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.

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.

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.
Outlook
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.

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.

Jack's Yamaha

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

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 MSNBC.com (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 msnbc.com

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.

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.