response was interesting, he said, it's like giving heroin to a heroin addict and expecting him to change.

Monday, November 24, 2008

Thanksgiving Travel - The driving decline continues

Our friends at AAA have forecast a small decline in the number of Americans traveling during the Thanksgiving holiday weekend. This would be the first decline in Thanksgiving holiday travel since 2002 and the fourth consecutive holiday this year with a year-over-year decline.

Some 41 million Americans are expected to travel 50 miles or more from their homes for Thanksgiving weekend — a decrease of 600,000 travelers, or 1.4 percent, from last year’s total of 41.6 million travelers. (but really, who counts them once you're past the 40 million mark?)

More than 33.2 million Americans, or 81 percent of all holiday travelers, are expected to travel by automobile. That’s a 1.2-percent decrease from the 33.6 million people who drove a year ago. Even with the recent decline in gas prices, people are still reporting they're going to stay home.

Who will travel and where will they be?

  • Southeast: 8.8 million
  • West: 6.9 million
  • Midwest: 6.5
  • Great Lakes: 6.1 million - I think most of these 6.1 million people will be on I-71 along with me and my family.
  • Northeast: 4.8 million

Whether you're going over the river and through the woods to Grandmother's house, or staying home, best wishes for a Happy Thanksgiving. Safe travels wherever this week takes you!

Wednesday, November 19, 2008

Our New English Language

I have two teenage sons, so I have become quite proficient at how to spell now (the close of 2008, the dawn of 2009). You remember the old, "if you can read this, thank a teacher"? It's now, "f u cn red ths, thnk a tchr." Yes, it gets a little under my English graduate skin to even type that out but, if it saves money while texting, I'm all for it. I'm not lol.

Where I have to draw the line though, is when I see, read about, or hear adults making up new words. One of my least favorite is "incentivize" or "incent". Neither are real words. The word, incentive, is a noun meaning to "incite some type of change or behavior". Let's leave it alone, please. Find a real adjective to suit your subject matter.

But what got me going on this topic today was an article I saw recently in Ad Age magazine. The article presents a review of a recent discussion amongst ad agency personnel at a CMO Roundtable a the Association of National Advertisers annual conference in Orlando, FL. Apparently, they expressed concern that many of their clients are increasingly bypassing their usual media and creative agencies and instead, turning to media companies (perhaps like Babcox?) for creative marketing ideas. So far, the topic doesn't bother me too much. But then, this:

"If I were an agency, I would be really worried about being disintermediated," said Becky Saeger, CMO of Charles Schwab and new chairman of the ANA. "more and more, agencies are almost in the way sometimes."

Now, I know as a Publisher I should consider the content (which I find very interesting actually). But as a person with an English degree and a lifelong interest in language, the fake word, DISINTERMEDIATED, really ticks me off. For clarity's sake, say what you mean and mean what you say. Did she mean to use the word, disinter (to dig up) or maybe disintegrate (to separate into components) or disjoin (to disconnect) - which is probably close to what she meant. Or, perhaps she meant to say, "If I were an agency, I would be really worried about being FIRED."

Please - don't send me any e-mails with made up words... Or if you're going to make up a word, at least use a little creativity! Just because you add a prefix, a suffix, or an -ly at the end doesn't make it a word!

And don't think this is a rant against ad agencies - because it is not. We work with some excellent agencies that are very creative and bring a lot of great ideas to our clients. I like the idea of working with an agency and a client together. That triumvirate can generate a lot of new ideas and can move in directions that neither one individually may have considered.

Just........I'm able to handle the text-spell, just QUIT MAKING WORDS UP!

If you really feel the need to use new words, then check out the Chambers Dictionary online. I think I'll stick with Websters.
And don't even get me started on all the new names for people that seem to have come into being over the past decade or two. K?

thx. TTFN

Profile of Today's Technician

We recently conducted a survey of the readers of our TechGroup magazines, specifically skipping over the shop owner and going directly to the technician. Today, I'm going to outline the "lifestyle" of today's U.S. automotive technician. Check back later for an overview of their tools and equipment purchasing trends.

Our methodology: We mailed and collected the responses to our survey from mid-September to mid-October, 2008. Our objective was to gather informaton on the demographics and lifestyles of professional auto repair technicians. We have a professional research team on staff here, so it was not just me and couple of local auto techs sitting around shooting the breeze. We're serious about research..... (though I realize you may be wondering why there's a picture of Mickey Mouse in an article about research. more to come on MM.)
In order to keep this a quick read, I'm just going to list some of the highlights of our research:
  • Our respondents have been technicians for an average of 20.9 years, with 33% being in the business for 26 years or more.

