The Best Company Facing Hard Times
It's not hard to find advice on how to engage your workers and invest in them as your most valuable asset. Contrarian practices are seen as shortsighted. But even when you manage a company so well that you are praised as a shining example of profitable, employee-first management, that's not a guarantee of success.
Inc. magazine has a story about how such a company faces tough times.
Reell Precision Manufacturing makes laptop hinges in St. Paul, Minn. For years it has been recognized a great place to work.
The employee-owned company adopted a democratic approach to management. It had employee-centric programs. Business publications lauded its management style. It thrived and survived tough times without layoffs.
"How had Reell wound up with the highest turnover rate and lowest employee morale in its history? How had the internal debate about policy turned so bitter and personal? And how had the three founders ended up in a courtroom defending themselves and Reell against breach-of-contract charges being leveled by a man to whom [founder Bob] Wahlstedt felt an enormous debt of gratitude and for whom he wished only the best?"
Part of Reell's problem was a decision to compete in the global marketplace on price. There also were problems replacing a CEO.
It's a long read but a worthy reality check.
Colby College's War on Food Trays
Inside Higher Ed magazine has a story about dining halls cutting food waste by restricting trays.
The theory is that students will take less food if they don't have an easy way to take it to the table. Colby College has tried Trayless Thursdays and found less food waste. They even prepared less food those days.
But don't underestimate the resourcefulness of college students - especially those in the Woodsmen team. They compete in lumberjack competitions and use their skills to craft their own wooden trays.
If I read this right, the students already have paid for their meals through a plan. So they don't feel like they are paying for the extra food. Convenience is the only way to get them to cut back.
I wonder if this works with paying customers. If you serve food on smaller plates, will they order more or think they aren't getting as much for their money?
If you run an all you can eat buffet, how big are your trays and plates?
Keeping Your Home
The Fed has cut rates drastically in the past week and a half. The federal government wants to mail you a tax rebate check. Will any of this help you keep your home if you are having trouble paying the mortgage?
Not really according to a Marketplace story. But there is this ray of hope:
"If you're in jeopardy of losing your home, reach out to your lender. [Rick] Sharga [of Realty Trac] says most banks don't want to take your property -- they don't want to be in the real estate business. So they'll often negotiate a refinance package, figuring that less is better than none."
And it's likely that a refinancing will have a favorable, fixed interest rate. So there is hope.
Commander in Chief Executive Officer
Tuesday's Republican primary in Florida highlighted a battle between two principles. On one side was Sen. John McCain stressing his credentials as commander-in-chief. The other side was Mitt Romney explaining that his resume qualified him to be CEO of America.
With the economy looking a bit shaky these days, the prospect of having a savvy businessman (or woman) lead the country has appeal. Do we need a president who knows hot to treat the country like a business?
Use the comments to explain what kind of resume our next president needs.
Over Stimulated?
The U.S. House of Representatives has passed the economic stimulus package touted by President Bush. The U.S. Senate has added some stimuli to it. It looks like the Senate wants to increase our rebate checks and extend unemployment benefits an extra 13 weeks.
The unemployment extension is argued to be very useful. It gives the unemployed more time and can put money into the economy faster than a rebate check.
But how much stimulus is needed? There are arguments that cash infusion really won't help. Interest rate manipulations by the Fed are seen as very effective.
The housing market may be ugly but the latest durable goods report isn't so bad. And the International Monetary Fund doesn't see a recession in our economy this year.
How does any of this affect your business?
Breaking News
The Wall Street Journal reported this morning that Gross Domestic Product growth slowed in the fourth quarter.
The GDP is a measure of all goods and services produced. This latest report is a sign that the economy is growing but not as much. This would lend credence to the theory that we need stimulus before the economy goes in reverse.
Not Always Friday
I heard on the radio that Friday's in South Portland by the mall has closed. Franchise fees were blamed. Of course that's not the whole story. Franchise fees wouldn't be a problem if customers keep the restaurant busy. Maybe it gets lost over there among all the other national restaurant brands.
Maybe that market has reached saturation for fast food taverns.
State of the Economy
President Bush started his State of the Union (transcript of the speech) on the economy. He instructed Congress to pass the stimulus plan that sends us tax rebates and offers tax breaks to businesses.
The benefits of the stimulus is debatable. Congressional reelection campaigns will be the biggest winners. Everyone can campaign they voted to save the economy.
The Fed is doing what it can by adjusting interest rates. Many economists argue this is where the real power in economic policy can be found. Presidents are bit players - no matter what the candidates are saying in their stump speeches.
But Bush hit upon a big part of the problem: federal spending. He promised to cut spending with a balanced budget in mind. He used a great buzz phrase, "American families have to balance their budgets; so should their government." Except that we don't. Families are deep in the red with mortgages, car loans and credit cards. Even frugal households have a fair amount of mortgage debt.
But I digress. The deficit is the issue. To fund the budget, the federal government has taken on its version of credit card debt. Instead of owing Capital One and Bank of America, it owes a lot of foreign investors who bought bonds. That's fine on the surface.
