Here we are in our 62-foot sloop racing to get to shore, and man are things pushing our little boat around. Let us take another look at what’s happening and where we could be headed to. We have our Federal Reserve actions promoting maximum employment by keeping interest rates really low. We have our fiscal policy of juicing the economy with free money (850 billion dollars of direct payments and extra stay-at-home money). As a result, we have a super-heated economy that is being driven by vaccine numbers and an unbelievable pent-up desire to shop. If we add those three things up, we are in hyperinflationary times.
I had an opportunity to sit in on a call with the marketing director for Kathy Woods’ ARK Innovations Fund. What amazes me is that even Wall Street is buying into the idea of Transitory Inflation. This inflation is only temporary! This is what the talking heads in Washington want us to believe. I got to ask her what is transitory about labor escalations and the effect of free money being introduced by our government? Of course, there was not much of an answer there and maybe with innovation, even labor costs will subside. I have had the opportunity to negotiate over 6 union contracts and not one of these fun encounters allowed for a reduction of labor costs!
Tim Fiore, who serves as chairman on the ISM committee that runs the survey, said in today's report...
“[Businesses] reported that their companies and suppliers continue to struggle to meet increasing levels of demand. Record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices, and difficulties in transporting products are continuing to affect all segments of the manufacturing economy. Worker absenteeism, short-term shutdowns due to part shortages, and difficulties in filling open positions continue to be issues that limit manufacturing-growth potential.”
This is very spot-on as we are all struggling to find folks to work in the office and the plant. We are struggling to find basic inputs to our businesses like pallets, edge protectors, and even grades of linerboard used to make boxes. Transportation costs are skyrocketing so much so, I think I could make enough money running a truck from LA to Chicago once a week to set up one hell of a retirement! What is worse is that it seems that nobody really cares. We are just happy to get something delivered. Try ordering an Uber to pick you up somewhere, it will take at least 15 minutes to get picked up. Now if someone didn’t whirl in the back seat you will be fine but what happened to that quick service?
Speaking of service, does anyone have any idea as to what the effect is going to be when we must fill all the basic service provider jobs that we shut down for the last year and a half? This is going to get strange. We have Uncle Joe trying to bail out an economy that’s on fire with hundred-dollar bills and we may run right into a brick wall. Dropping another few trillion dollars won’t fix it this time. Do you know we spend around 800 billion dollars on groceries in the US every year? Our last stimulus plan was 1.9 trillion dollars. We could have fed everyone twice and had 300 billion dollars left over. We are heating up an overheated economy.
So, what does this all mean? I think we must put on our Customer Service hat on tight. I talked about it last time, but things are not getting better. At our Winning@Retail event a couple of weeks ago, we learned a tremendous amount of what’s taking place in retail. Both online and on-shelf retail sales will boom. Especially on shelf sales. We are pent up with desire! We also learned that we need to transition instead of knee-jerk change (thank you Holly Green).
What I learned from the presenters, and again from Brent Lindberg, is we need to get much better as manufacturers of packaging. Could you imagine calling any box company and asking to develop a box, determine a size and get a price so that you could order the damn thing? This is a week-long adventure for just about any box supplier. We at Bay Cities are going to change that paradigm. How are you going to do that? The same way Amazon does it. We will be shortly utilizing technology to design, price, order, and manufacture a package online. No human will be touching the process from graphic and structural design, estimating, order entry, and even the pre-production processes of manufacturing. Soon every person will be able to design, price, and order a package from us without any human intervention. The first one to see this order in our facilities will be the press operator. Why not? How come you can order custom blinds online and get them delivered right to your house, yet you can’t size up and order a box the same way? Someday this will be the way things get done in our industry.
While we wait for the slowest industry on Earth to move to the 20th century, we are getting our game face on with Customer Service. Just like in retail you will need to greet the new hunter with the Nordstrom “how can I help you” attitude, we must learn (once again) how to be the best with our clients who have been through a worldwide pandemic and truly, ultimate hell. It is time to shine. Just be nice! How about that for a start? We have been through a disgusting political presidential election, aided by a media that has homed in on negativity blasting to no end, all of this during a worldwide disaster. This could have been the most coming together times as Americans but instead we divided America. So, it is with that, that my personal commitment is to make Bay Cities at least one place where people are treated nice no matter where they came from, if they are green or polka dot or what they believe in. This little garden spot of Pico Rivera, California will be a very great and soothing place to visit and call upon. We should all make that commitment in our lives and in our businesses.
Let’s go!
Greg Tucker
Chairman CEO