  • The majority of our respondents have been working at their current location for over 5 years, with the average being 11 years.
  • 46% of these technicians began working in the business by the time they were 18 years old. The next largest category (10%) began at the age of 19. (Good reason for you to consider advertising to student technicians today - they start young and stay in the business for a looooooong time.)
  • 63% hold ASE certifications, with an average of 5 certifications each.
  • For those technicians paid hourly, 32% have an hourly rate of $16 or less, while 21% cite an hourly rate of $25 or more.
  • The average number of hours worked per week is 44.4
  • The average age of our technicians is 41.8 years old. 68% are married. When asked how many more years do you expect to remain an automotive technician, the average answer was 13.1 years.
  • 38% are HS graduates and 30% went to technical or a trade school.
  • Our technicians own or lease an average of 3.9 vehicles, with cars/light trucks/SUVs making up 88% of their vehicles. Others are motorcycles, RV, motor homes, snowmobiles, ATVs.
  • What do you think technicians like to do in their spare time? Well, according to the survey, their favorite passtime is fishing (46%), followed by boating (32%) and travel (28%). Surprisingly, just 22.5% enjoyed motorsports as a leisure activity (why do so many manufacturers spend so much money to support motorsports then?) Only 11% enjoy golf. (of course, perhaps a lot more of them golf, but only 11% enjoy golf.)
  • Internet use - 93% have access to the internet (70% have access both at home and at work).

Then we asked them some broader industry questions and asked if they agree or disagree.

Here are the areas where they strongly agree: The shop where they work is a decent place to work (that explains the length of time.); There is a shortage of trained technicians.; It is difficult to keep up.

They were more neutral about their opportunity to advance in the industry and some apparently feel the public doesn't respect their skills (something we all need to keep in mind as we work to promote our industry both within and outside of our business networks.)

Finally, 53% indicated they might change careers. Of those, 42% would remain in automotive, but not as a tech, 26% want to become a shop owner, and 32% would seek something outside the automotive field.

One final note: Happy Belated Birthday Mickey Mouse! Yesterday was the 80th anniversary of Mickey Mouse's appearance in Steamboat Willie. 80 years, several modifications, and solid marketing........ today Mickey Mouse is one of the most recognizable brands/images on the planet. Even though his primary target market is children, people of all ages, income levels, lifestyles, and education recognize the black mouse with white gloves (and MM is rarely if ever confused with Michael Jackson, who is a person (not a cartoon character) known to wear one white glove from time to time.) That is great branding - no matter how you analyze it.

Friday, October 31, 2008

Coach: a private instructor; to train

Coach Ernie Pantuso - who didn't love him? I guess you could say the same about Knute Rockne, but I never saw him in action. Never even saw the movie about him. But, I saw Cheers plenty of times with Coach at the bar, always ready to give someone a boost, a pat on the back, a shoulder to cry on, or just a good friend to listen to. Slow as he could be at times, everyone liked Coach, and he liked everyone back. Even Carla Torelli never had a bad thing to say about him.
At any given time in our careers, we may have the opportunity to be a coach to someone in our industry. That person may be older or younger. May have a little or a lot of experience. May have a different viewpoint. May not be a good fit for the business at all, but you're stuck with them. Coaching is tough - whether you do it for pay or for more personal reasons - being a good coach can be very difficult, and also very rewarding. And unlike the Coach from Cheers, not everyone may like you as a coach.
Here are some observations I've made of good coaches I've experienced in my own career:
A good coach should look for ways to develop their people. Once you've recognized a potential for leadership and determined the skills and abilities necessary for growth in a position, help that person develop those skills. You should work with that person on an appropriate development plan that includes constructive feedback. Always hold people accountable. A deadline is a deadline, not an option. Reward and recognize success, analyze and improve on failure.
A good coach should be able to delegate responsibilities. Your people can't grow and develop if you give them a project then look over their shoulder 99% of the time. Believe in your employee's ability, and then give them the leeway to be successful. Provide a guideline, but use one without a garrot at the end.
Excellent communication skills are really critical for a good coach. You have to be a good listener because you have to teach your people to listen well. Another important aspect of a coach's communication skill is the ability to stay positive. Without being a "pollyanna" a good coach can stay positive under pressure and lead a team to success. Even in times like these.
Can you be a good coach if you're not a good decision maker? Simply, no. Make a decision, set a course of action with appropriate timelines, and accept responsibility. Anticipate needs and any changes and take action when necessary. Be prepared to change. Keep the right people in your organization in the loop! One coach I had liked to say, "I can take bad news, but I don't like surprises."
The hardest thing about being a good coach is - many times you have to coach a person without them knowing it. Sometimes you will have a formal coaching session, but usually you won't want to sit down with someone and begin a conversation with, "so, today let's talk about goal-setting....." Pretty obvious eh? So - practice your coaching skills. A good coach is a good leader, and leads to a good organization. If you're better than good, it won't be long before the performance of your company improves as the people you coach improve.
And my favorite Coach quote (though not for business use):
COACH: Can I draw you a beer, Norm?
NORM: No, I know what they look like. Just pour me one.

Monday, October 27, 2008

Wal-Mart Gets Healthy and Goes Green!

Interesting news from Wal-Mart (if true, and if they hold their suppliers to these standards). No other single retailer could pull this off - if they do manage to make these changes, it could affect the way China does business with all countries, across all types of manufacturing. It would definitely be good for the consumer, and better (than now) for the environment. Considering the magnitude of their supplier base, a 2-year roll-out seems aggressive. They have already pressured their suppliers into certain environmental improvements (well, they've turned out to be good for the environment, but the driver was cost savings.) For example, the smaller bottles of laundry detergent that you're seeing on store shelves, thank Wal-Mart. They needed to reduce the cost of overseas freight per piece, so they directed their suppliers to concentrate their liquid and package it in something smaller..... The power of Wal-Mart....

