Saturday, March 27, 2004

California Prices Themselves Out of More Jobs

Kraft is closing one of its Nabisco plants near Los Angeles, laying off 235 people (link requires registration). This is one of two plant closings they recently announced as they try to "consolidate operations" after a dismal quarter.

Kraft states that jobs will be moved "elsewhere in the U.S.", meaning they will consolidate production in lower cost states with sane worker's comp and tax laws (no, they can't make Oreos in India since they would be stale the time they hit the U.S., although I suppose they could do it in Mexico or Canada).

This story caught my eye after seeing several giant Intel plants in Phoenix this week, each of which must employ several thousand workers. These plants aren't new, but Intel is a California company and I couldn't help thinking that each of those billion dollar plants represented jobs that were purposely put outside of California. So "offshoring" to lower cost areas isn't exactly new.

Wednesday, March 24, 2004

Gambling in Phoenix: No Dice

So I am in Phoenix for a customer meeting and my customer, having already been entertained to a heavy lunch a few hours earlier, demurred on dinner, leaving me to an evening alone. The city is currently packed due to the NCAA championships and spring training, so restaurants and bars are filled to overflowing. While I waited for the crowds to thin, I decided to kill some time by swinging by one of the Indian casinos in the area. I wasn't interested in gambling so much as just checking the place out.

In a nutshell: take the worst casino you have ever been to in Nevada, make it a little worse, and take out the craps tables.

The thing that really blew me away: Bingo. I took a picture, but unfortunately the camera phone defaulted to the smallest resolution, but what you are seeing here is a giant room with over 500 people (literally) with an average age of 68 playing bingo:

The rest of the place was nearly all slots, although they did have a few blackjack and poker tables. Maybe I have become a little snobbish after all my visits to Vegas, but definitely not a stop for the jet set.

Tuesday, March 23, 2004

Let Me Give You Some Advice...

On TV shows and movies we often see characters who hear voices in their heads on advice they once received, or even flashbacks of characters getting advice (Kung Fu, of course, being the master of flashback advice). So, I wondered, if I were TV character, what voices/flashbacks would I have?
The line between legal and illegal isn't fixed, and can come out and grab you : I often hear the voice of my business ethics prof Dr. Windsor when I read about all the shenanigans at Enron, Worldcomm, Parmalat, etc. and did a post on his advice before. Although appropriate, Dr. Windsor never referred to me as "Young Grasshopper".

Never ask a man how much he makes or how many women he's made love to: I think Dad was trying to tell me that there are just some things that should always remain private.

Automatically put aside money from each paycheck into savings so you never see it in your account: Mom's a CPA. Enough said.

Don't go outside with a wet head!: My grandmother, rest her soul, was chock full of wisdom on how to avoid getting sick, what to do when you got sick, what to do when you were no longer sick and how to avoid getting sick again. She lived to 86.

Don't put your #$*% where you wouldn't put your tongue - Dr. Bessem was a gynecologist and my friend's father, and he would sometimes come into the gameroom where we were hanging out, scotch in hand, and dispense all sorts of interesting advice that was probably more appropriate to a hormone-raging 17 year old than grandma's advice.

Interested People are Interesting People - I spent 6 years at summer camp as camper and counselor and we always had a "thought of the day". Most were trite truisms we have all heard before. Sunday was always a Bible verse. But a few stuck in my head that were valuable as I grew up and entered the business world, like this one. This is similar to "People's favorite subject is themselves", and whether on a date or doing sales, this is good advice.

I have a bunch more, but a blogger friend of mine told me to always keep my posts short to keep them interesting.

From the Who Cares Department

Elvis Presley's Roots Traced to Scottish Village

The guy's been dead for a few decades now (Ed: or IS he?) and even if he were alive, does anyone really care? (Ed: There's a whole fan base that will now go to this village he never went to because some ancestor is supposedly from there).

Sunday, March 21, 2004

BFL "Mini" Lunch in Pasadena

Friday's Bear Flag League lunch was a small, if very fun event. There were only three of us: Calblog (Justene), Daily Prescott (Patrick) and your's truly. It was simply too hard for a lot of people to make a lunch event during a work day and a lot of "maybes" became "nos", so Justene announced that all future events will be on the weekend (like the last one, which had a much larger turn out).

