Market Indicators that Affect Our Business

While the general media is forecasting doom and gloom, I would like to offer my predictions for the remainder of 2007 and into 2008 for our section of the economic world. The big economy news is the housing slump and the GM/UAW strike - both are dramatic and are sure to affect even the smallest shop in the smallest town. Or will they?

July numbers show that home prices had their steepest drop since 1991. Before you get overly excited - it was only a 4.5% drop! That means a house that may have sold for $125,000 last year would sell for $119,375 this year. That's a healthy drop, and I have to admit, I'm glad I'm not selling my house this year. But the numbers don't matter until you go to sell your house. And, is it time to slit the wrists? I don't think so.

Now, consider the UAW strikers at General Motors. The strike will cost General Motors 12,000 cars or $270M each day. In the first month, GM could lose $8.1 billion, in the second month $7.2 billion (I don't know why October is expected to be more expensive than November, I just report the news, I don't make it.)
What will it cost the workers? It was reported by ABC this morning that the average Union worker makes approximately $65k each year, and the average non-union worker maker $45k each year. But during the strike, these UAW members will make $200/week. Personally, I can't see the strike lasting that long. We've all got bills to pay, and $200 would barely cover my grocery bill to feed two teenage boys and a working husband! Do you know how long it will take them to make up their lost income? A lengthy strike does not make sense for anyone in 2007. If it does last more than a month, we will all begin to feel the effects. It has been estimated that for every GM worker, there are 10 people working for a GM Supplier. If GM business dries up, so does the business for the supplier. And this is where the strike could begin to affect our business.

But these are the short-term indicators. Do they affect the economy? Of course, but I would say they are more short-term blips than long-term tools to use when forecasting your own business cycles.

That being said, later this week I'll review how some of the more historical market indicators are faring and what they might mean for your business in the near future.

2 shops, 2 comebacks, 2 weeks: My Life

In the past month, I've had more than $5,000 worth of repair work done to my vehicle. About $4,600 of it was due to a collision with an uninsured motorist. Fortunately my insurance company picked up the entire bill, less the deductible. I had the work done at a shop that was associated with a local dealership, because they have some sort of deal with my insurance company, AND they were conveniently located 50 feet away from the appraiser. When I picked up my car (earlier than they predicted - YAY!), I looked at it in dismay. What had been a 6-year-old Toyota front-end, had become a new-looking front-end, but something was not right. The missing license plate? The color? No, they did a great job matching the color. The headlights? Yes. They looked funny, and once I drove around in the dark, I found out they lit funny too! We looked under the hood - Mr. Polite Service Writer speaking slowly and evenly as he described how they replaced this, recreated that, and re-arranged the other, using some new, some re-furbed, and some parts from the local salvage yard (I am opposed to none of these - they all have their place in repair work). I asked about the cut-outs in the felt under my hood, "why are these spaces cut out?" "Oh, there should be information stickers there, I'll check on that for you." Hmmmmm. I was surprised they were able to make that hood look as beautiful as they did. Besides having left it looking like a wrecking ball had been dropped on it, late last year I blew a psiton through my engine, which shot like a bullet into the hood. The hole in the felt was still there, but the hood was as beautiful as the day it was born. Yet, even though I did a cursory walk-around with the service writer, and nodded as he told me the work that had been done, I was not happy and felt a slight sour feeling deep in my gut. My 6-year-old baby was no longer mine - it had become this re-habbed, re-furbed something other. The lines betwen the pieces and parts of the front end of my car were no longer parallel. One side had a slightly bigger gap than the other side. At another point, the lines widened - the fit and finish that Toyota is known for, was no more.
And yet I drove it home.

As I pulled in to my driveway, headlights askew, I bravely honked my horn to announce my arrival to the family and dog. Instead of that Asian two-tone horn I've grown accustomed to, I heard a weak single-tone bleat - as tho someone had stepped on a cheap red bicycle horn. That was truly the last straw.

The second bit of work (in my $5,000+ 2-week span)was to repair my front brakes, for a mere $500 or so. I had them repaired because after the accident, even tho the insurance company approved a "visual" of the brakes and the collision center reported them "ok", I didn't feel they had the same stopping power as they did the minute before the accident.