Wal-Mart Imposes New Safety, Environmental Standards on China Suppliers
The world's biggest retailer, Wal-Mart, last week announced strict new corporate social responsibility guidelines for the Chinese companies that produce the products that it sells. The new guidelines, which will raise quality control standards and adherence requirements for national environmental laws for suppliers, were implemented in the wake of ongoing quality and consumer-safety concerns with Chinese-produced goods.

Wal-Mart is viewing these measures as a way to allay consumer fears over the safety of Chinese products on their shelves. The company stated that they will not buy from companies that do not comply with the new practice standards. Companies dealing with Wal-Mart will also be required to list the names and addresses of all subcontractors – the small factories where quality and safety concerns can often originate.

The new process will begin on Jan. 1 and will be phased in over two years. Additionally, Wal-Mart is holding suppliers to increased energy efficiency measures in hopes of improving energy efficiency by 2012.

Friday, October 24, 2008

Highlights from Snap-on's 3rd Quarter Results

Here's the detail you won't find on the wire services:

Snap-on Announces Record Third Quarter 2008 Earnings
Diluted EPS of $0.94 increases 34.3% over $0.70 earned last year; Sales increase of 2.5%; Expects continued year-over-year earnings improvement for balance of 2008
Snap-on Incorporated (NYSE: SNA), a leading global innovator, manufacturer and marketer of tools, diagnostics, equipment, software and service solutions for professional users, today announced operating results for the third quarter of 2008.

"We are very encouraged by our third quarter results, especially given the current global economic challenges," said Nick Pinchuk, Snap-on's president and chief executive officer. "We continue to focus on fortifying our already strong business models, pursuing geographic and customer diversification, and driving our value creating processes, including innovation and rapid continuous improvement. These are the activities that have created the string of encouraging results over the last few years and we're confident they will serve us well going forward.
"The global economic challenges have made forecasting uncertain," said Pinchuk. "Snap-on, however, remains positive looking forward and believes that continued execution of our core strategies will support improved year-over-year earnings again in the fourth quarter. Finally, as we report these results, it's clear that the progress would not be possible without the dedication and support of our franchisees and associates. I thank them for their extraordinary contributions."

Highlights of Snap-on's third quarter 2008 operating results are as follows:

Net sales
of $697.8 million increased $17.1 million, or 2.5%, over prior year, including $12.1 million from currency translation.
Gross profit improved to 44.7% of net sales in 2008 from 44.2% in 2007;
Operating expenses improved to 33.0% of net sales in 2008 from 34.4% in 2007.
Operating earnings of $86.4 million increased 19.3%, or $14.0 million, over prior year; currency translation contributed $0.3 million of the increase. As a percentage of revenues, operating earnings improved to 12.1% in 2008 from 10.4% in 2007. For the nine months ended September 27, 2008, operating earnings improved to 13.0% of revenues, as compared to 10.7% in the year-ago period.
Net earnings of $54.6 million increased 32.8% from $41.1 million in 2007; diluted earnings of $0.94 per share increased 34.3% from $0.70 per diluted share in 2007.
For the twelve month period ended September 2008, pretax return on invested capital was 22.0% as compared to 18.4% for the comparable 2007 period. Pretax return on invested capital is defined as earnings before interest and taxes divided by the quarter-end average of shareholders' equity and net debt.
Commercial & Industrial Group segment sales of $338.1 million were up $10.2 million, or 3.1%, from prior year.
Excluding $12.4 million of currency translation, sales declined $2.2 million year over year as continued growth in emerging markets, contributions from increased sales of power tools, higher sales of tools, kits and tool storage products to industrial customers, and continuing strong sales in our innovative, imaging aligner units were more than offset by lower sales of professional tools in Europe and by sales declines in other wheel service equipment worldwide.

Operating earnings of $40.7 million increased $8.0 million, or 24.5%, from prior year as contributions from higher pricing and savings from ongoing Rapid Continuous Improvement (RCI) initiatives were partially offset by the lower level of organic sales and commodity cost increases. As a percentage of sales, operating earnings in the quarter improved to 12.0%, as compared with 10.0% a year ago.

Snap-on Tools Group segment sales of $269.5 million increased $7.5 million, or 2.9%, from prior-year levels; currency translation contributed $0.4 million of the sales increase. Higher year-over-year sales in the company's international franchise operations were partially offset by a 0.3% decline in U.S. sales.

