Signing Bonuses for Restaurant Workers
Today’s Highlights: OHSA prepares new Covid rules. A startup makes inexpensive robots for small manufacturers. And why European carmakers want higher taxes.
MANUFACTURING
Dean Solon, founder of Shoals Technologies, says the secret of the solar company’s success is not manufacturing in China: “Indeed, most of Solon’s competitors are Chinese companies like GCL System Integration and Wuxi Sun King. The Chinese-made components are cheaper than Shoals’, but Solon has an edge: His stuff is seen as safer, more reliable and easier to install. That means companies are willing to pay 5 percent to 10 percent more for it, believing they’ll make up for it in lower labor and maintenance costs. Last year, that premium added up to earnings of $34 million on $176 million in sales.”
“To keep that made-in-America premium as low as possible, Solon makes the manufacturing process as foolproof as he can. Screens mounted on the front of each machine show workers how to do each task—from stripping and crimping wires to installing fuses and finishing cable assemblies—with cycle times measured not in man-hours but man-seconds.”
“[Employees] are told never to worry about messing up. ‘If this process makes something wrong, shame on us—we designed it wrong. We didn’t bulletproof enough for you not to make mistakes,’ he says.” READ MORE
A startup, Rapid Robotics, sells inexpensive robots to small manufacturers: “Its machines do simple work, like heat stamping, fastener insertion and pad printing that are basic, exacting and repetitive — and the type of jobs that small factories have had trouble hiring enough people to do. To date, the San Francisco-based startup has deployed nearly 100 robots at clients in the Bay Area, bringing in revenue that Forbes estimates in the range of $2 million to $3 million. But it’s got plans to expand rapidly, especially at small manufacturers in the midwest and southwest, where Kretchmer says it’s seeing a lot of interest.”
“In a video that Kretchmer shows over Zoom, for example, a robot hot stamps a logo onto a coffee maker. Other robots can operate pad printers that are used to create tagless labels on apparel or print onto plastic and other materials.”
Rapid operates on a subscription model, and charges $3,750 a month per robot in the first year and $2,100 a month after that, including support and maintenance. It recently switched its pricing from annual to monthly to further appeal to firms with tight margins and low budgets for capital expenditures.” READ MORE
HUMAN RESOURCES
Restaurants in Philadelphia are paying signing bonuses and raising wages to $15 an hour: “Saying the decision will pay off in recruiting and staff retention, founder Nicole Marquis said about 115 workers would be affected at the fast-casual HipCityVeg and the full-service restaurants Charlie Was a Sinner and Bar Bombon, where hourly pay averages about $11.50. The national and state minimum wage for tipped employees is $2.83 an hour, though employers must make up any difference to the minimum wage of $7.25. The raise was announced amid an acute shortage of restaurant workers and in a time of reassessment in the industry about wages and working conditions.”
“Marquis’ move should be felt more deeply at her HipCityVeg eateries in the Philadelphia area and Washington, D.C., where the front-of-house workers do not share tips.”
“For now, the extension of unemployment compensation and the recent $1,400 stimulus checks are keeping many idled workers home, said Tonya Breslow, whose search firm Mis En Place has been offering signing bonuses to attract workers.”
“Fireside Grill in Newtown Square, for example, will pay $3,000 for waiters, while the company that operates Walnut Street Cafe and Sunset Social in University City will pay $250 for hourly workers and $500 for management.” READ MORE
Are workers really passing up job opportunities to collect unemployment? Maybe, but it’s not a slam dunk: “First, it’s not clear how much of a hiring crunch actually exists. Reports of hiring shortages crop up with pretty much every economic recovery, as employers get used to the new normal, and the media’s bias toward conflict and negativity tends to play these accounts up. But the U.S. managed to add a whopping 916,000 jobs in March, including 176,000 in restaurants, fast-food chains, and bars. That hiring largely occurred before Democrats passed their coronavirus bill, but it suggests that unemployment benefits hadn’t exactly frozen the job market. What’s more, University of Massachusetts Amherst economist Arindrajit Dube has found that, at least through March, states with less generous unemployment benefits haven’t seen their job markets rebound any faster, suggesting that jobless benefits may be having a limited impact on the overall speed of hiring.”
“Finally, the Department of Labor reported on Thursday that 1.2 million Americans left the unemployment rolls between March 20 and March 27. It appears plenty of people are ready and willing to return to work.”
“Insofar as some Americans are choosing to stay home rather than search for a job, it’s unclear how many are doing so because they can make more on unemployment, and how many are doing so because they’re afraid of catching a potentially deadly virus.” READ MORE
OSHA is preparing emergency rules to protect workers from Covid: “Mask mandates are coming down across the country, even as Covid cases are rising in most states. But the Biden administration appears poised to reinstate masking and other social distancing rules for recalcitrant governors — at least in the workplace. The federal Occupational Safety and Health Administration is preparing to issue new short-term regulations to protect workers from catching Covid-19 on the job, according to lawyers tracking the agency's efforts. They could be made public as early as this week, these lawyers say, and take effect soon after that.”