But now we have the subprime mess. People are defaulting on loans. Creditors are tightening their policies. This alone could be handled without calling it a crisis. But the federal government is out there asking for loans too.
The deficit pushes down the value of the dollar. This helps out the math when calculating the trade deficit. But it's not a big benefit. Since the dollar is the currency of choice in the international oil markets, the price of oil has risen dramatically. High demand and international tensions have done their part too.
Mix all that together and you don't have a great economy.
I think of this in simple terms. Either we (consumers) have the money needed to keep the economy going or the government has it. Today we're trying to have it both ways, and it put economies across the world on edge.
How do you see the economy? Does the Bush administration have any chance of setting it straight?
Economic Census
There's a bit of a misleading headline in the Sun Journal today. Maine takes top ecomomic honors is about the Economic Census being conducted. Businesses have until Feb. 12 to return surveys.
The story is based on the 2002 survey data. The top economic honors mentioned in the headline refer to the paper industry, goods distribution and telemarketing. And the "honors" are based upon a per capita standard. It doesn't exactly make Maine an economic powerhouse.
But there is some interesting pieces of information:
"Maine's widely distributed population makes distributing goods and services a thriving industry. Direct selling establishments (such as water deliveries, canteen services, newspaper deliveries, fuel dealers) brought in $922 million in 2002; about $711 per Mainer. Vermont is next, where its $140 million works out to $666 per capita."
That tells me there is a good foundation for demand for any delivery business. But fuel prices are another matter.
Also take a look at this piece of our economy:
"Maine led the nation in per capita sales for RV parks and campgrounds, $125 million in 2002, or $97 per capita. Nipping at its heels were Alaska ($51 million; $81 per capital and Wyoming, $42.5 million; $84 per capita.)"
No matter how you define a tourist, you can't argue that Maine isn't Vacationland.
If you like economic stats, this Census is a good place to spend some time. This economic snapshot should point to some business opportunities.
Best news you will hear all day
The Wall Street Journal reports that oil prices are supposed to drop.
Apparently oil exports are worried that a sluggish U.S. economy will lessen demand during a period when oil demand is traditionally lower.
State of the Union
Tonight is President Bush's last State of the Union address. I'm betting he will use economic terms more than words such as terrorism and Iran. There is a plan in Congress to give the economy a jolt, and there certainly will be encouragement to get it passed quickly.
Gov. Kathleen Sebelius (D-KS) will deliver the Democratic response. Well, she will offer the official response. Look for responses and pitches for their stimulus plans from the Democratic candidates for president. The Republicans won't pass up a chance to get in front of a camera on the eve of the Florida primary either.
I would be more interested in hearing the response from the business community. What is your take on the state of the union?
Getting away from it all will be a bit tougher
The Wall Street Journal has a special report on the future of technology today. It generated a couple yawns with me. But maybe you have a different take.
I did come across a bit from Scott Pearson, Senior Product Manager, Sporting Goods, at L.L. Bean. He sees advances in GPS technology that will help friends, family and rescuers know where you are in the backcountry. He also expects advances in portable power generation to allow you to have more gadgets while camping.
My first reaction is "Sigh." It kind of defeats the purpose of communing with nature. But it occurs to me that these kinds of technology will encourage more people to enjoy the great outdoors. Again, "Sigh." Isn't that why people get out?
But I also realize that more people also can mean business opportunity. If more people want to play outdoors, how can your business serve them?
The Weekend Stimulus Edition
Although, I'm headed for New Hampshire to hike this weekend, I will try to keep my economic impact to a minimum. But the Mexican restaurant industry is going to see some stimulus. I promise to buy my gas and cigarettes in Maine though.
Speaking of which, a commenter named "blank" brings up a good point about New Hampshire drawing Maine shoppers. He (or she) wonders if the draw has more to do with the location of the retailers. N.H. locations just may be closer for people living near the border. But it also is worth considering whether tax structure had any bearing on deciding which side of the border to set up shop.
As I wrap up some tasks, I have some later breaking business news for you:
Although calling this a Maine business story is a stretch, I'm going to reach anyway. NPR aired "California Program Makes Toilet Water Drinkable." Slate declares "It's Time To Drink Toilet Water."
First of all, that's not news to my dog.
Second, I think Poland Spring has a new marketing campaign.
With that, I declare enough damage for one week. I will be back Monday morning. Enjoy the weekend.
Don't Take Your Stimulus to N.H.
It looks like Uncle Sam is going to mail me a $600 check in May. The idea is for me to spend it in your business so you will expand and hire more workers. Then they will spend their new wages in more businesses. Then it will snowball into prosperity.
I don't know whose business I'm going to stimulate yet but I promise I won't spend it on cigarettes in New Hampshire. Why would I do that? The Maine Heritage Policy Center thinks that's a real danger.
The think tank has a report that estimates that 10,000 cars crossed the border into New Hampshire on a Saturday (Dec. 1) last month. (Download their report.)
It's very likely I was in one of those cars. But I wasn't on a quest for tax-free appliances or cheap goods. I was hiking in the White Mountains.
