‘You Should Just Get This Made in China’
‘You Should Just Get This Made in China’
Tracking the hopes and dreams of one entrepreneur from a factory in coastal China through the supply chain chaos to a small business in central Mississippi.
Good morning!
Here are today’s highlights:
More seasonal-worker visas are on the way.
A hoodie with a blazer? The return-to-office dress code is causing confusion.
This time, the robots really are coming—even to smaller businesses.
MBAs are better at cutting salaries than increasing sales.
THE ECONOMY
Employers added 431,000 jobs in March, and unemployment fell to 3.6 percent: “Covid-19 cases of the Omicron variant have declined sharply since late January, spurring more consumers to book plane tickets, stay in hotels and dine out. Employers are hungry to hire workers to meet this surge in demand. There were nearly 11.3 million job openings in February, slightly below December’s 11.4 million record, the Labor Department reported Tuesday. One factor that could help employers fill open roles: More Americans appear to be seeking a job now versus earlier in the pandemic. Clicks and job applications on jobs site ZipRecruiter have increased since mid-February.”
“Many retirees are coming back: In February, the share of retired workers re-entering the workforce climbed to around 3 percent of total retirees, its highest level since early March 2020.” READ MORE
Mark Zandi responds to the latest jobs numbers:
HUMAN RESOURCES
There will be more seasonal-worker visas available this summer: “The Biden administration will make an additional 35,000 seasonal-worker visas available to employers ahead of the coming summer hiring season, the Department of Homeland Security said Thursday. The visas are being made available in addition to 33,000 visas already set aside for seasonal employers, such as landscapers, fisheries, resorts and vacation-town vendors, for the summer hiring season. They will be available to employers looking to bring on temporary workers with start dates between April 1 and Sept. 30.”
“The move marks the largest release of additional visas for the summer season since Congress changed the rules in 2017 governing how many seasonal-worker visas would be made available each year. Last spring, the Biden administration increased the H-2B visa supply by 22,000. And, for the first time, it also released another batch of 20,000 visas for last winter’s hiring season.”
“In order for employers to hire a foreign worker on an H-2B visa, they must first attempt to recruit an American worker and receive certification from the Labor Department that there are none available to do the job. The program comes with requirements on how much employers must pay the workers, so they aren’t paid less than American counterparts, and employers must continue recruiting Americans even after foreign laborers are hired.”
“The administration has come under intense pressure from employers and business groups to make the additional visas available sooner to help alleviate labor shortages, which are being felt most acutely in low-wage industries that rely disproportionately on immigrant labor.” READ MORE
The return-to-office dress code is proving confusing: “More organizations are calling workers back to offices only to discover it’s difficult to telegraph what employees can and can’t wear. Be too strict and you risk alienating people who weren’t thrilled to come back in the first place; be too lenient and the environment no longer feels professional. In March, more workers returned to offices in the U.S. than at almost any other point in the pandemic.”
“In a single week, [Warren Bischoff] had to tell one employee that white tennis sneakers are a no-no, another that bluejeans aren’t appropriate, and a third that T-shirts will never fly.”
“In a recent edge-case ruling, he decided that ‘dress sneakers’—brown shoes with a white sole—might be OK, but only on Fridays.”
“Mr. Bischoff, 58, no longer wears the dozen or so custom suits in his closet, and instead embraces an array of blazers and button downs. At a recent business dinner, all six men in attendance wore blazers: there was a text chain before to confirm no one would wear a tie.”
“Banana Republic last year launched a collection that paired blazers with hoodies.” READ MORE
SMALLBIZ TECHNOLOGY
Subscription robots are targeting smaller businesses: “The robots are coming—and not just to big outfits like automotive or aerospace plants. They’re increasingly popping up in smaller U.S. factories, warehouses, retail stores, farms, and even construction sites. The pandemic has kicked orders for robots into high gear as companies deal with a labor shortage, rising wages, and a surge in demand for their products. U.S. robot orders jumped 28 percent in 2021 from the previous year, to an all-time high of almost 40,000 units, according to trade group Association for Advancing Automation, and they’re expected to increase again this year.”
“[Thomson Plastics] has robots on 27 of its 89 molding machines and plans to add more. It can’t afford to purchase the robots, which can cost $125,000 each, says Chief Executive Officer Steve Dyer.”
“Instead, Thomson pays for the installed machines by the hour, at a cost that’s less than hiring a human employee—if one could be found, he says.”
“I’m paying $10 to $12 an hour for a robot that is replacing a position that I was paying $15 to $18 plus fringe benefits.” READ MORE
LOGISTICS
In Shanghai, workers are sleeping on floors to keep factories operating during the lockdown: “The municipal government in the city has allowed some firms to maintain operations in a bubble-like environment with staff working, living and staying within a restricted area. The strategy is part of frantic efforts by officials and companies to balance disparate goals: curbing the growing outbreak under stringent Covid-control policies, while keeping production going to limit economic damage and global supply-chain fallout. Among the companies staying open is China’s biggest state-owned auto maker, SAIC Motor Corp., which is headquartered in the city. Since Shanghai’s outbreak worsened in mid-March, SAIC has been operating several factories under a closed loop, the company said.”
“On day one of the bubble, workers received a package prepared by SAIC called a ‘personal 10-piece set,’ which included a quilt, towel, air mattress, sleeping bag, underwear and socks, they said.”