“The question now is what the details of the federal version of this scheme will look like. [Lawyers] Vance and Conn anticipate a stringent face-covering requirement, particularly indoors.”
“According to Conn, that ‘will create an interesting tension with these states like Texas, which have ended their mask mandates.’ The conflicting rules will likely sow confusion, he says.
“‘I think they’re going to have a lot of employee misconduct in places where you have mixed signals.’” READ MORE
THE 21 HATS CONVERSATION
It's Not Always About the Marketing: A lot of business conversations start with the urgent question, How can I attract more customers. But sometimes, the real issues go deeper. Sometimes, before you can figure out how to sell, you have to figure out who you are. A conversation with two people who learned this the hard way: Shawn Busse, CEO of Kinesis, and David Nichols, CEO of Loupe.
REOPENING
The coronavirus is hammering regional hotspots: “The spring wave of the pandemic has driven hospitalizations above 47,000, the highest since March 4. Thirty-eight states have reported an increase during the past week in the number of people hospitalized with covid-19, the disease caused by the virus, according to a Washington Post analysis of data provided by the Department of Health and Human Services. But the national statistics don’t capture the intensity of the coronavirus emergency in the hotspots. Michigan reported more than 10,000 new infections on Tuesday alone. The state on Wednesday reported an average of 46 deaths a day, up from 16 a month earlier.”
“Other regional hotspots include Maine and New Hampshire in northern New England; Delaware and Maryland in the Mid-Atlantic; Arizona, Colorado and Nevada in the Mountain West; and Oregon and Washington in the Pacific Northwest.”
“‘In a nutshell, the increasing trend is concerning — covid-19 is clearly alive and well,’ said Jeffrey S. Duchin, health officer for Seattle and King County. ‘It’s causing a large number of illnesses in young and middle-aged adults right now.’” READ MORE
ENERGY
Fixing Texas’ power market is proving costly and complicated: “Two months after blackouts paralyzed Texas, most of the people who participate in the state’s 19-year-old electricity market, including producers, sellers and traders, share a similar view. The freeze wasn’t a one-off event. The state’s power market needs to change. In a single week in February, when a cold front caused wind farms, natural-gas plants and a nuclear plant to freeze, electricity sales in Texas topped $46 billion—more than five times what the state spent on electricity in all of 2020. That exposed a major flaw in a laissez-faire power market that had not required participants to winterize their equipment.”
“Unhappy power-plant owners, retail power providers and even some traders are now threatening to reduce investment in the nation’s second most-populous state until a market many liken to a casino is stabilized.”
“‘All eyes are on Texas, and they should be, as it relates to electricity-market reforms,’ said Curt Morgan, chief executive of Vistra Corp., the largest power generator in Texas. ‘If they just put a Band-Aid on a mortal wound…we’re not going to make it.’” READ MORE
In Europe, automakers are demanding higher taxes on cars with combustion engines: “The top executives at several car and truck makers are calling on European governments to introduce the new taxes on carbon-dioxide emissions from gasoline- and diesel-powered cars and trucks as a way to help their EVs better compete. They say the levies should take the form of highway tolls or higher fuel taxes. ... Traditional automakers face a dilemma. The bulk of their business is still building and selling cars with internal-combustion engines—including family cars, big sport-utility vehicles and sports cars. Raising fuel taxes could hurt sales of those vehicles. But unless EVs can compete on price with conventional cars, it will be hard for auto makers to lure customers to them and recoup the vast investments manufacturers have made in the technology.”
“‘We need to tax carbon at the pump,’ Markus Duesmann, chief executive of Audi AG, said in an interview.”
“Taxing emissions from polluting vehicles, he and other executives say, would help ensure electric vehicles remain attractive for buyers after the expiration of subsidies that are now sustaining sales.”
“Particularly vocal in seeking an overhaul of fuel taxes have been European truck makers who are investing billions of euros in developing a new generation of battery electric and hydrogen-powered trucks and vans.” READ MORE
THE 21 HATS PODCAST
Episode 57: Dana White Decides to Franchise Paralee Boyd: This week, Dana White informs Jay Goltz and Stephanie Stuckey that she has begun the process of franchising her hair salons across the country, and perhaps the world. Why did she choose to franchise? As she explains, she does have concerns about controlling the culture in franchised locations, but she believes this is her best opportunity to grow. Interestingly, when Stephanie took over Stuckey’s in 2019, she bought a franchise business that she says had lost control of its franchisees, which is why she’s now moving in the opposite direction.
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