Actually, every weekend this winter has found me in New Hampshire's White Mountains. For many reasons, I enjoy the New Hampshire mountains more than the Maine counterparts. And when I'm done hiking, you can find my car in a restaurant parking lot.
But you couldn't find it at Walmart or Home Depot. I didn't buy gas. It's not cheap in North Conway. And I didn't buy cigarettes.
The MHPC estimates that each Maine car parked at Walmart or the liquor store carries one carton of smokes back across the border. And that would mean Maine lost about $8.4 million in tax revenue each year.
The study also assumes that an average of 10 gallons of gas is pumped into each car.
Did I mention that the 10,000 cars per Saturday was an estimate?
There are a lot of estimates in this report. Maybe they are based on good statistical sampling methods.
Wait, the cigarette calculation is based on an assumption. I guess that assumption is Walmart and liquor store patrons are smokers. This isn't nitpicking. Cigarette taxes are responsible for $8.4 million of the $14.6 million in lost tax revenue.
Take a look at the report. How many of the estimates and assumptions sound right to you? (Note that I use the words "assume" and "assumption" when the MHPC uses it.) Do you think cross border shopping is a problem for your business?
Survival and Marketing Planning
Today I ponder planning for surviving a recession (and some advice) and handling customers' reviews of your business.
Preparing for Recession
This week there is a lot of talk in Washington about preventing a recession.
The Fed took action Tuesday by lowering a key interest rate. President Bush prposed tax rebates.
Speaking of tax rebates, the state won't tax it. But The Lewiston Sun Journal reports that one lawmaker wants to make sure the rebate stays tax free.
Robert Reich, former Secretary of Labor in the Clinton administration, says it's not enough. He thinks the problem is the housing market and none of that will save it. He says we need foreign investment.
And he's talking about the kind of investment that only Middle East princes and Asian banks can muster. There's not much we can do to make that more likely.
The chances of a recession hitting Maine are beyond our influence. But that shouldn't mean we are helpless.
If a recession hits Maine, surely we can do something to soften its blow on our lives. Or maybe we can find ways to prosper.
What's your plan?
Some advice
Marketplace: You may want to refinance your mortgage.
Jeff Bogue's Financial Sense: Don't dump your stocks
Reviews not just for restaurant
If you own a restaurant, reviews are a part of business. Thanks to the Internet, customer reviews are a part of any business' reputation.
That includes doctors. NPR has a story about Web sites that allow patients to review and grade doctors.
I tried the two services featured and found Maine doctors in DoctorScorecard.com but not FindADoc.com.
This underscores a point I made earlier this month: customer-driven review sites need to be on your marketing radar.
Do you have a strategy to deal with restaurant reviews?
What does it mean?
Starbucks seems to be taking its cue from the Federal Reserve. The Wall Street Journal reports that they plan to sell a $1 "short" cup of coffee and offer free refills.
Don't reroute your commute yet. It's being tested in Seattle.
This is an interesting move. Starbucks brought premium coffee drinks to the mainstream. They may not own the market but they certainly made it what it is. Mom and pop coffee houses have benefited from it.
Now McDonald's wants a piece of that market. And it looks like Starbucks wants a piece of the "just want a cup of Joe" market.
Will it work? Will this attract a new crowd of coffee drinkers?
Here's the point you can start worrying. Your coffee shop can be competitive with Starbucks on price. Their latte and cappuccino prices can be beat.
But $1 coffee - even if it is a smaller cup - puts them in a different pricing league. And that's a league you share with McDonald's.
How do you think this will affect the coffee wars?
What about recession?
Ed Murphy tackled the question I had yesterday. How will the fed rate cut affect Maine? It's not going to prevent a recession in New England.
But there is good news. The cut can trickle down to home equity and car loans. You have a chance to save a little bit of money.
How do you think the economy is going to fare? Is there anything you can do to protect your business?
Why didn't someone tell me this sooner?
Apparently, the green M&Ms are an aphrodisiac. No, I'm not making this up. Someone is but it's not me. MarketPlace has a story about Mars candy is going to package green M&Ms separately - just in time for Valentine's Day.
Here's where being able to laugh at yourself can come in handy. There's an urban legend out there that is obviously not true. So build a product around it and capitalize on all the word-of-mouth marketing that already exists.
Of course M&Ms doesn't have to do much in this regard. They already make the green candies. They just need to retool their packaging. Not an issue since they already offer red and green batches for Christmas.
And they have a tradition of using humor in their advertising.
Is there any way you can use rumor, urban legend or pop culture to market your product?
The Fed Rides to the Rescue
The financial markets had a tough day Monday. Stocks dropped around the world while the U.S. markets had the day off thanks to Martin Luther King.
This morning, Bank of America - remember they're going to save Countrywide - and Wachovia reported falling earnings.
Today doesn't look any better. To try to head off a sell off in the United States, the Federal Reserve announced it was cutting the federal funds rate, the interest that banks charge each other on overnight loans, to 3.5 percent, down by three-fourths of a percentage point from 4.25 percent. This is considered huge.
