Jul 29, 2021 9:02:23 AM | 8 Min Read

How Much is that Big Mac?

Posted By Bay Cities
How Much is that Big Mac?

I sat through a Merrill Lynch briefing on “What could happen in our economy next?” feature. Once again, they are all bought in on the fact that Transitory Inflation is what we are experiencing today as a result of peak demand after the world was shut down. I am still at a loss for this idea, as I guess if you make boxes, you can’t be that bright! Well, ok my back does hurt from “falling off the turnip truck” but my mind is working. I think it’s working much better than the yahoos in political and financial towers of power. So, let’s get right to it, shall we?

In 2019 a Big Mac was a total of $3.57 in terms of US-denominated dollars. Today, a Big Mac is $5.65 in US-denominated dollars (the world currency). We buy oil in US dollars and Big Macs can be bought in any currency depending on where you may find yourself. What I have been on a hunt for is what is the correlation between the CPI and the Big Mac Index. What I found out is: There isn’t one nor will there be one. There can’t be because the CPI is based on Las Vegas gambling that is fixed by you guessed it, the United States government.

I looked back at the Big Mac index, and it has been on fire since its inception in 1986 when the measurement of Mc Donalds’ wonder started. It was then at about $1.56 and today it is off the charts at $5.65. There seems to have been one dip or leveling during a couple of years, but mostly this American delicacy has been straight up in cost during the history of the price. As stated earlier, in 2019 (pre-pandemic) this illustrious burger was pegged at $3.57 and today the treat is $5.65. That is over 55% in value depletion driven by inflation. The Big Mac does not lie! History has proven that this juicy wonder has never really dipped in price, nor will it, and we call this the effects of inflation. We are in a very turbulent inflationary time right now and will be for a long time.

The last time we talked, Uncle Joe pumped up the economy with over 1.9 trillion dollars of stimulus. I must remind everyone that M2 (money supply), juiced by this amount of dough into the economy creates extra cash to spend thus resulting in higher prices needed to buy the same stuff we bought a year ago. Hence the recent Big Mac price driver. Do not be fooled. What’s Joe up to next? A 3.9 trillion-dollar bill that will give more money away and create even more inflation. There is no way on God’s green Earth that we will figure out a way to tax people to make up for the drunken pirate’s spree, nor will there be. Why? Because there is a two-party system in place, and no one has the courage to deal with our debt in such a way that won’t kill our economy (that’s code for getting my vote).

Let’s look around and see what’s going on here in the Peoples’ Republic of California. There is a recall to bounce Governor Newsom out of office. He is now out giving away 100 billion dollars to quickly buy votes. This is a clear and simple perfect display of a politician in trouble. This great giveaway is going to really put a dent into California because Mr. Newsom is not very good with math. This too is putting strain on the buying power of the dollar. What is even wilder, is that our gas is sitting around five bucks a gallon. I guess that will get fixed when Joe and Nancy’s stay-at-home program goes away, and we then should find truck drivers around to deliver gas.

Our state is burning down, and we do not have enough truck drivers to deliver jet fuel for our air tankers to drop water on these fires. Here is the reality of the issue. The truck drivers are already employed by Amazon who has them delivering everything everywhere at any given time. These skilled drivers may not come back to delivering fuel. Wildly, we move millions of dollars in freight at Bay Cities and, get this, there are right now 13 loads of freight for every one driver in Los Angeles. Shipping rates are skyrocketing. My neighbor works as a clerk for the Port of LA. He told me last week that a bigger issue is looming: maritime ship operators. These folks mostly come from third-world countries, and they do not have the ability to get vaccinated. Many of them are getting sick and not able to move ocean liners. How is that one for style? Houston, we have some issues here in Cali!

Looking at the box business, there are major price pressures on the industry. Many converters are still looking for a consistent and constant supply of linerboard to make corrugated boxes. We are all still majorly busy and the deck is stacked against us. The majors have all announced increases, but I wonder if even that is going to help. They have increased their overseas prices and now a wicked turn of events is happening. First, we must take some downtime or this whole paper system will implode. So far, I counted 5 mills going offline to get some badly need maintenance. Second, we can’t get drivers to deliver wood chips to make liner. In addition, we are using up so many Old Corrugated Containers (OCC) that almost every week the cost is rising. Let us not bring into play all of the other input costs that are still on fire. Yet the granddaddy of them all is still labor. We have millions sitting home eating Bon Bons. Maybe they will start looking for jobs after Joe’s stimulus bribe runs out in September. The big question is, would you hire someone who has lived on the fat while all of us and our employees have been out here slinging it? That’s a very interesting question. This is going to be one of the most challenging holiday seasons, I could ever imagine.

We need to begin to invest in training and modernizing our facilities and offices. The modernization of the world according to Merrill Lynch will cause over one-third of our existing workforce to be retrained. The new jobs will be much different in the future. They will include mastering AI and 5G. Doing more with less yet we still will need to do things.

Our industry has a trade show called SuperCorrExpo, which is happening in August. I must wonder what true kinds of innovation for labor savings we will see there for our industry. I am certain we will see faster machines that set up quickly and run super-fast. What about the rest of our business? What’s interesting to me is it's not only the plant floor that needs to be innovative, it’s the whole enterprise that needs a retune. We will be looking for those nuggets so we can keep reconfiguring our service offering to our clients which is our biggest focus as a company.

Let’s review: the Big Mac is in hyper-inflated times and so are all of you. Don’t be fooled! Our government is pouring fuel on the fire as fast as they can (they need to get re-elected). Input costs are getting out of control and labor is one of the biggest issues around. We either grow new employees, train and take care of our existing employees or steal them from others. Our industry is besieged by inflationary pressures that are not allowing it to function with great pleasure. We can’t get drivers to deliver goods and the ocean liners lined up around the ports may be out there for a while due to sick, unvaccinated maritime workers. Lastly, we all need to get really focused on Customer Service, while we raise prices and miss deliveries. Maybe there is something that can help us as an industry at SuperCorr. If there isn’t, we need to be looking for great solutions to help the folks we have working on our client’s behalf, work better, faster and cheaper.



Greg Tucker 

Chairman CEO

Topics: Corrugated Packaging, Packaging Industry, Logistics

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