Short Story, Part One: Took the car back for additional bodywork. They fixed the horn, showed me where to find the stickers on the inside of my hood if I ever needed to read them, and re-pointed the headlights. Nonetheless, I can still put all the fingers from one hand through the gap between one of my headlights and the body of my car - NOT a Toyota finish, but because my insurance company and the shop guarantee the work for the time I own the car, I'm not going back a third time to complain. I am left wondering about the effect of additional exposure on my engine and all things under the hood that those extra spaces will make possible. But that's not all, the more I look at the way the hood and the front-end lies in relationship to the body of the car - it's just a case of hurry up and get it out the door. I am disappointed in the quality of their work, to say the very least. Very nice people, but.

On to the brake job.

The Excellent Mechanic

It's Tuesday, September 11, and based on the number of e-mails I've received today, it looks like many of our readers are just now getting to the August issue of TechShop. Here's a very nice response from Bob Minnick, owner of Courtesy Car Care in Texas.
Beth,

Several years ago (1991?) I received a proverb from a seminary professor (who I knew, had worked on his car, and sat in his class). He based it on Proverbs 31 - which actually described the excellent wife. He changed the proverb to address the excellent mechanic. I hang it in my shop and have had several people want copies of it. I am sending it to you after having read your article about the mechanics creed. It's not perfect but it was an excellent gesture by a customer and friend. The proverb was written by David M. Fouts, ThD. I have lost contact with him but I believe He is teaching Pensecola Bible College. I had him as a Hebrew professor at Dallas Theological Seminary.

I thought you might like this. I copied it below as well as attached it in a Word document.

Blessings,

Bob Minnick, owner
Courtesy Car Care
Duncanville, TX


THE EXCELLENT MECHANIC

An excellent mechanic, who can find one?

For his worthies far above tools

The heart of his patron trusts in him
and he will have no lack of gain

He does good work and not evil
All the hours of his day

He looks for noises and bumps,
And works – his hands are a delight

He is like a fine craftsman,
He brings his skill to bear
He rises also while it is night
And brings relief to the motorist
And calm to shaking motors

He considers a part and then buys it
From his wisdom he installs it

He girds himself with strength
From coaxing rusted bolts

He senses that his work is good,

His droplight does not go out at night

He stretched his hand for the air wrench,

And his hands grasp the wheel rim

He extends his help to the poor
And gives needed discounts to the needy

He is not afraid of economic downturns

All his co-workers are helped by him

He makes coveralls for himself

They may be striped or bibbed

His wife is well respected

By all whose cars he has fixed

For the extra hours he gave

He makes good repairs and numerous
And supplies timing belts to those who need them

Strength and integrity are his clothing
And he smiles with a greasy face

He opens his mouth in wisdom
And the encouragement of friendship is on his face

He looks well to the way of business
And never eats the bread of idleness

His children will rise up and bless him
And his wife also, and she praises him, saying’

Good mechanics are hard to find
But you excel them all

Flashy advertising is deceitful
and nationwide chains are in vain

But the mechanic who fears the Lord,
he shall be greatly praised

(source: David Fouts, ThD )


Thank you Mr. Minnick (and Mr. Fouts). Very nicely done, though I take exception to the comment about flashy advertising. :)

The independent automotive repair person and repair shop represent the salt of the earth, ana indeed, should be treasured.

The Big Best Box Buy

Sometimes I can be a little opinionated, and sometimes I can be a little cranky. Today is one of those days when I am both. I am a fan of customer service, I am a BIG fan of GREAT customer service. I HATE BAD CUSTOMER SERVICE. Can you see where I might be going with this?

I recently had the opportunity to test the customer service-ability of one of the Big Box electronic companies. Our family had purchased a $99 I-Home for my son's I-Pod and, big surprise, it stopped working correctly in less than three months. Actually, as the story from my 14-year-old unfolded, the volume control quit working after three weeks, and only worked on VERY LOUD. He told me about it three weeks later. From that day forth, I tried to get him to wrap it up so we (WE) could take it to the Best Big Buy Box store to exchange it. On a good day, my son does not like to shop, leave the house, or go anywhere that does not utilize a scooter or bicycle. But on this day, this Sunday, I made him go with me to the store, broken I-home and all the wiry components clasped lovingly in his arms. As a last thought, I asked my other son to round up the other various equipment we had purchased over the last 18 months, including two digital cameras, a digital video camera and something else... All told - we had spent more than $3,500 at this place in a short period of time.