For the best explanation, check out the NPR story and listen to Adam Davidson's interview on the move.
At first glance, it's not having much of a calming affect. The Dow and NASDAQ are down. Yahoo! Finance has stats on the markets in the United States and around the world if you want to stay on top of the turmoil.
If you work in the financial markets, it's obvious what this means to you. But those of you in the corner markets, it seems a little removed from your world. How do you think this is going affect your bottom line?
The upside to all this is the hope that the Fed rate cut will put enough money into the economy that we all get a boost. This could have a better outcome than any stimulus package that President Bush or his potential successors propose.
All we can do is wait and see.
Find the Mistake in this Blog
Jared Sandberg has a column in the Wall Street Journal about the tactics of shifting blame. Workers who refuse to admit their mistakes and find scapegoats more often than not prosper.
That sounds rather obvious. Who wants to admit they did something wrong? And performance evaluations celebrate success not failure.
But there is a movement to embrace mistakes. Some companies concentrate on the lessons learned from mistakes. MaineToday.com provides time during staff meetings for employees to "confess" these learnings. We even vote for the best one and award a trophy. The goal is not to reward mistakes but create an atmosphere that encourages us to admit mistakes and share learnings so others can avoid the mistakes.
It's not to say we are cavalier toward mistakes. If I create a page that crashes the server or publish a misquote that leads to a libel suit, I'm not going to get away with a glib mea culpa and a trophy. And my evaluation won't look so good if I continue to create bad links and struggle to put the proper e-mail address in the Daily Digest.
But the idea that there are lessons in mistakes is a solid one. Of course it would be better to make perfect decisions every day. But how many of you are perfect? If you make a bad decision that doesn't put you out of business, can the experience give you knowledge and wisdom that will get you ahead in the long run?
Yes, this is easy for me to say. It's not my business. I'm not the decider.
But I do say this in a very public forum. Not only are my thoughts on business published, but you have the opportunity to explain to me why I'm wrong. And that's going to happen. I'm not a business expert. If I was, I would be running my own company instead of working for a paycheck.
So when I make a mistake, you have the opportunity to correct it. Explain why my ideas won't work. Not only will I learn something, but other readers will find something valuable too.
There is another concept gaining traction in publishing: Your audience knows more than you do. You can prove it by adding comments.
My (off topic) Mistake of the Day
In November, the New York Times wrote about how Elizabeth Emerson was one of many Washington County residents having trouble paying heating bills. Emerson also confessed to indulging in the occasional Hershey's chocolate bar.
The Bangor Daily News has caught up with Emerson and reported that she has received a lot of chocolate. Hershey's even sent her a box. Emerson did say she received other offers of help but chocolate dominated the "aid" package.
Anyone send her any heating oil? Or did she convert her furnace to burn chocolate?
That's all from me today. I'm going to have the one piece of caramel that I can afford - with oil prices being what they are.
Let Me Tell You About...
I'm listening to MarketPlace on the radio right now. There's an interesting story about London taxi drivers are being paid to talk about products while driving with passengers. The idea is that taxis have "captive audiences" and the drivers' conversations will be subliminal pitch. (They don't have the story online yet but I will look later this morning.)
I think that's putting a lot of faith in a cabbie's conversational skills.
But it's an interesting thought. If it works, you may one day see free taxis - totally supported by advertising. But there may be more aggressive techniques employed. Imagine a free taxi that's paid to drive by or stop at certain businesses.
"Excuse me but I'm going to stop at this Irving for gas. You have time to get out and get something at the Blue Canoe store. They have the best coffee in town."
Maybe passengers can pay a fare to get a silent, ad-free ride.
Next, spokespeople will be paid to ride buses and talk up their products. Or the guy next to you in line at the DMV could be hired to tell you how you can get fresh, minty breath.
It's a whole new frontier of advertising space.
Remember the Bank Mergers?
Last week I mentioned that Bank of America is buying Countrywide. I finally found a MarketPlace story that addresses the implications.
If you have a mortgage with Countrywide, you aren't going to see a problem. But if they want to refinance, it may be a little more difficult. But that's not news to any homeowner.
What holiday?
Today is Martin Luther King Day. Many businesses have given their workers the day off. Not here at the world headquarters of MaineBusiness.com. Like I promised Friday, I'm not whining.
Even though NPR just reported this is supposed to be the most depressing day of the year. We're supposed to be getting our credit card bills for the holiday (over)shopping and realize we're not going to keep our resolutions.
It could be worse. You could be a quarterback in Wisconsin who just realized a quarterback named "I-Peyton's-Younger-Brother" Manning has his plane ticket to Arizona.
Which leads me to the question I'm going to be researching today: Are you celebrating the Patriots going to the Super Bowl or Martin Luther King's birthday?
Baldacci on the Economy
It's so bad that the state has to adopt his consolidation plans. That was his pitch in his weekend radio address. If you didn't hear it, here it is:
Listen to the speach
Read the transcript
I'm looking for the response by House Minority Leader Josh Tardy. It is quoted at the bottom of the AP story.