Operating earnings of $28.2 million were up $3.6 million from prior-year levels. Contributing to this increase were higher international sales, benefits from RCI initiatives and lower franchisee termination costs in the United States. These increases were partially offset by the impacts of a less favorable sales mix and $5.0 million of higher material and freight costs. As a percentage of sales, operating earnings in the quarter improved to 10.5%, as compared with 9.4% a year ago.
Diagnostics & Information Group segment sales of $155.1 million were up $3.1 million from prior-year levels primarily due to higher OEM program sales as a result of a new essential tool program in North America, increased sales of diagnostics products in Europe and higher sales of Mitchell1(TM) information products. These sales increases were partially offset by lower sales of diagnostics products in the United States and by lower sales at Snap-on Business Solutions, including expected lower sales from the planned exit of certain non-core product lines.
Operating earnings of $27.2 million were up $5.0 million from prior-year levels primarily due to benefits from RCI initiatives and contributions from the higher sales. As a percentage of sales, operating earnings in the quarter improved to 17.5%, as compared with 14.6% a year ago.
Financial Services operating income was $4.8 million on $18.0 million of revenue, as compared with $5.6 million of operating income on $15.8 million of revenue a year ago. Contributions from higher revenues in 2008, primarily as a result of lower market discount rates, were more than offset by higher year-over-year operating expenses, including $1.4 million of one-time, project-related costs.
Snap-on intends to continue investing in its strategic growth initiatives aimed at expanding value provided to its traditional customers, penetrating new and adjacent segments, and extending its presence in the emerging markets of Asia/Pacific and Eastern Europe. Snap-on also expects to continue implementing its RCI and low-cost sourcing initiatives intended to provide higher levels of profitability.
Based on current expectations, Snap-on expects that its earnings for the balance of 2008 will continue to exceed 2007 levels. Additional detail about Snap-on is also available on the Snap-on Web site.

Overall, Snap-on has posted decent numbers for this tough U.S. economy. And it appears they plan to maintain current initiatives to continue their growth plans.

Monday, October 20, 2008

Distribution Models for a New Century

What is the best way to distribute goods from a manufacturer to an end-user?

But first, some history of the automotive aftermarket: Back in the day, the tools and equipment were made in a small factory or machine shop, and the owner/general manager/sales manager loaded his products into the back of his car or truck, and made a week-long trip around a territory, selling as much as possible to the shops and technicians along his route. Upon his return home, he'd either make more stuff, or his partner would have it made by the time he got there. He'd load up and start all over again.
At some point, a middle-man sprouted. This middle-man was the jobber. I'm not sure, but I think the first mortar-and-bricks jobbers were a small group of NAPA stores, and the first mobile jobber, was Cornwell. The main difference between mobile jobbers and brick and mortar, is that the mobile jobbers generally sprang from their own manufacturing facility. As their business grew, mobile jobbers added products from other manufacturers. Both types of jobbers offered the manufacturer a a benefit in the distribution channel. They could receive larger quantities of goods at a time, and take on the expense of selling them to the end-user themselves because they built in a resale margin.
As time passed, warehouse distributors sprang up across the nation, offering the manufacturer even greater economies of scale. Now the manufacturer could ship a whole truckload of goods across the country and get paid for it immediately. A manufacturer could open up brand new markets, practically without even trying. All you needed was a good warehouse distributor with a decent market of jobbers - primarily brick and mortar. In the meantime, the mobile jobbers set up their own warehouses and increasingly supplemented their manufactured hard goods with supplied tools and equipment.
This model worked great in the 30's and 40's. Interstate roads and highways were being built. Greater distances were being covered more economically than any other period in our country's history. Cars and trucks were being driven and needed to be fixed. This model worked even better in the 50's,60's, and 70's. More miles were being driven, more roads were being created, more people were being created and more cars were being sold. It was a great time to be in the automotive aftermarket. No matter which end of the spectrum - it was all good!
Then came the 70's. OPEC, inflation, return of the VW, launch of Datsun and Toyota, gas shortages, conservations efforts. (And let's not forget - flared pants with white belts that had holes going all the way around your waist.....) (ok, let's forget the belt)...
Reality: In 1979, the average car owner in Ft. Worth, TX paid $.78/gallon for gas. By 1989, that price had gone up to $1.09, and nationwide the average was $1.28. We all know where it is today.
In the 1980's, distribution changed modestly. Retailers saw the automotive aftermarket and decided they wanted a piece of it. Remember Auto Shack? Bad old Radio Shack said they couldn't use that name, so Auto Shack became AutoZone. Sure there were regional retailers - Pep Boys had strongholds on the east and west coasts, but AutoZone came in determined to go nationwide. It was about this same time that we began to see "buying groups" organize. (call them what you will, that's my name for them).
I would argue that the late 70's and into the early 1980's saw changes that dramatically affected our industry, but many people in manufacturing and distribution failed to see the significance. So the manner in which we distributed goods and services to shops and technicians at the birth of this industry, did not change much during it's "turbulent teen years".
Uh - oh - Here comes Al Gore and he invents the world wide web. Now, we add the internet to our distribution model.
We thought the markets were mature then. The question is, now that the markets are REALLY mature, and many levels of distribution have saturated the U.S., will the model from the 30's and the 60's and the 80's continue into the mid-2000's? Should it?

Part two - to come. Stay tuned.

Friday, October 10, 2008

Jack's Yamaha

a reader sent in this picture. See his comments from an earlier blog. Sweet ride, eh?

Wednesday, October 8, 2008

Now EVERYONE will be Riding a Scooter

How to buy a scooter for your Commute
Want to save a ton of money on gas? Get out of your car and on a scooter

Liberated from an article by Laura T. Coffey on (edited by and additional commentary by me in italics.)

The economy is tanking. Bleak financial headlines are bombarding us every day. And on top of everything else, gasoline prices continue to be painfully high. (Though not as high as last week!)
If you’re on the prowl for ways to save as much money as possible right now, you may be among the growing numbers of consumers who are showing an interest in scooters. Of course, depending on the weather where you live, a scooter might not be a viable year-round answer for you — but get this: A cute and trendy scooter can cost as little as $4 to fill up. Just $4! (That's because they typically have a 1 to 1-1/2 gallon gas tank. My Vespa scooter gets about 60 mpg.)
Intrigued? The following tips can help you reflect on the pros and cons of owning a scooter.