The smallness of the group didn't detract from the conversation as the three of us chatted away for nearly two hours. We would have sat there longer if it weren't for a personal errand that Justene had and a business meeting I had (Patrick had the day off). Since it was only the three of us, I decided not to take pics.

Special thanks for Justene for picking up the tab! I hope to make the weekend event next month and meet more of my fellow BFL bloggers.

Also, here are some pics from the lovely Pasadena court house:

Cigar Review: Ashton Classic Esquire

Enjoyed an Ashton after a home-cooked steak on my coal-fired grill (pissing off both environmentalists and animal rights activists at the same time). I had a Ashton Classic Esquire, one of two I received as stocking stuffers this last Christmas. The cigar had a rich, smooth, pleasant taste, but it did have a bit of an after-taste which detracted from the experience, knocking some points off its rating. It also had an uneven burn, which I find annoying, but isn't always the fault of the producer since it could be caused by improper storage (I have a proper humidor which I check regularly, but I wouldn't call myself a storage expert).

Overall, a very good cigar: four out of five stars, or keeping with my 100 point scoring system I used when I started these reviews, 83 out of 100. Ashton markets themself as Pleasure Beyond Expectation, and I think they produce a very good cigar, but not the top of the line.

Wednesday, March 17, 2004

Consumer Review: Netflix

Thumbs up! I have been thinking about signing up Neflix for half a year now and finally did it after wandering into my local Blockbuster and finding absolutely nothing to rent (never mind the fact that I pay $15 a month for HBO and except for the Sopranos, they never seem to have anything on).

For those of you not familiar with them, Netflix is a video rental company (DVD only) that operates through the internet and mail. You sign up over the internet for the movies you want to watch and they mail you the first three in your queue (you can also sign up for an 8 video package). You keep the movies as long as you want - a week, a month, whatever. When you are done with a movie, you send it back in the pre-paid envelope and they mail you the next movie on your queue.

You can watch any number of movies you want for a flat fee of $20 a month, so if you rent more than five movies a month from Blockbuster, you are in the money. In only my first week I have already received my sixth movie. The mail times are great (for me, at least). It took one day from the time I signed up until I received my first movies, and it is a two day turn from the time I return a movie until I get the next one in my queue (one day for them to get, one day for me to receive).

Another nice feature of Netflix is their browsing and recommendation software. Similar to Amazon, you rate the movies you have seen and they will suggest titles based on your selections. It's fun to sit down for a few minutes at a time and rate movies - I have done it for 500 titles so far, and I really don't consider myself a serious movie watcher.

The one unknown is the availability of "hot" new releases, but with my queue of over a dozen movies and growing, I won't mind if it takes a few extra days to get a new release versus dealing with Blockbuster. One nice feature I am looking forward to is getting a few movies to take with me for long business trips. With no late fee, I can take them with me and watch on the plane, hotel room, etc. on my DVD playing laptop and just mail them back when I get home.

Netflix's business model is being copied by several others, including Walmart, and there are indications that even Blockbuster will do something similar, so I think they hit on something here.

Update: I took a look into their stock since I liked their service, but with a PE of 341 and a business model that can be copied, I'll cheer from the sidelines.

Monday, March 15, 2004

Some Outsourcing Data You Won't See Get Much Play

The WSJ reports (link requires paid subscription) that more jobs are outsourced TO the U.S. than are outsourced FROM the U.S. Long story short, the U.S. has a net "inflow" of $53.6 billion outsourcing jobs ($131 billion sent to the U.S. for outsourcing work versus $77.4 billion outbound). In addition:

- The U.S. inbound (more jobs here) number is up $8.4 billion from 2002 to 2003.

- The U.S. outbound (exported jobs) is up $8 billion from 2002 to 2003.

So the increase in 2002 outsourcing from the U.S was more than matched by outsourcing to the U.S.