Midday Follow-Through
I know I said earlier that I was signing off for the weekend but I wanted to give some quick updates on things I hit this week:
Unemployment
OK, this is new but still worth an afternoon post. The state reported that Maine's jobless rate edged up in December to 5.1 percent. Considering BIW just announced 70 layoffs, January probably isn't going to get much better.
But Amtrak to keep working
Amtrak and the nine unions representing its workers announced a tentative agreement well before the Jan. 20 strike deadline.
Feel stimulated yet?
President Bush announced some tax measures that would put as much as $150 billion into the economy. Bush didn't get into specifics but he wants to put the money in the hands of consumers - which probably means tax rebate checks. After the spending is over, the hope is that 500,000 jobs are created.
Word of the day: Stimulus
The Wall Street Journal previews White House plans to boost the U.S. economy. At the heart of it is a $800 tax rebate. There also may be a way for businesses to quickly write off capital investments.
Clarification: After hearing more about it, I think it is more accurate to say the tax rebate could be as much as $800.
The WSJ also says that President Bush is open to a stimulus bill that does NOT include making his tax cuts permanent.
The Democrats would like to extending unemployment benefits, and expand the food stamp program and the Earned Income Tax Credit.
Bush is expected to announce the principles today but not specifics. I expect Congressional Democrats and the president will have plans by the State of the Union on Jan. 28.
Yesterday, Fed Chairman Ben Bernanke admitted that economic growth was slowing but praised the economy's resilience.
“It has a strong labor force, excellent productivity and technology and a deep and liquid financial market that is in the process of trying to repair itself. So I think we need to keep in mind also that the economy does have inherent strengths and that those will certainly surface over a period of time.”
Wall Street wasn't convinced, and markets dropped.
Bernanke also endorsed a temporary stimulus package. He advocated a plan that used several elements that "involve putting money in the hands of households and firms that will spend it in the near term."
Is any of this going to help your business?
Hey! It's Friday
I'm wrapping this up early to start clearing my driveway. It's going to be a fun drive into work today. For some of you, it's the start of a three-day weekend. Not me. I will be working Monday and will resume my blogging. I promise not to whine about not getting MLK day off. In the meantime, enjoy the weekend and stimulate your soul.
How and When to Reach Customers
Marketplace had a story about a service that will help you keep catalogs out of your mailbox. CatalogChoice.org will contact merchants and ask them to not mail their catalogs to you.
On the surface, this is a win-win-win. You will have to trash/recycle less paper. The companies can cut costs by not mailing material to people who do not want them. And the environment suffers less - fewer trees need to be cut and less energy expended on the process.
Carolyn Beem, L. L. Bean spokeswoman, told Marketplace that it's a good theory. They don't want to upset potential customers. But they want to make sure these customers really don't want to get those catalogs.
Why would they care? L.L. Bean sends 250 million catalogs per year. They would be able to save a lot by cutting down that number. And they have a spiffy Web site.
Joe Michaud ponders the same question on his blog. His theory is that by making catalogs attractive, consumers don't mind holding on to them and storing them on their coffee tables. Then in between TV shows, phone calls or chores, consumers can leaf through them. (Disclaimer: Joe is my boss but that's why I'm linking to his blog. Really. He's not going to give me a bonus or anything. Not that there's anything wrong with that.)
If you run with Joe's theory, it adds another dimension to your marketing strategy. Not only do you have to decide how to reach your customers but when to reach them.
Radio and TV and program your advertising based upon time slots. But if you use direct mailing or Internet advertising, do you know when they will see it? That matters because if you try to reach someone when they feel too busy, they will ignore your marketing. So you need to craft a compelling message that can be absorbed quickly.
On TV today
Ben Bernanke, Federal Reserve System Chairman, is to appear before the U.S. House of Representatives Budget Committee. I can't imagine Congress or Bernanke saying anything that doesn't rhyme with recession. C-SPAN2 will begin its broadcast at 10 a.m.
Need a drink?
The Portland Regional Chamber is hosting an after hours mixer at the American Red Cross office on Forest Avenue. It should be a good chance to relax and discuss Bernanke's testimony. Or the Patriots.
Got an event?
Do you want to reach out to the business community and publicize your event? Then post it on the state's most comprehensive business event calendar. It's free.
Fueling Infrastructure Repairs
The National Commission on Surface Transportation has released its final report on upgrading the nation's infrastructure (You can read a summary here). Basically it's an aggressive list of recommendations to upgrade the nation's highways and bridges.
Aggressive sounds expensive. To pay for it, the commission recommends increasing the national sales tax on gasoline 25 to 40 cents per gallon. That increase would happen about 5-8 cents per year.
(FYI, I have to credit Marketplace for letting me know about this report)
Members of the commission argue that the impact on motorists will be small. Before you react to that, consider these two stories in the Bangor Daily News today:
Bill proposed to ease weight restrictions on logging trucks Frequent Maine storms, high fuel costs make snow removal contracts unprofitable
I have to wonder what the effect will be on the average business.