1. Think about safety. Be aware that you could be putting yourself in serious peril for this simple reason: Many drivers of SUVs and other large vehicles will have a hard time seeing you. And driving a scooter in severely foul weather also can be dangerous. If you live in the Sun Belt and you’re willing to be serious about safety precautions, though, you could conceivably drive a scooter year-round. (I have ridden my scooter in the rain exactly once in three years. The end result was a soaking wet white t-shirt on a middle-aged woman. It was not pretty. I do not recommend driving in the rain.)
2. Do what you need to do. If you’re still interested in a scooter despite the risks, wear a helmet for protection – even if you’re exempt from doing so – and take a motorcycle safety course. For details on courses being offered near you, contact your state’s Department of Motor Vehicles or Department of Highway Safety. (I agree.)
3. Reflect on your commute. Are highways and other busy roads unavoidable, or could you travel on side roads with speed limits of 40 mph or less? This question will prove to be of huge importance as you shop around. (My route to work is exactly 3 miles, with no roads whose speed exceeds 40 mph.)
4. Are you new to two-wheeling it? If so, a scooter can be less intimidating than a motorcycle. Because it doesn’t have a clutch, you can just twist and go, and depending on the size of the scooter, you can get anywhere from 50 to 100 mpg. On the down side, scooters with smaller wheels can feel unstable when pushed to their top speeds, and only larger scooters can handle highway trips. (Piece-o-cake to master. Electric start, no prob.)
5. What will you need to carry? If you think you’d ever want to drive with an extra passenger on board, check specifications carefully to see how much weight the scooter can handle. Also make sure the scooter has enough cargo room to store all your stuff. Be aware that you may end up needing an add-on rack or top box for extra storage. (Forgot about carrying a passenger on any of the smaller scooters. You'll easily lose 5 - 10 mph due to the extra weight.)
6. Check out major brands. As you shop around, test drive scooter models with track records of reliability. These include Honda, Yamaha, Suzuki, Aprilia and Piaggio (LOVE PIAGGIO - maker of the VESPA). Make a note of how comfortable the seat is, how effortlessly your feet reach the ground and how easily you can move the scooter forward and backward while seated.
7. Know the rules. There’s a big difference between a scooter and a bicycle that’s propelled by pedals and an electric “helper motor.” You typically won’t need a license to ride an electric helper-motor bike, which usually can’t go faster than 20 mph. In many states you will need an operator’s driver license, tags and registration for a scooter, which generally displaces less than 50 cc. If the engine of your two-wheel ride is more than 50 cc, you’ll likely need a motorcycle endorsement on your driver license or a motorcycle-only license. Check with your state’s Department of Motor Vehicles about the specific rules where you live.
8. Invest in insurance. It may only set you back by about $100 a year – revealing yet another way scooters help drivers save money. The coverage is worth the price, especially because scooters can be quite easy to steal. (And as my insurance agent told me, you really don't have to worry about collision, because it's doubtful you'd survive.)
9. Buy the right gear. In addition to a helmet, you also may want to opt for a full-face shield for protection from wind, rain, bugs, small rocks and dust. Brightly colored, motorcycle-specific clothing that you wear over your street clothes can help you to be more visible to other drivers and can protect you from road rash in the event of an accident. (I've got a full-face black helmet and a hot-pink power rangers jacket for protection and warmth.)
10. Make parking plans. Check on the rules for parking scooters at your place of employment and near your home. Street parking may be an option for you, but you’ll have to weigh the risks of the scooter being defaced or knocked over. Also, some parking garages won’t allow scooters at all, and if they do, they may charge the same fees that they charge for regular cars.
Sources and resources
Consumer Reports’ Cars Blog
American Motorcyclist Association
Associated Content
© 2008

Thursday, October 2, 2008

Who will be there in 2009?

Nearly 1 in 5 car dealerships could fail: studyWed Oct 1, 12:25 PM ETDETROIT (Reuters) -

As many as 3,800 U.S. car dealerships could fail this fall and into 2009 -- nearly one in five -- because of weak sales, increased operational costs and the credit crunch, according to a forecast released on Wednesday." An increasing number of dealers are simply closing their doors because sales have plummeted, credit has dried up, the overall retail environment is increasingly challenging and potential investors are sitting on the sidelines," said Paul Melville, a partner with Grant Thornton LLP, which issued the forecast. "In addition, the domestic automakers who badly need retail consolidation are not spending much of their scarce capital on the problem because the economy is doing it for them," he said. Bill Heard Enterprises Inc, one of the biggest General Motors Corp Chevrolet dealerships, filed for bankruptcy on Sunday, citing operating losses, decreased demand for vehicles and lack of credit. At its peak, Alabama-based Heard's revenue was about $2.5 billion per year, according to the bankruptcy filing. With U.S. light vehicle sales predicted to drop to the 13.7-million-unit range in 2009, the study said that about 3,800 dealerships, about 18 percent of the total number of U.S. car dealerships at the end of 2007, will need to close. U.S. vehicle sales are expected to be flat next year with any recovery in demand expected only in 2010, as consumers struggle with tight credit, high gasoline prices and a housing market slump. The drop in demand has been particularly hard for Detroit-based automakers GM, Ford Motor Co and Chrysler LLC. GM's sales were down 18.5 percent in the first eight months of 2008 while Ford's sales declined 16 percent and sales at Chrysler, controlled by Cerberus Capital Management, dropped 24 percent. Thornton said apart from new car sales, other sources of revenue for dealers, such as used car sales and financing profits, are also falling.(Reporting by Poornima Gupta; Editing by Brian Moss )

Of course today it was announced that overall new car and light truck sales fell 26.% for the month of September, the first time sales have fallen below the 1-million-vehicle mark since February, 1993.