I don't think outsourcing jobs is a good thing, and I think some companies are doing it without looking at all the financial numbers or project issues (Dell has reversed some outsourcing as has some software companies). But the bottom line is outsourcing is the decision of companies, not the government. If you listen to politicians, you won't get the whole story. You'll hear sad stories about software people or call center people who lost their jobs, but you won't hear the fact that limiting outbound outsourcing will result in retaliatory measures from other countries that will hurt more Americans than it will help.

The people clamoring for outsourcing laws are of course the people most affected by it. And they have no compunction if more people lose their jobs, as long as they get in or stay in theirs. I am not blaming them - it's human nature. But if the job of the economy is to provide the most economic benefits to the most number of people, then laws limiting outsourcing are not the way to go.

Sunday, March 14, 2004

Sopranos Episode 2: Booooring

Okay, maybe they're still setting up the plot lines, but I practically fell asleep in tonight's episode. Yeah, there are some questions like: is Tony's cousin Tony really going legit after getting out of prison, or is this some set-up? Are the feds finally going to get some dirt on Tony?

As the final season of Sopranos, bets are that Tony gets wacked - how better to end a series on a mobster? So all the plot lines on the fed crackdowns seem like a red herring to me.

Wednesday, March 10, 2004

We Work For Little Pieces of Paper

Just Procrastinating links to a story of a woman who tried to spend a “million dollar bill” at Wallmart. Lots of people have seen these novelty items in the store and it surprises me that someone was stupid enough to try to pass one off as real currency (but isn’t there a saying about never underestimating the stupidity of the American people?).

The only difference between her novelty item and a real bill (besides the technical aspects of the type of paper and printing method) is the fact that our government says a $20 bill is “money”. That’s it: it’s money since the government says it is (fiat currency). If you think about it, it’s a little strange – we work for and then buy all sorts of goods and services by passing these little pieces of paper around. And more recently, all this is done virtually with bits of data being transferred between banks, credit unions, credit card companies and the like with no paper at all.

The evolution of money is an interesting topic and one of the reasons I got into collecting obsolete U.S. currency. Besides the historical and economic history in old currency, many of the old bills are like little pieces of art compared to the monopoly money our government is churning out today.

I am what is called a “type” collector. Once I get a type of currency I move on to the next note (other people collect series, serial numbers, portaits, signatures, the list is nearly endless). For example, here are just a few of the types of small-size $1 notes issued since 1928 (all from my collection):

Note that this small slice of my collection contains silver certificates and a U.S. note. Other types of money that have been issued include gold certificates, national bank notes, federal reserve bank notes (FRBN), and most recently federal reserve notes (FRN). This is another interesting aspect of collecting, which is understanding the different schemes the government has tried to create money.

Besides types of notes, U.S. currency can be broadly divided into “large size” and “small size” notes, the small size notes being the size of the notes in your wallet, which started being issued in 1928 as a way to save money on printing costs. Large size notes tend to be more expensive due to their age, but are also the most beautiful, interesting and rarest notes in the hobby since the larger size gave the engraver more space to show his craft, as shown by this obverse of the 1914 $1 Federal Reserve Bank Note (FRBN) in my collection:

And for that woman? She should have known that the largest bill ever printed by the U.S. government was $100,000, but was used only for internal transfers between the federal banks and never put (and illegal to posses) in private circulaiton

The largest bill ever printed for general circulation was $10,000, and although ALL U.S. currency ever issued is redeemable at face value at your nearest bank, this bill would fetch well into the six figures in a private sale (most known examples are in museums).

The largest "current" bill in circulation is $100, so if you see anything larger than this it is either a phony or worth a lot more than its face value as a collector's item ($1000 bills are still out there and worth anywhere from $1200 up, so don't spend them as cash).

Tuesday, March 09, 2004

If You Are Against Outsourcing, You Must Be Against The "Do Not Call Registry"

So you are upset about Americans losing jobs?

1. Telemarketing Jobs Lost Due to "Do Not Call List" - 2 million to 6.5 million, according to the Direct Marketing Association.

2. Jobs Lost in U.S. Due to Outsourcing - Hard to find an exact number for an issue so many people are upset about, but halfway down this article it states that Forester Research estimates 3.3 million jobs will be be outsourced by 2015

So if you are upset about 3.3 million jobs going overseas in the next decade and want to so something, it seems to me that getting rid of the Do Not Call Registry will be a much faster and easier way to bring back jobs to America. After all, as I stated before, one of the riskiest things about doing business in the U.S. is being regulated out of existance by the government - which also leads to a loss of jobs - which is what happened to telemarketers.