We get to the "CUSTOMER SERVICE" counter with our broken I-Home and ask if we could exchange it. Here is the verbal exchange that ensued:
Store: "Do you have a receipt?"
Me: "No, but I bought it around April 18" (knowing that with any electronic purchase the information is stored on their computer system, probably right next to the place they reserve for fingerprints and eye-scans)
Her: "Well let me check our system. Yes, you bought it on April 18. I'm printing your receipt now." Time passes as the receipt prints.
Me: (Thinking) If they know I bought it here, why do they need to waste time/paper printing the receipt?
Her: I'm sorry, that's out of manufacturer warranty. Did you buy the extended warranty?
Me: No. I think if I pay $100 for something it should work longer than a few weeks and I shouldn't have to pay even a penny more for it to last a while.
Her: Well it's out of manufacturer warranty and we can't exchange it.
Me: When did the warranty expire?
Her: Yesterday.

Imagine at this point how you might feel. Both of my sons took a look at my face, cringed, and took two steps back.

I think at that point I may have raised my voice a little.
Me: You mean, that you won't take back something that broke within three weeks of use, because the warranty ran out YESTERDAY, and I'm returning it today?
Her: I'm sorry, that's corporate policy. Once it's out of manufacturer's warranty, we can't take it back.

Me: (I may have stuttered or thought to myself - this can't be really happening.) This cost me $99, I'm fairly sure it cost your store somewhere between $35 and $45 AND YOU CAN'T EXCHANGE IT? May I see your manager?
Her: I am the manager.
OK, so long story short, she stuck to the party line and did not budge. I give her a lot of credit, she remained professional (making it tough for me to get really crazy). But, store manager? She's about 22, her name is Kristi (no last name, company policy) and I'm certain she dots her i with a heart! She made the wrong decision.

Me: I can't believe that a company this size does not allow their store manager to make the decision to keep a customer happy. I have spent more than $3,500 here in the past 18 months and you won't exchange something for less than $100? May I have the name of your CEO?

Her: I don't know his name but you can call 1-800-WeLuvCustomers.
Me: Thank you, buh-bye.

HONEST TO PETE!

What does this have to do with your business? Think about it. Do you honestly take care of your customer or do you toe the company line and hide behind "policy". If your product or service has a dollar value, then you should have the integrity to stand behind it. Your people, whether they make minimum wage or $25 an hour, should be allowed to make the right decision to keep customers happy. I am not saying anyone should be a doormat to their customer, because the customer is not always right. But I am saying this, because of this so-called manager's decision, I will NEVER buy from this best Box Buy place again. No, they have created a new HH Gregg customer.

Other takeaways: My kids learned that it is ok to ask for better service when you feel you are not getting it. They asked me if I was embarrassed to talk to a total stranger the way I did (I was a little loud at one point) - Absolutely not! Again, it doesn't matter if I paid $100 or $1,000, we all work hard for our money and want stuff to last. That I-home went directly from the box to my kid's bookshelf - there was no reason in the world it should not have lasted 5-10 years! Look around your home or office - I bet you have plenty of things that cost less than $50 but are more than one year old (I think immediately of my $19.99 alarm clock - still works after 3 years and I didn't buy the extended warranty. go figure.)

Think about your own "policies", but more importantly, think about the freedom you have to do the right thing and make sure your enterprise understands your philosophy on customer service. It can make the difference between a one-time customer and a customer for life.

Why is Gas So Expensive?

At least once a week, someone comments on the price of gas. It went through the roof, it came down again. Why? Why does it fluctuate so much? Did you know that the price of gas at the station reflects more than just gasoine? As of May, 2007, unrefined crude oil was 46.1% of the retail price. Refining costs and profits accounted for 27.9%. Federal and state taxes were 12.7% and distribution and marketing costs were 13.3%. For more up to date statistics, go to tonto.eia.doe.gov/oog/info/gdu/gaspump.html

Toyota Backs Off Lithium Ion

via The Truth About Cars by Frank Williams on Aug 09, 2007Toyota is delaying introducing lithium-ion battery-powered hybrids because of safety concerns. Forbes reports that the Japanese automaker is hanging fire (so to speak) due to worries that the cells might overheat or explode. Toyota doesn't expect to have hybrids with Li-Ion batteries until 2011. They've also delayed plans for Tundra and Sequoia hybrids. Whether or not this will affect GM's hopes of lithium-ion powered Volt is yet to be seen. Meanwhile, commenting on an earlier TTAC post, Tesla spinmeister Darryl Siry claims their Roadster's Li-ion battery pack passed UN and DOT protocols for safety "when shipping" which "can actually be harsher than safety when in a car."