The Transportation and Infrastructure Committee of the U.S. House of Representatives has scheduled a hearing for 11 a.m. Thursday. There's no word yet on whether CSPAN will air the hearings. Rep. Michael Michaud is a member of the committee. You can reach Michaud at :
Lewiston: (207) 782-3704 Waterville: (207) 873-5713 Bangor: (207) 942-6935 Presque Isle: (207) 764-1036 or by writing
I admit mixed feelings on this. Like you, I don't want to pay any more for gasoline. One the things an economy needs to stay healthy is the efficient flow of goods and people. We need to be able to move around the country as cheaply and reliably as possible. Gasoline prices don't help.
But neither do roads and bridges that are falling apart. Any money spent on them could be considered an investment that will help the economy. But considering gas prices already are above $3 a gallon, what would be the return on investment here?
Paid sick time
Andy Graham has a column in the Portland Press Herald advocating a bill that would require companies to provide sick leave in Maine. Graham makes a good case for the benefits his business receives by provide sick leave. He believes it improves morale and productivity. It's a good read for anyone considering sick leave policies for their business.
But Graham doesn't identify the bill. I believe he is talking about LD 1454 - An Act To Care for Working Families. It seems to have been carried over from the previous Legislature.
It would require Maine employers with 25 or more workers to offer one hour of paid sick time for every 30 hours worked. The employer can cap the time at nine hours.
I work for a company that offers paid sick time. Even though I haven't had much use for it - except for when I broke my leg a few years ago - I appreciate it. I know there are workers in many companies that abuse it.
What's your experience with administering sick time? And how do you feel about the bill in the Legislature.
Driving this economy
It's a strange time for Michigan. The Republican primary comes right in the middle of the Detroit Auto Show. While the auto makers are putting on a happy face, presidential candidates are telling them how they are going to save their industry. The plans don't change much: control health care costs, diversify fuel options and retrain workers.
That last option is the interesting one. Retraining workers isn't a new idea. There have been programs as long manufacturing plants have been closing. But it underscores the fact that car makers are going to have to make cars with fewer workers. It's called efficiency.
Michigan isn't unique. Maine workers have had to find new careers. With a little bit of luck, candidates are going to visit the state just before Super Bowl Sunday - the Maine GOP caucuses that weekend - and explain what they can do for us.
I hope it's more than lead a cheer for the Patriots. What do you think a presidential candidate should do for our economy?
Downtime for Downeaster?
I heard on Marketplace this morning that Amtrak faces a Jan. 30 strike deadline. This would stop the Downeaster.
The unions representing 7,000 workers have been without a contract since 1999. The union demands would raise Amtrak's labor costs about a third.
This comes as Maine considers investing in rail upgrades to extend the Downeaster's reach beyond Portland - which prompted a healthy debate debate its value.
Resolving this strike could transform the rail service's economic model. And that can't make it easier to argue for subsidizing it. This would be a good time to restart the discussion. Please comment on its value to you and Maine.
More information
Downeast Riders blog is a chance for you to keep up with the Downeaster.
National Association of Rail Passengers keeps an eye on the strike.
The Downeaster site has schedule and ticket information.
Amtrak.com allows you to purchase tickets.
Are you working?
I made it into work this morning as a few flakes made their appearance in Portland. But as I write this blog, I can barely see anything out my office window. How many of you non-snow-plow drivers are working today? What does it take for you to close your business?
Buy American
The Kennebec Journal has an interesting Letter to the Editor titled Now more than ever, we should buy American by Stacey M. Gerard.
It's not a new call to action. I've been hearing it since my hometown steel mills closed their doors - blaming foreign competition. U.S. automakers were a huge cheerleader for the slogan. Laid off autoworkers - heads of families nonetheless - became the poster children.
But buying American became harder as U.S. automakers put car plants in Mexico and Canada. And Japanese car makers started building in America. I remember in the '80s that those U.S.-made foreign cars weren't good enough because the plants simply assembled parts made in Japan.
Trouble is, a lot of U.S. manufacturers do the same thing. In this global economy, parts are made around the world. So it's hard to find a "Made in the USA" label that really means it.
I'm as patriotic as the next guy. And I appreciate Gerard's idea. But I would like to hear from her on how that works for her. How many of her purchases support U.S. manufacturing?
I also think this may run counter to another good idea: supporting locally-owned businesses. Buy your goods at the mom & pop instead of the big box. But, how much of the inventory of those businesses is made in the United States?
I know. Just about everything in Walmart is made in China. But where do we buy the domestically-made alternative?
And as a business owner, what influences your decisions when you need to stock your shelves?
Maine made is a great marketing campaign. But how realistic is it for you to offer those goods?
In the meantime, support your local business news Website. We're 100% American. Although I did eat Chinese recently.
Subprime Fallout
The Wall Street Journal is reporting this morning that Bank of America agreed to buy Countrywide for about $4 billion.
My mortgage is part of that $4 billion. To be honest, I don't know how this affects me. I'm not subprime. My rate is fixed. I'm going to be looking for stories on what this means to us.
Working for the Weekend
And that wraps up the first full week for MaineBusiness.com. I'm taking the weekend off to rejuvenate my soul. Look for new updates on Monday. I hope you enjoy your weekend as much as I do.
What Do We Do Now?
On Wednesday morning, economist Charlie Colgan delivered a dismal forecast for 2008. Here is what he had to say and what he showed us:
Here is what the Maine media had to say about the forecast:
Now that we know that, now what? One person in the audience wanted what the state government should do to improve the business climate. I assume a better business climate would ease the pain caused by a recession. Colgan's short answer was that the government needed to do what it does better and efficiently.
Last night, Governor Baldacci outlined how the state would do that. (The State of the State speech: Text | Audio)
The Federal Reserve may lower interest rates to keep the economy going.
The White House might not be able to stay out of it too. President Bush is considering tax breaks.
The Sun Journal published a wire piece listing measures that could help the economy.
So, have they missed anything?
Commentary
Greg Greg, an habitual commenter on Portland Press Herald stories, summed up Colgan's forecast very well:
"Great news! The new recession won't be felt so bad because we're still in the old recession!"
He's really not far off the mark.
And Wally Edge has a fun take on Baldacci's speech over at PolitickerME.
That Didn't Hurt - Much
This morning USM professor Charlie Colgan presented his economic forecast for 2008.
I didn't have high hopes when I saw his title slide: "Maine in 2008: Still on Thin(ner) Ice." And then he made a reference to the crowd he attracted (almost the entire auditorium at the Hannaford Lecture Hall was occupied). Attendance is up when things get dicey. Everyone wants to know what to do. They don't care when times are good.
According to Colgan:
Job Growth is declining. The real downer is self-employment in the construction industry. Which is being hampered by the housing crunch.
Yes, sub prime mortgages exist in Maine. But the problems in Maine aren't as bad as they are nationally. We have a relatively low number of "creative mortgages." Housing prices have leveled off from their decline. Unfortunately, the housing bust nationally will be the biggest problem the economy has seen in a long time.
And he sees no reason for a drop in oil prices. This is being fueled by high global demand.
Overall, he sees a recession but not a bad one for Maine. The major moderating effect will be that Maine never had a great boom. So the bust won't be so bad.
There are tons of details to his report that I will refer to later. Colgan promised the report will be available at the Muskie School of Public Service website.
I wonder about tourism. If oil prices will stay high and consumer consumption won't save the economy, are people going to come to Maine this year? This would be a good chance for you to comment.
There were two questions that generated similar answers. One businessman wanted to know what advice would Colgan give the governor to improve Maine's business climate. And a USM senior wanted to know what his wages would be like when he graduates.
First, Colgan defined government's role in business as doing its job well. That means collecting taxes reasonably and efficiently (you can argue the definition of "reasonable" in the comments if you wish) and other core functions efficiently.
He added, "Maine doesn't do all that bad." Especially when you talk about state government.
As far as job prospects go, he wanted to debunk the myth that there are no good jobs in Maine. (Again, this is a chance to comment.) He believes there are a lot of good opportunities in the state. There could be more and believes the state needs for technology jobs.
He blames the national economy for that deficiency. And the says that the national recession will make them harder to find in Maine.
So I'm going to leave you with that thought. An often quoted economist likes the business climate in Maine.
What do you think?
The Economy of the State
I'm headed over to USM this morning to hear economist Charlie Colgan's forecast for Maine's economy. I will blog about it when I get out.
It comes in time for Governor John Baldacci's State of the State speech. He delivers that at 7 tonight. Look for it on MPBN TV and radio.
My prediction: nothing's going to be rosy. Colgan will talk about the housing market (who doesn't?). What I worry about is how it affects economies outside the state and tourists' ability to visit Maine.
More on this later. Hopefully I will have some silver linings to discuss.
So this is a challenged economy
President Bush declared that our economy is challenged. Weak job numbers and high gasoline prices seem to be the factors slowing economic growth.
Here in Maine, we might not notice the challenges so much. We already are dealing with challenges of our own. Economist Charlie Colgan is going to address what Maine can expect Wednesday at USM.
Speaking of Challenges
I just saw this on the Wall Street Journal home page:
"KB Homes posts deep losses for fourth quarter and full year, as 'challenging market conditions' continue for homebuilders. "
Today's Agenda
We've missed the Bangor Region Chamber of Commerce's Annual Business Breakfast this morning. If you went, drop me a note about how it went.
But later today we have some meetings and a seminar to check out:
CYNERGY - Steering Committee Meeting 4 p.m., Doyle & Nelson
Ecotoasters Meeting 12:05 pm - 1:05 pm, Maine Dept. of Environmental Protection, Tyson Bldg., (East Side State Government Campus) Lisa Higgins 207-287-7023.
Starting your own business 1 - 4 p.m., SCORE
There's more happening this week on the Events calendar. If you want to get the word out about a seminar, meeting or mixer you are hosting, you can post it for free.