Funny, getting rid of those 2 million+ telemarketing jobs was soooo popular with politicians of both stripes...

Outsourcing as Consumer Choice

If outsourcing is a concern to Americans, a better solution would be for companies to offer consumers a choice. In today’s WSJ (requires paid subscription) there is an article about E-Loan doing just this by giving their customers the following choice:

1. Have your loan processed in India for fast turn around, or
2. Have your loan processed the U.S., which will take, at minimum, two days longer than if you choose India (but with no additional cost)

I expect to see more of this, probably with monetary incentives given to customers who choose overseas support and those picking U.S. support paying more. After all, those who want to prevent offshoring should be willing to pay more for customer support, 24 hour service and fast turn around to keep jobs in the U.S. The rest of us who don’t have a lot of money to throw around can save a few bucks by having our services go to the place where it saves us money or gives us faster service, or pick according to the situation (I don't care if my PC support is in India, but I think I will keep my tax preparer state-side, but it's MY choice).

Sunday, March 07, 2004

Since When Did Coffee Need Ordering Instructions?

I was at Starbucks this morning for my daily amphetamine caffeine fix and noticed that, in order to help their clients, Starbucks has published an instruction book on how to order coffee.

Obviously this book is not for boring people like me (just coffee, please), but for people who like showing off how sophisticated they by ordering complicated drinks (you know the type). Here are the instructions for entering your order at Starbucks and some examples:

Step 1: Cup
Step 2: Shots and Size
Step 3: Syrup
Step 4: Milk and Other Modifiers
Step 5: Drink

So you order an Iced, decaf, tripple-grande, cinnamon no-fat, no-whip mocha, or Grande quad ristretto non-fat dry cappuccino.

Got it? Me neither. I'll just stick to coffee. It's the caffeine that's important anyway. And you can check your personality type by entering your Starbucks order here.

Friday, March 05, 2004

The Search for Blame is Always Successful

Quite frankly, I am a little surprised at the Martha Stewart Verdict. I am not a lawyer or legal scholar, and I didn't follow the case closely, but based on what I knew about the case it seemed that the government's case was pretty weak and nothing more than a political effort to show a few CEOs swinging from lamp posts after the bursting of the internet bubble, Enron, Worldcom, etc.

However, I am not holding Martha blameless. Here are a few pointers that were hammered into my head by my business ethics prof (It was a fun class. The prof was like a young version of Professor Kingsfield from The Paper Chase, intellectually skewering young minds that would dare debate with him - and you had no choice but to debate him since he would call on you, ask your opinion about the case being discussed and automatically take the opposite view):

The Line Between Legal and Illegal Isn't Fixed - The prof drew up a wavy line on the board and said that was the line between legal and illegal. And - oh yes - this wavy line moved up and down. In other words, things that were perfectly legal one year could easily be found to be illegal the next year. And a lot of it depended on politics. If you want to stay clean, DON'T stay on the "just legal" side of the line - you could find yourself on the wrong side of the line in a heartbeat. Stay FAR onto the legal side of the line and you will stay in the clear.

Use the Smell Test - The prof liked this one and used it throughout the semester. If something even smelled unethical - even if it was legal - avoid it like the plague. During case study discussions he would often pick out a hapless classmate and simply ask "Does this pass the smell test?". Of course, whatever he said the prof would take the opposite view, so the trick was always to back up your opinion with facts.

The U.S. is NOT the Safest Political Place to Do Business - This was a good lecture. The topic was "safest political places to do business in the world". Everyone assumed that we were going to talk about countries that have a Dictator of the Month. The prof said he was going to start listing countries from top (safest) to bottom. "Wait", he stopped at turned to the class, "who do you think is first?". Everyone assumed the U.S. Wrong! The U.S. wasn't even in the top five.