Good news for the independent repair service shop. But look out - the dealers still left standing will certainly improve their marketing efforts and get more aggressive to acquire and maintain repair business.

Wednesday, October 1, 2008

Survey Says: It's the Economy, stupid

Have we heard or seen that line enough this election season already?

Many of us are already putting final plans for 2008 in motion, and are looking ahead to 2009. With a Presidential election less than 30 days away, I'm certainly not in any position to predict the future of our economy, our automotive industry, or the election turnout itself. But the truth is, I just can't help myself. Besides, there are indicators and discussions of which we should all take note as we prepare our businesses for 2009.

From the DOT: American Driving Reaches Eighth Month of Steady Decline
Data released by the U.S. Department of Transportation shows that, since last November, Americans have driven 53.2 billion miles less than they did over the same period a year earlier – topping the 1970s’ total decline of 49.3 billion miles. ...Americans drove 4.7 percent less, or 12.2 billion miles fewer, in June 2008 than June 2007. The decline is most evident in rural travel, which has fallen by 4 percent – compared to the 1.2 percent decline in urban miles traveled – since the trend began last November. The decline in miles driven is similar to the two oil crisis of the '70s. (Data Source: August 13, 2008,
Calculated Risk: Finance & Economics.)
When Americans drive fewer miles on their vehicles, consumables (tires, parts, etc.) and preventative maintenance (oil changes, filter changes, etc.) tend to be required less. As certain services are being performed less, mechanics are faced with two certainties:
they will have to find other jobs to pick up the slack within their employment - for instance, a shop will try to perform more oil changes or PM checks, when people begin to reduce their scheduled maintenance because they're not hitting the mileage points
or they reduce time on current job (because the business is not coming to their door) and find other jobs to pick up the slack.
Historically, during a period of recession, the mobile tool jobbers business will pick up, as more technicians perform "shadetree mechanics", working on weekends outside their shop to supplement their income.

However, mobile jobbers business is reported as relatively soft in the U.S. through the second quarter (Snap-on US sales down 4.1%, Danaher down 4% in their tool segment, Stanley's revenues within North American automotive repair tools continue to be adversely impacted by the U.S. economy. Segment profit as a percent of sales declined versus the prior year driven by inflation, unfavorable product mix and strategic investments in emerging markets and Stanley Fulfillment System initiatives, according to annual reports) and into September (anecdotally). The same can be said for many other tool and equipment companies this year. Many faced a soft 1st quarter, saw a slight rally in the 2nd quarter, expected flat to a slight increase in the 3rd quarter, but instead had more dismal sales. Equipment sales are really lagging, primarily due to the credit crunch. Right now, I am not hearing much positive commentary from the field about the 4th quarter or into 2009.

There are talks of cutbacks and layoffs, and some customers have already begun to lay people off or reduce hours. Warehouse distributors are not taking advantage of quarterly rebates, because their warehouses are already full and they can't afford to risk cash-flow for inventory that may or may not move in 30-90 days. Mobile distributors are having a tough time getting new dealers set-up because they can't get financing for their new businesses. That being said, everyone is starting to get more creative in how they approach the market and as they look for new markets.

When technicians aren't working as much, they're not replacing older tools, nor are they interested in investing in new tools when they have to make a choice between groceries, gas, or tools. Especially, now that the first several waves of price increases on tools and equipment have hit the streets. There are some tools and equipment being sold today for 10% to 30% more than they would have cost a technician a year ago, simply because of the rising costs of raw materials that manufacturers have seen over the past 18 months. They've finally been able to pass some of their costs along to the distributor and ultimately the consumer.

So - no quick answers, no clear direction. However, here are my predictions for the final months of 2008 and early 2009:

1 - We will have a Presidential election and a man will win.
2 - The "Wall Street/Main Street Bailout" will pass.
3 - Credit will remain tight as the government sets tighter standards - thus continuing to make it difficult for some businesses to grow. In theory, this will weed out the weaker businesses, and ultimately the stronger, better-run companies will thrive.
4 - Most indicators for the automotive industry will continue to decline (miles driven, tires replaced, new cars manufactured/sold) for the next 6 months at a minimum.
5 - In an effort to keep people fully employed, our government will continue to run a deficit, because the private sector will not invest enough to increase production and reverse the recession. Additionally, we will see an increase in subsidies (this may help the automotive sector if the subsidies are available to the domestic Big 3).
6 - The price of oil, and subsequently gasoline, will continue to play a big part in the public's sense of well-being and trust in the government.
7 - no matter what any politician says between now and the election - taxes will go up.

