No. 12 December 2008

Economists are predicting the beginning of an economic turn-around in the third or fourth quarter of 2009. I don’t know about you but my vote would be to see a turn-around a whole lot sooner! Please?

As Tecumseh Snow King engines become NLA, the result will be both problems and opportunities in the OPE marketplace. If you produce snowthrowers, you have to have snowthrower engines. Unfortunately there are not a lot of choices left. I heard one snowthrower engine rumour about a US equipment manufacturer who imported Chinese manufactured snowthrower engines for both the US and Canadian markets in 2008, only to discover a casting defect in the block that resulted in an oil leak. Supposedly all the engines had to be replaced. If true, it will be the first major problem this company has had with Chinese manufactured engines. The rumour says heads have rolled in China at the engine manufacturing plant……..I hope that doesn’t mean literally. Here’s hoping all OPE manufacturers find the snow engines they need and that we have lots of snow this winter, and lots of snowthrower sales. It would definitely be a bright spot in an otherwise dismal product sales year.

Christmas time always reminds me of the four stages of life. Stage 1 - you believe in Santa Claus; Stage 2 - You don’t believe in Santa Claus; Stage 3 - You are Santa Claus; and Stage 4 - You look like Santa Claus.

There are two auto industries in the US today. One is in the Midwest, unionized with huge pension and health care obligations and making vehicles few people want to buy. The other is in the South, non-unionized and making vehicles people do want to buy. The three companies located primarily in the Midwest (GM, Ford and Chrysler) are suffering because they’re too large, too inefficient and as described by one pundit, “have essentially gotten their collective butts kicked by foreign automakers since the 1980’s.”

It was mentioned in the September 17, 2008 issue of USA Today that the Big Three US auto makers have an average hourly compensation rate of $73.20, while Toyota’s average hourly rate is $48.00. The article also listed the average hourly US compensation for Management and Professional Workers as $47.57. Manufacturing/Goods-Producing workers had an average hourly rate of $31.59, and all workers overall had an average hourly rate of $28.48.

When you do the math, GM, Ford and Chrysler compensate their employees 52.5% more than the competitors like Toyota, 54% more than US management and professional workers’ average wage, 132% more than the average US manufacturing wage, and 157% more than the average compensation of all American workers?

I’m sorry, but I just can’t see why we (taxpayers) should bail out (reward) these three companies and their unions for consistently making poor decisions for the past 30 years. Let them fall into bankruptcy so they can quickly and easily restructure or merge, eliminate brands they should have gotten rid of years ago, shut down inefficient plants making vehicles nobody wants, shed outrageous pay and benefit packages, improve their quality, and hopefully become competitive once again. I believe that even if we dump money into these companies at taxpayer expense to try to save them, it will only briefly delay the ultimate outcome.

There was a terrific article on the front page of the November 7, 2008 Wall Street Journal called “A Snowthrower Maker Braces for Slump’s Blizzard of Woe.” It’s about Ariens and the impact of the country’s economic problems and the shuttering of Tecumseh Power on the company. You can read a copy of the article at http://www.opeesa.com/ in Volume 131 of their business newsletter “OPE-In-The-Know.” You’ll really enjoy reading the article and learn a few things too, just as I did.

During this holiday season, take a minute to filter through the bad news and think about all the good things going on in your life and our country. When you hear a high unemployment rate, think about the other side of the equation and the 90+ percent of Americans who do hold jobs. If you’re employed, receiving a pay-check, have family health insurance, have children and grandchildren living nearby and doing reasonably well, then give thanks for all those blessings you do have. It’s very hard to look at a glass and call it half-full instead of half-empty. Your positive and grateful state-of-mind touches everyone around you, including your family and your employees. You have a choice every day about how you approach life and the people around you. Make it positive. Make it thankful. Count your blessings. Then share a few.

Merry Christmas and Happy Holidays.