‘I Like This World’
For some car dealers, the chip shortage and the supply-chain bottlenecks are working out just fine.
Good morning! .
Here are today’s highlights:
Used car prices surge to a record.
Are we approaching a global energy crisis?
Remembering the man who saw real potential in a microwave oven.
The U.S. economy added fewer jobs than expected last month: “U.S. job growth fell to the slowest pace of the year in September, as the delta variant and a persistent shortage of workers restrained the ability of companies to hire. The economy added 194,000 jobs in September, the smallest gain since December 2020 and down from the upwardly revised 366,000 jobs added in August, the Labor Department said Friday. The jobless rate fell to 4.8 percent from 5.2 percent a month earlier. The rate fell largely because many workers exited the labor force.” READ MORE
THE COVID ECONOMY
Some car dealerships are benefiting from the chip shortage: “Rick Ricart, president of Ricart Automotive Group in Columbus, Ohio, told Morning Brew that a recent sale that would have taken four hours to make before the chip shortage was closed in 52 minutes. Customers no longer wait for a model with an additional feature to come along, because no one knows for sure when that will be. ‘I like this world,’ said Brian Miller, president of Manhattan Motorcars and owner of luxury car dealerships in New York. Sales are down 20 percent, he said, and depending on the model, customers are waiting anywhere from six-to-18 months for their new car due to the semiconductor shortage. Still, 95 percent of everything coming in sells almost immediately, so Miller is pleased.”
“Auto retailers benefit from lower operating costs with less inventory, and the supply-and-demand imbalance means buyers pay more for new and used vehicles, sometimes thousands of dollars above the manufacturer’s suggested retail price.”
“Without its usual stock of new, high-end sports cars to sell, salespeople at Manhattan Motors have shifted tactics to making calls to old customers, asking if they want to get out of a lease or sell their third or fourth car. The same is happening in Ohio.”
“‘People are selling cars back to us for more money than they bought them for a year ago,’ said Ricart.” READ MORE
Used car prices surged to a record in September: “The Manheim U.S. Used Vehicle Value Index, a measure of pricing trends at wholesale auctions, increased 5.3 percent in September from a month earlier, the biggest monthly gain since April. The index is now up 27.1 percent from a year earlier. Global supply-chain snags have hit new-vehicle production schedules, pushing some consumers into the used-car market and leading dealers to step up their buying efforts, according to the Manheim report, released Thursday. Retail used-car prices will likely remain elevated in the months ahead, it said.”
“Used-car prices have been a major contributor to U.S. inflation this year, holding roughly a 2 percent weighting in the overall consumer price index.”
“The August consumer price index report showed a decline in used-car and truck prices, but that was a temporary pause rather than a peak.” READ MORE
We recently asked Morning Report readers to introduce themselves by sending in a photo and answering a few questions. Today, we meet John Bibbo, president of Event Source/Panache Events. CLICK HERE to tell us about your business.
Location: Cleveland, Columbus, Pittsburgh, Detroit, and Fort Lauderdale.
Nature of business: Event rental.
One decision that helped you get where you are: Never say no! My philosophy is that if the customer has a need and they are calling you, and you say no, they will keep calling companies to see who can fill the need, which could jeopardize the order or even the entire account.
If you had it to do over: Don’t wait so long to expand.
One aspect of running a business you have yet to master: Effective ways to bonus for performance.
Most successful form of marketing: Face-to-face, in-person relationship building.
Problem would you most like to solve? How to attract rock stars to our team in an industry that few know about. We are the unsung hero’s of events. READ MORE
Amazon’s delivery partners are not having an easy time building businesses: “Three years ago, Amazon.com Inc. issued an invitation that seemed too good to pass up: Start your own company and earn as much as $300,000 a year delivering packages for the world’s largest online retailer. The offer had strong appeal for would-be entrepreneurs. With an upfront investment of as little as $10,000, these new ‘delivery service partners’ could have a fleet on the road in weeks.”
“Today some 2,500 of these small businesses—captained by military vets, construction contractors, retired college professors—employ more than 150,000 drivers in the U.S. and around the world.”
“Video cameras, telematics devices and smartphone apps monitor drivers’ every move. Software dictates how many packages a driver should be able to deliver in a 10-hour shift, a number that keeps creeping up and can be difficult to meet.”