Friday, September 26, 2008

A Word from One of Our Readers

I received a thoughtful letter from one of our readers today, which I've reprinted in its entirety below. In addition to TechShop, I'm the publisher of Tomorrow's Technician, which is a magazine that goes to students in automotive programs. One of the number one reasons they say they want to get into the business of fixing cars is because they "get a kick out of taking a broken car and making it whole again". I'm glad Steve still enjoys his profession, though I know it must be difficult for him to get up and get going some days. I'm also glad that men like him are still in the business - integrity is as important an asset as the best diagnostic tool.

Next time you're in Gloucester, stop in at 159 Maplewood Avenue, and say hi to Steve.

Sent: Thursday, September 25, 2008 6:32 PMTo: Beth Skove

Subject: august 2008 pov column
Hello, I hope this letter isn't too long. Forgive the typos but I have to get back to work!! I would like to address what i see as going on in my market area here in gloucester, Mass. First, as you mention alot of folks go to jiffy lube or the midas, etc because they can afford to advertise and make it look like a good deal. At the same time alot of local shops are only taking on the good jobs and not the tough ones. I haven't figured out how to tell a good customer i only want his gravy jobs without him getting mad. In our area everybody's home bills, fuel bills and tax bills just keep going up. How high can i raise my prices? The techs who left the industry are working in their driveways, again with the gravy jobs. When you don't have overhead you can charge alot less. The employed techs are doing it too. Most of us can't take alot of time off for training so we go at night when it's offered. So after a 10 hour day and a 1 hour drive, you know where i'm going with this. I have to tell you after almost 40 years i still get a kick out of taking a broken car and making it whole again. I don't know the answers but i know after 60 plus hours a week i'm tired. I know that i'll have to defend my diagnosis and estimates and bills 25 times a week because some in this industry continue to do unsavory things to their customers making it hard on those of us trying to do the right thing.

Ok i feel better. Thank you and keep up the good writing, steve linsky's service sta glou mass

Wednesday, September 10, 2008

When is your Brand not your Brand?

Brand Tags' Noah Brier: How My Website Took Off
From Late-Night Idea to 3 Million Page Views, Some Tips for Agencies and Clients
By Noah Brier Published: September 08, 2008

Sorry, but I lifted this from an article I recently read. I thought the idea of a brand being only what other poeple think it is was a pretty interesting concept. I've been told many times that "you are what people think you are", so it makes sense to me that the same type of logic would apply to a brand. Here's what Noah Brier has to say:

Six months ago, in the middle of the night, I had a very simple idea: If brands exist in people's heads, as I believe they do, then shouldn't you be able to ask a whole bunch of people what they think of a brand and then use tag clouds to display the results? After flipping the idea around in my brain for a few minutes, I decided it was a good enough reason to jump out of bed and make it happen. Now, it should be noted that I'm no programming wizard. Only a few weeks before, I had started to teach myself PHP, a not-quite-programming language that allows you to build web applications, and MySQL, an open-source database software. What I did not have is years of building websites and apps, though that didn't matter much, as I quickly discovered through the rapid growth of Brand Tags, as this site would be called. An hour and a half after buying the domain (the dot-com version was taken), I had a working prototype with nine brands loaded in. It worked just as I had planned: A random logo popped up on the screen and asked you to type in the first word or phrase that popped into your head. After you hit submit, another logo would pop onscreen. Quiet before the stormI showed a few people, but mostly I let it sit collecting digital dust. I talked to a few folks about doing some design work on it or adding features, but mostly it simply sat there in its lonely corner of cyberspace, an idea that might or might not see the light of day. Then May rolled around, and I was feeling guilty for not having written anything on my blog for a while. Rather than spend time finding something to write about, I decided I would release this little experiment as is. I wrote up a post in about five minutes and followed it by sending the link to a few friends as well. And, of course, I announced it on Twitter. This was all on a Friday. Within minutes, the comments started to roll in. Over the weekend, I followed the momentum and continued to make adjustments and add features (including a backward guessing game dreamed up by my girlfriend and user profiles so that I could capture e-mail addresses for follow-up contact). The site was seeing some good traffic, and the tags were piling up. Then, late on Sunday evening, MetaFilter, a super-geeky community/group blog I'm a member of, picked it up. From there it spread quickly, getting picked up by big-time bloggers like Seth Godin and Kottke (the latter of which had always been a kind of secret nerd goal of mine) as well as the ad press. Even the mainstream press got in on the action, with one of the very first mentions showing up on a blog on the Wall Street Journal's website. The momentum only continued from there. Over a single month, the site attracted about 200,000 visitors, totaling around 3 million page views and 1 million tags. For an idea that took me an hour and a half to build, it was an unmitigated success, and I have some fun plans for where to take it moving forward. With that way-more-lengthy-than-I-originally-planned intro behind me, here are a few things I've learned, in no specific order: It's a lot of work: I don't think people realize just how much work it is to actually live the launch-and-iterate mentality. Over the course of a month and a half, I have probably answered 5,000 Brand Tags-related e-mails, made hundreds of small and large changes to the site and commented on about a hundred blogs that wrote about the site. If I didn't have complete autonomy to make any changes or to represent the brand on a moment's notice, I have no idea if the site would have been as successful as it has been. In other words, if you're planning something like this, make sure you and your client have clear communication lines.
Noah Brier is head of planning and strategy at Barbarian Group. He blogs at beats personal contact: I don't have any proof at all to back this up, but I believe in my heart that Brand Tags wouldn't have taken off if I hadn't responded to each and every e-mail I got. Those e-mails have been from people at agencies, brands, media outlets and everywhere else under the sun. They have been requests to add logos, ideas for new features or just friendly congratulations. My attitude is that if someone takes the time to e-mail me, I should take the time to e-mail them back. It's not always timely and it's definitely not scalable, but it just feels right. After all, without these people I wouldn't have gotten more than 1,000 blog links, nor would I have more than 600 brands in the system (most of them were sent in by people from brands or agencies who found the site). Teach yourself some code: I recently read an article that suggested knowledge of code would be the literacy of the 21st century. I agree. Being able to get a computer to do what you want it to is an amazing strength. All of a sudden you're not reliant on others to bring your ideas to life. And it's really not that hard -- I taught myself in a few weeks without the help of books. As a friend of mine said to me a few years ago, if there's one thing the web knows, it's how to make the web. Any question you have has likely been answered and well documented on one of the thousands (millions?) of sites by and for the people who make the web. Plus, you don't have to be an expert, you just have to be able to bring your ideas to life. Be ready for spam: If there's a way to game the system, people will find it. In the case of Brand Tags, spam is not that big a deal because at the moment it's just for fun (and in a way, tag clouds handle spam very well, because the things said most seldom appear the smallest). However, as I have moved forward I've had to work hard to think about ways to keep the results in as good shape as possible. If you're a brand, this should definitely be something you're considering. What are your contingency plans?