“Workers are tested regularly for Covid-19 and can’t leave the closed loop unless there is an emergency. Many workers have been inside for two weeks already ...”
“To keep workers on site, SAIC is offering extra money, with some receiving double pay for the hours they work, people familiar with the matter said.” READ MORE
Tracing one business’s shipping container from coastal China to central Mississippi: “The largest multinational retailers like Amazon and Walmart have responded to the convulsions in the supply chain by chartering their own container ships, amassing empires of warehouse space and stockpiling products. Such options are beyond the reach of small companies like Glo, which employs 27 people. Modestly profitable, the company aims for $4 million in revenues this year. The order that Mr. Walker placed for the Christmas season just past was the most important in Glo’s brief history. His light-up cubes had begun as a playful way to garnish a cocktail. They had since evolved into the glowing midsection for a variety of children’s bath toys. The company had recently forged ties with a giant in children’s education and entertainment — Sesame Street.”
“This container would carry more than Glo’s usual bath toys. It was a vessel of aspiration for his company, a start-up that personified the nation’s entrepreneurial brio.”
“Mr. Walker wanted to make his products in the United States, but soon concluded that this was virtually impossible. He contacted dozens of American factories. One offered to make the steel plates used to manufacture the cubes for $18,000 — 12 times what he pays in China.”
“In starting a new line of Glo characters, the company sought a promotional box that would open and pop up, like a children’s book. It contacted a factory in Georgia.”
“‘Their packaging engineers said, It’s too complex,’ Mr. Walker recalled. “‘You should just get this made in China.’” READ MORE
MANAGEMENT
A study found that MBAs are better at cutting salaries than increasing sales: “Based on their findings, the researchers concluded that the typical ideologies of business school programs — which shifted in the 1970s — are responsible for the way that degreed business managers approach their work: namely, that they emphasize shareholder values, rather than worker ones. That's reflected by non-degreed managers tending to share greater sales and profits with their workers.”
“Using data from firms in Denmark and the United States, the NBER researchers found that wages fell within a few years at companies run by degreed managers in both countries, 6 percent within five years in the U.S. and 3 percent in Denmark in the same amount of time.”
“The NBER researchers say there's nothing to suggest that a pricey business degree makes someone a better manager, however. Firms appointing them do not experience higher sales, productivity, investment, or employment growth following an MBA hire, the study finds.” READ MORE
PROFILE
Rechelle Balanzat could get her dinner delivered to her door but not her dry cleaning: "’I'd call my cleaners and ask if I could get my laundry and dry cleaning picked up and delivered,’ recalls the now 35-year-old entrepreneur. ‘Sometimes they would, sometimes they wouldn't. That was a lightbulb moment.’ A year later, she had founded the boutique dry cleaning and laundry business that today offers its customers easy pick up and delivery through an app, along with more recent upgrades including artificial intelligence-assisted texting, GPS tracking, and ETA updates.”
“Balanzat considers Juliette a tech company first and foremost--but she also had to make sure that orders were washed to the highest standards. ‘At first I thought I could outsource the cleaning to a laundromat, but I quickly realized it's a trust issue,’ she says. ‘I couldn't just hand these clothes over to anyone.’”
“After cold-calling a number of local laundry businesses, she made a deal with one to rent out the space for Juliette's orders.”
“While Juliette's staff is at just 70 percent of its pre-pandemic levels, Balanzat says that the company is poised to start a hiring phase. This year, the company plans to open three more locations in Manhattan.”
“Prior to the pandemic, Balanzat says that dry cleaning made up about 60 percent of orders, and 40 percent were wash-and-fold. Today, that balance is closer to 50-50. The average order frequency for a Juliette customer is once a week, and the average order price is $50.” READ MORE
THE CREATOR ECONOMY
Content creators continue to turn side hustles into businesses: “The entrepreneurial army of influencers on Instagram and TikTok, as well as other enterprising innovators monetizing their social-media audiences, is gaining momentum. The global creator workforce is valued at more than $100 billion and counts an estimated 50 million people as participants, according to a recent study by the Gen Z- and millennial-focused marketing agency Influencer Marketing Factory. Today, creators are launching businesses and using monetization tools to lure customers away from social platforms and onto apps or websites they made.”
“When Dasha Kennedy broke her foot, she took time away from her 9-to-5 role as a debt collector to heal.”
“Meanwhile, her side hustle was taking off: In her free time, Kennedy would share tips on personal finance for young Black audiences through her Facebook group, The Broke Black Girl.”
“As her follower count grew, so did the offers for paid opportunities. Kennedy realized she had another viable career option, one in which her job security wouldn't be dictated by someone else.”
"’I didn't start off chasing a profit as much as I did chasing a purpose — it's an important distinction,’ she said. ‘Now I get paid for doing what I love.’" READ MORE
THE 21 HATS PODCAST
What If I Get the Contract? This week, Liz Picarazzi tells Jay Goltz that she’s pursuing multiple sales opportunities—and ponders what would happen if those opportunities actually came to fruition. Would her company, Citibin, be able to handle the additional volume? “In my fantasy world, where I am a lot,” Liz says, “I look at where this could go. And just like you, Jay, I go to, ‘How in the world would I produce all of these?’” Liz and Jay also talk about the pros and cons of pricing transparency: Do you volunteer your premium price up front? On your website even? Or do you wait until you’ve made your sales pitch and gotten your customer excited?
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