I can't believe someone would actually be quoted as saying "shipping" is "harsher than safety when in a car". What exactly does that mean? I would bet that every li-ion battery pack shipped is safely bubble-wrapped to prevent that famous "damage during shipment", yet you don't see too many bubble-wrapped vehicles driving the roads these days. Li-ion batteries have to withstand the harsh abuse of American drivers, accidents on the road, and under-trained technicians. Hope Toyota has taken that all into account.

Also - wonder if a similar effect would occur with the new li-ion tools coming to market recently? From the December, 2006 issue of TechShop, our editors wrote, "Lithium ion is not as durable as NiCd, and can be dangerous if damaged". However, according to the tool manufacturers, most have taken this into consideration when they were developing the components of the tools and have protected the batteries accordingly.

What has been your experience? Let us know!

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Forge anything with a Brake Drum

I saw this on Toolmonger this morning and had to share it. Forged tools are a significant part of my manufacturing background, and I found this unique approach to forging interesting. I'm happy to report that in my previous life, we were able to generate heat in a more controlled environment, and at no time was duct tape in use.

From The Flickr Pool: A Brake Drum ForgePosted August 2nd, 2007 10:28 am by Chuck Cage

NickNaylo posted this great pic of his brake drum forge to TM’s photo pool, proving once and for all that you don’t need major cash to try your hand at blacksmithing. He says he assembled this little rig for a whopping $75 in parts — including a scavenged squirrel cage fan, some pipe fittings, and, of course, a brake drum.
It even looks like he’s rigged up a dimmer to control the speed of the fan — handy for controlling fire temp to avoid simply burning your workpiece into nothingness.

If you would like to recreate this forge, here is some additional information to consider:

Brake Drum Forge
Brake drum forges are often built as a first project at many blacksmith schools and beginner workshops. Then every student has a forge to take home. Note that a brakedrum forge has almost no coal reserve and is only useful for small projects as a hobbiest or starter forge.
Brake drum forges vary with the diameter of the brake drum. 10" to 16" (25 to 40cm) will work. They make a pretty decent firepot but are not nearly as heavy as commercial firepots therefore will not last as long. Brake drums are typically a cast iron rim with a pressed or formed in steel center of 1/8" plate. A few are solid cast. Some wheels are suitable for the same purpose. See My first forge
Fittings also vary according to your budget (new or scrounged). New are not prohibitive but it all depends on your view point. Current cost runs about $18 US. The drum I have left over from the JYH is 12" (30cm) diameter (inside) and about 6" (15cm) deep. It has a 3" (7.6cm) center hole and 5" (12.7cm) bolt circle. Fittings will be a 2" heavy steam flange (about 5/8" thick), a 2" close nipple, a 2" x 6" long nipple, a 2 x 2 x 3" reducing T, and a 3" x 6" nipple. Schedule 40 pipe is standard but 80 or 120 will last longer IF you can get them. The two long nipples have one end sawn off or may be cut from a longer piece of pipe. The 3" piece is cut about 1/2" beyond the threads and the 2" x 6" has the threads cut off OR left on depending on the blower type. A counter weighted ash dump is fabricated and hinged from the 3" pipe. A sliding door held on by a single screw pivot point also works and is easier to fabricate. Although most people prefer the dump type many commercial forges came with a sliding door. A pull made from heavy wire can be rigged so that you don't need to crawl under the forge to dump the ashes.
The legs on the above drawing should be spread out more for stability. They are attached by flattening the end of the tube, drilling or punching a 3/8" hole and bolting on with the bolts holding the flange to the brake drum "pot". The blower shown is a little 120 CFM model I use on gas forges. A hair dryer, furnace blower, or any type of squirrel cage fan will work. Blowers with a lot of pressure and CFM such as those from vacuum cleaners or leaf blowers will need an air control. The little 1/30th HP shaded pole motor on the blower above can be controlled by a room lighting control.
NOTE: A grate should be made to reduce the amount of coal that falls into the tuyeer. One or two pieces of 1/2" (13mm) steel or stainless steel bar will sufice. If you get fancy and fabricate a clinker breaker type gate a grate is not required.
Copyright © 1998 - 2005 Jock Dempsey