Monday, August 25, 2008

Snap-on Tools' Recent Show

As many of you know, a few years ago, Snap-on changed their tradition of holding their regional shows across the country into one big annual show in Las Vegas. Again, this year, they returned to Las Vegas. This year they held their show at the South Point Hotel, Casino and Spa in Las Vegas. The hotel was at the very end of the strip, but well worth the cab ride. Once you arrived, you didn't have to go anywhere else for food, entertainment, gambling and tool news!

As it turns out, this year's show ended up being very well attended. For most of the year, a lot of manufacturers have crossed their fingers at the approach of each show, asking themselves - "will the distributors show up? Will they buy anything? Did I make the right decision by spending the time/money to attend another tool show?" But - according to my sources, there was no need for concern. Once again, Snap-on held a fabulous show. It's been reported that more than 3,000 distributors attended. And, best of all, they were in a buying mood! Manufacturers were not disappointed.

Considering that ISN held their show just 5 weeks earlier, many manufacturers did not have anything "new" since then. However, they brought all their new 2008 products, and the Snap-on distributors LOVED it. No surprise - the hottest products appeared to be in the DIAGNOSTICS section. Diagnostics was always jammed with distributors, from the beginning of the show on Friday, til the show ended Sunday afternoon.

One manufacturer told me, based on his sales at the show, it was the best show he's attended this year. People were in a buying mood and his sales reflected this.

All in all, it was an excellent opportunity for Snap-on to showcase their new products, and share some of the successes of 2008 with their community of dealers and vendors. Perhaps this is an indication of our industry picking up again in the second half?

As announced in late July, Snap-on has been having a pretty good year, even though the U.S. economy has slowed. Their operating results for the second quarter of 2008 include a 7.6% increase in net sales over prior year (without their favorable currency exchange, their net sales are up 3.1%).

They attribute their success in the first half of '08 to the improvements they've made in operations and growth initiatives. According to Nick Pinchuk, Snap-on's president and CEO, "second quarter operating performance evidences continued achievements in our strategic
diversification and growth initiatives. Despite the continued macroeconomic challenges, the strength of our global and diverse customer base and the value created by our innovation and rapid continuous improvement processes combined to deliver significant sales and profit improvements.”

Additional highlights of Snap-on’s second quarter 2008 operating results are as follows:
• Operating earnings of $111.7 million increased 27.8%, or $24.3 million, over prior year, Operating earnings as a percent of revenues improved to 14.2% in 2008 from 12.0% in 2007.
• Net earnings from continuing operations of $66.9 million increased 26.7% from $52.8 million in
2007; diluted earnings of $1.15 per share increased 27.8% from $0.90 per diluted share in 2007.
Commercial & Industrial Group segment sales of $387.7 million were up $56.1 million, or 16.9%,
from prior year, including $25.0 million of currency translation. Excluding currency translation, sales growth was 9.4%, with strong contributions from Snap-on’s global industrial and power tools businesses.
Emerging markets
continue to be important for growth, as well as increased sales of imaging alignment systems, and higher sales of professional tools in Europe - all contributed to the year-over-year sales increase.
Operating earnings of $49.3 million increased $16.8 million, or 51.7%, from prior year primarily due to the sales improvement, including higher sales of innovative new product, improved pricing and continued benefits from Rapid Continuous Improvement (RCI) and other cost reduction initiatives, which more than offset higher production and material costs. The operating earnings increase also reflects $5.0 million of lower restructuring costs and $1.5 million of currency translation. As a percentage of sales, operating earnings in the quarter improved to 12.7% as compared with 9.8% a year ago.