Meet the New Barista... Same as the Old Barista
Starbucks is putting Howard Schultz back in charge of the company. He took Starbucks from four stores in Seattle to four stores in each city block. This move was made the same day that McDonald's announced plans to compete with its own baristas and coffe bars.
I can't find any Dunkin Donuts news this morning but I can't believe they will let the week go by without churning out a press release.
You want fries with your McLatte?
The Wall Street Journal reports that McDonalds wants to compete with Starbucks (WSJ still requires subscription but it is on the front page of the paper). Locations will install coffee bars and baristas to offer cappuccinos, lattes, mochas and a branded coffee, cream, sugar concoction called a Frappe. The story doesn't seem to say that they will offer plain coffee. You probably will have to order that with your fries.
McDonald's already has upgraded it's cup of Joe to compete with Starbucks and Dunkin Donuts.
I already blogged about how Starbucks can help your coffee shop. But I wonder if a McDonald's cappuccino will compete with yours.
Update: I came up with the "want fries with that" allusion before I heard the story on NPR. I'm just saying.
Coming to a Best Buy near you
The Consumer Electronics Show has started in Las Vegas. This the show to debut the latest in technology. The New York Times reports that it has lost a bit of its cache recently.
One announcement out of the show is that Microsoft has a deal to deliver movies and TV programming to the Xbox and MSN. (Again, the Wall Street Journal and NPR.) This makes me glad I don't work for a local TV station, movie theater or video rental store.
Is technology marginalizing your business?
The Wall Street Journal is blogging the show.
More reasons to pick up the Wall Street Journal
Office vacancies are on the rise.
Employers are cutting workers' hours.
Why $100 for a barrel of oil matters
I hate to end the week on a down note but I think The Associated Press headline "Oil Prices Fall Below $99" is worth comment. Before this week, a barrel of crude oil has been priced below $100. But this week, $100 is the new benchmark. Get used to triple digit numbers.
The story says demand is strong so there isn't any reason for the price to drop significantly. Considering the temperatures, Mainers aren't going to be able to demand less for their homes soon.
Meanwhile, the Wall Street Journal reports that job growth is slowing. Growth in wage and salary income is slowing too.
So basically, consumers have to pay more to heat their homes and drive to your business. Meanwhile, it doesn't look like their paychecks are going to get much bigger. Probably not enough to cover the increasing costs.
Where in the budget are they going to cut back? Is it in the goods and services you provide?
It's all downhill
As oil prices rise, so does the amount of snow. Which isn't bad news for one Maine industry.
MaineBiz writes about how investments at Sunday River and Sugarloaf are paying off big time.
But skiing isn't all big business. There is a lot of skiing on a small scale in Maine. And their off to a good start.
MPBN covered how the snow has benefited all the ski areas - not just ones on big mountains. The Morning Sentinel has a story about Baker Mountain providing inexpensive skiing to central Maine.
But their customers are probably your customers. They're paying more for heat and gasoline. Will they make sacrifices?
Maybe they will be less likely to drive to Sugarloaf - where the lift tickets cost more and the drive eats up lots of gas. The smaller, cheaper and closer mountains may be the destination for skiers who need to cut expenses.
My forecast may be gloomy but the weather wonks have better predictions for the weekend. So get out, have some fun and look at your cash flow forecasts Monday. I will be back with The Takeaway in the morning.
Yelp! You got a bad review
In the old days (the '90s?), mostly restaurants were concerned with reviews. And usually the reviews were only found in the local newspaper. Hotels were subject to scrutiny by a few travel guides.
These days, providing online forums so customers can review any business has become a business. Your store can be scrutinized like a restaurant on a variety of sites. And the reviewers aren't professional correspondents. They're your customers - probably the ones you didn't make happy.
This phenomenon has been on my radar for awhile but came up this morning on Marketplace. The radio piece dealt with how hotels deal with reader reviews on Trip Advisor. But it's good info for any business owner.
You should take the time to look at Yelp. They have a guide for business owners who get reviewed.
The Marketplace story and the Yelp business guide will help craft a strategy to deal with Internet reviews.
You can hear it now
The Public Utilities Commission is taking up the Verizon-Fairpoint deal at 9 a.m. today. The PUC website promises to make the audio available live.
New year, new layer of snow to plow
Have you finished digging out from the New Year's storms? I still have some shoveling to do before I can get out of my driveway. But I could be in the office by now if I wasn't too cheap to get a plowing contract.
I don't mind the exercise and I can telecommute without even putting on snow boots. Some of you aren't so lucky. You have brick and mortar businesses that need to be opened to receive customers.
And you probably are responsible for clearing snow so they can park or get to your front door. How much has that cost you so far?
Yesterday, the Portland Press Herald reported that towns have used more salt than expected this winter. I wonder how they are doing on overtime and fuel for the plows.
Many business are in a similar dilemma. According to the Bangor Daily News, all this snow is good for business.
If you sell snow shovels, skis, winter jackets or snowmobiles, things must be looking up. Ski resorts and plow contractors are smiling too.
How's the weather working for your business?
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