The risk of doing business in the U.S. is being too successful. Become too big a target and the government will come after you, guaranteed. Standard Oil (broken up the government despite the fact that oil prices dropped for consumers in every single year of its existence), Microsoft (constantly on the defense from government), Halliburton (constantly on defense from the Left), the list goes on and on and on. Or you can be regulated out of existence, have your profits taxed away (anyone remember the Windfall Profits Tax on oil companies?), or attacked just for doing economically savy business decisions (there was an item today on CNN attacking companies for doing things to lower their taxes - like putting subsidiaries overseas. Lowering your taxes isn't illegal - avoiding them is - and there was nothing illegal by what these companies did - and I would say it would pass the smell test since this is like being attacked for deducting your mortgage interest, but my prof would, of course, debate me on that).

This goes into the whole discussion of business bashing by politicians, typically the Left. They love jobs but hate the businesses that provide them. I have never have figured this one out.

The Very Big Fish and The Very Small Fish Typically Get Away - This little rule of thumb didn't hold up for Martha (and maybe not applicable after 10 years): The law is like a fishing net. The really big fish can break through and get away. The really small fish slip through the holes in the net and aren't interesting to catch anyway. It's all the medium sized fished that get caught and eaten.

The warning 10 years ago was this: If as a middle manager at a company you know about malfeasance going on, you are more likely to serve time than the CEO (so come clean, turn State's, etc.). I think this was true a decade ago when I was in business school, but I think after the past few years with Enron and what not, the CEO is more likely to serve than the middle manager. But I think it is still something to keep in mind.

The Search for Blame is Always Successful - This wasn't in business school, but a quote I read somewhere (and can't find who to attribute it to), but a truism whether discussing political grandstanding by prosecutors or office politics.

So while I disagree with Martha's conviction, I think she could have avoided her situation all together if she had known about these little lessons.

Wednesday, March 03, 2004

Convergence: Inevitable or Marketing Minefield?

Convergence is a word thrown around a lot in several industries - mainly by marketing people like myself - to describe new products that will combine the functions of several distinct products. Today, the term can be found in marketing literature on portable devices (converging the portable phone, PDA, and digital camera), the home network (converging the TV and PC systems in the home), and in several other areas. But these aren't the first areas where convergence has been attempted. While some convergence areas look like a sure thing, a look at earlier efforts at convergence shows that the results aren't always pretty:

The post war boom of the 1950s saw unprecedented growth in purchases of both cars and leisure boats. Some marketing genius decided why not combine them into one?!? While the boatcar did make it easier to tow your leisure craft to the nearest lake or bay, the inability to throw out a good cast from a fishing rod relegated this to the collectors' market, where the few that still exist bring in high prices today.

After the fiasco of the carboat, the boys in marketing (they were all boys back then) went back to the drawing board and figured out their problem: they mixed the wrong product with the car. It should have been a plane instead of a boat! Alas, this attempt also resulted in failure, mainly due to the inability to find wide enough parking places at the new indoor malls that were starting to crop up by the end of the decade.

The 1970s saw new advances in science and the produce people figured they would get into the convergence game by combining two vegetables few liked into a single one everyone could hate. They succeeded by creating a vegetable that had the blandness of cauliflower with the rough texture of broccoli. While you can occasionally find broccoflower in the store, it has never been offered at any of the finer (or less fine) dining establishments of the U.S.

The 1980s found convergence success in the Multifunctional Printer (MFP) by combining four products that functioned poorly by themselves - fax machine, printer, copier and scanner - into a single product that functioned even worse. But people needed to reclaim desk space from all the gadgets that were taking over their office, and trying to get help from a single source when things went wrong was easier than trying to call four different help lines.

The 1990s saw politicos getting onto the convergence bandwagon with their introduction of Billary. Fortunately the initial product was rejected, although there is a reintroduction planned for 2008.

And the 00s? I think we'll see many more attempts my marketers to converge dissimilar products since it is easier for a marketing person to combine two or more products that are already on the market than to create a brand new product. The proposed business plan is deemed less "risky" since markets already exist for the current single products, meaning it is easier to get buy-in from management. Sometime convergent products make sense, but as I think I have shown here, the result is often ugly.

Extra Credit: Can anyone name the "convergence product" from a Classic Saturday Night Live "commerical"?