“The system is designed to maximize efficiency and discourage hazardous behavior, such as texting while driving. But the algorithms often get things wrong, several delivery owners said, dinging drivers for offenses they didn’t commit.”
“These demerits affect the report cards the delivery contractors receive each week. The lower the score, the less Amazon pays them.” READ MORE
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Manufacturing and supply-chain problems have forced consumers without stoves and refrigerators to find creative solutions: “Appliance sellers are doing double duty as therapists to frustrated consumers, who may find themselves eating cereal for dinner and doing dishes in the bathtub for months. Jacqueline Feeney, an interior designer, ordered appliances in August 2020 for her new apartment in Rye, N.Y. The delivery dates kept getting pushed back, but she and her husband moved in anyway, making an Instant Pot pressure cooker the center of their kitchen while waiting for their stove.”
“Steve Sheinkopf, the head of Boston retailer Yale Appliance, said he has lent out so many cheaper appliances to customers that he feels like he’s running a lending library.”
“His staff has been berated by homeowners missing ovens and dishwashers. He said that he added ‘combat pay’ and threw ice-cream parties and free pizza to try to boost morale.”
“‘We have to take the calls that are less than understanding,’ he said. ‘We feel bad for the people who work here.’” READ MORE
Are we approaching a global energy crisis? “Astronomical increases in natural gas prices. Skyrocketing coal costs. Predictions of $100 oil. A global energy crunch caused by weather and a resurgence in demand is getting worse, stirring alarm ahead of the winter, when more energy is needed to light and heat homes. Governments around the world are trying to limit the impact on consumers, but acknowledge they may not be able to prevent bills spiking. Further complicating the picture is mounting pressure on governments to accelerate the transition to cleaner energy as world leaders prepare for a critical climate summit in November.”
“In China, rolling blackouts for residents have already begun, while in India power stations are scrambling for coal. Consumer advocates in Europe are calling for a ban on disconnections if customers can't promptly settle what they owe.” READ MORE
A global deal to set a 15 percent minimum tax rate has cleared its last major hurdle, as Ireland signs on: “The change in Irish policy comes ahead of a Friday meeting of 140 governments and jurisdictions that have for years been negotiating a way of taxing international companies to limit avoidance and divide tax revenue in a way they say is fairer. The group seems likely to give its backing to a final agreement that would aim for implementation in 2023. Ireland had been one of a small number of holdouts when the outlines of a global agreement were settled in July. That accord, driven by the U.S., aims to overhaul the way multinationals are taxed, the culmination of a yearslong effort to squeeze tax-avoidance arrangements.”
“While small, Ireland plays an outsize role in strategies used by companies from the U.S. and elsewhere to lower their global tax bills.”
“Most of the largest U.S. technology firms have their European headquarters in Ireland, and the country has also attracted the largest U.S. pharmaceutical companies.”
“Crucial details remain to be decided. Among them: how to prevent countries from circumventing the strictures against low-tax regimes by offering non-tax subsidies to companies.” READ MORE
Robert Schiffmann saw the real potential for microwave ovens: “He created microwaveable caramel popcorn, crust for microwaveable frozen potpies, microwaveable oatmeal and a microwave crisper. He developed one system to thaw frozen doughnuts and another to microwave foods without removing their packaging. In the early 1980s, he and Ken Eke, an engineer and designer, created the Half Time Oven, which used recirculated hot air and microwaves to cut cooking time. It was sold on television on QVC and licensed to the companies Brother International and Apollo Worldwide.”
“He formed R.F. Schiffmann & Associates, which became the vehicle for his microwave explorations as a consultant to dozens of companies on ovens, foods, packaging cookware and product testing, and as an expert witness in microwave heating cases.” READ MORE
THE 21 HATS PODCAST
‘Pardon Me. I’m So Sorry. This Is My First Pandemic:’ This week, in episode 79, we go one-on-one with William Vanderbloemen. We start off talking about how he saw The Great Resignation coming and what he thinks are the keys to coping with it. Then we step back, and—with the help of many questions suggested by listeners—we discuss his conversion from pastor to CEO, what happened to his company culture when everyone went remote, and why he still reads every single email he gets—even when he’s off on a seven-week sabbatical. Plus: how he hit upon his unconventional social media strategy and his suggestions if you’re looking for a VP of marketing. (Suggestion No. 1: Try not to lose the one you have.)
You can subscribe to The 21 Hats Podcast wherever you get podcasts.
If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren