Today’s Economic Inflection Point

Since the economy is so bad I’ve been thinking about what will follow. Not just in the next several weeks, but rather the resultant outcome from this inflection point. And that is what we have here an inflection point; a moment of change and redirection.
The people who work in banking and on Wall Street must be contemplating the affects as well. Surely their work and their incomes will be affected by the changes that are likely in government regulations pertaining to their industry. But the affect of this economic crisis are going to radiate outward in the economy as a whole as well. What we have come to know as normal for our country and for the global economy has shifted to a new trajectory. Some things will no longer be as important and new ideas are likely to bubble up and find traction with consumers and businesses.
I personally feel these changes taking shape in my industry – construction. My own role in the past years has been to estimate, sell, and manage commercial building projects that use stone materials, such as marble, granite, and limestones, for cladding and as flooring and decorative elements. If I am correct in my analysis, much of that business is likely to wither away during the next five years or so. Not that it will disappear altogether, but demand for high-end finish materials is likely to be modest. Developers and Architects are not finding money to advance building designs, or for that matter at the moment, buildings in general. Money is tight and will remain so for years. Private development is likely to be retarded for the next decade. These companies have been crushed.
Government spending isn’t over. The incentive programs will play out over the next two years, but after that government will still be a big source for projects and opportunities. But it may prove difficult for a contractor to locate the projects and exploit them when they come to pass. Construction is in some ways still a local business and large operations are only seen at the top of the business; in construction management primarily. Trade contractors are for the most part local companies. Those companies, similar to my own, will find it hard to develop a strategy for continuity in this new environment. Especially if the trade is similar to the stone business and is esoteric and also expendable in lean times. It’s likely that I will need to shift into another aspect of the business or simply change my career totally, which is something that I’ve been considering recently.
This comes back to my original point about an inflection point and change. I am reflecting on the end of one career and the potential opportunities that will develop as the country and the world reshape themselves and their economic marketplaces. What goods and services will become desirable and in demand next? Where will opportunity be found?
Although those questions are classics; they are the question of the moment throughout the World.

Since the economy is so bad I’ve been thinking about what will follow. Not just in the next several weeks, but rather the resultant outcome from this inflection point. And that is what we have here an inflection point; a moment of change and redirection.

The people who work in banking and on Wall Street must be contemplating the affects as well. Surely their work and their incomes will be affected by the changes that are likely in government regulations pertaining to their industry. But the affect of this economic crisis are going to radiate outward in the economy as a whole as well. What we have come to know as normal for our country and for the global economy has shifted to a new trajectory. Some things will no longer be as important and new ideas are likely to bubble up and find traction with consumers and businesses.

IM000989I personally feel these changes taking shape in my industry – construction. My own role in the past years has been to estimate, sell, and manage commercial building projects that use stone materials, such as marble, granite, and limestones, for cladding and as flooring and decorative elements. If I am correct in my analysis, much of that business is likely to wither away during the next five years or so. Not that it will disappear altogether, but demand for high-end finish materials is likely to be modest. Developers and Architects are not finding money to advance building designs, or for that matter at the moment, buildings in general. Money is tight and will remain so for years. Private development is likely to be retarded for the next decade. These companies have been crushed.

Government spending isn’t over. The incentive programs will play out over the next two years, but after that government will still be a big source for projects and opportunities. But it may prove difficult for a contractor to locate the projects and exploit them when they come to pass. Construction is in some ways still a local business and large operations are only seen at the top of the business; in construction management primarily. Trade contractors are for the most part local companies. Those companies, similar to my own, will find it hard to develop a strategy for continuity in this new environment. Especially if the trade is similar to the stone business and is esoteric and also expendable in lean times. It’s likely that I will need to shift into another aspect of the business or simply change my career totally, which is something that I’ve been considering recently.

This comes back to my original point about an inflection point and change. I am reflecting on the end of one career and the potential opportunities that will develop as the country and the world reshape themselves and their economic marketplaces. What goods and services will become desirable and in demand next? Where will opportunity be found?

Although those questions are classics; they are the question of the moment throughout the World.

Widgets for Sale: Value and Time Value

Widgets. That’s what I like to call anything that can be sold when talking to sales staff.

My own business model – what I’ve used for several years now – is an awareness of the size of a transaction. The value of the widget and the volume of widgets sold. My time is valued so as to achieve a return to me that is acceptable for our standard of living. For me to become involved in a sale, I need to be able to get a certain amount of profit, that is really driven by profit value per hour invested. So I need to be conscience of the value of the transaction, and the amount of my own effort required to consummate the transaction, and to maintain the customer relationship in a sustainable manner.

Taking on transactions that involve too much of my time for too low a return leads to a lessening of my income level and a tendency to over-work. To work longer and harder to get back to the return needed to maintain the intended lifestyle.

So I like to consider the idea of widgets. I want to sell products and services that generate a largish transaction value. I also want those transactions to be as simple as possible; requiring as little effort as is possible for the transaction to be completed successfully. I also have to consider risk of trouble in the transaction; the possible failure to complete the transaction successfully without claims of failure, or actual failure to achieve the level of service or quality intended.

In any given business, the size of the transaction and the simplicity of the transaction and the service or product provided are vitally important. Another element to consider about any transaction is control of the process and your ability to affect the resultant outcomes.

The starting point is the value of the widget being sold, in conjunction with the number of widgets. Driving the sale toward a larger average sales value (revenue), and keeping the transaction inherently simple, are a great way to think about almost any sales situation. The idea of widget value, and the true cost of selling that sort of widget, is a good way to kill off poor product or service performers, and to recapture time better spend on another widget.

News Reporting and Societies Goals

Media giants today are primarily focused on what is happening in the federal government. Far less information is gathered and reported at state, county, or city levels. The travails of government in the State of California happen to get a headline, but that state is disproportionately large, and even at that does not get attention except for the extreme levels of dis-functionality that they have exhibited recently. In short, we are under-served in regard to government disclosures and information gathering that once occurred in newsrooms throughout this country. The news has been dumbed down to satisfy the populous. We as a people don’t want to know too much. We aren’t asking questions that ought to be asked.

It isn’t a conspiracy theory sort of post that I am writing either. My point is simply that most people are assuming that someone else is taking care of business while they do something else. They are not buying and reading newspapers, as we all know, and so there isn’t funding available to those who would ask hard questions. There aren’t credentials either for individuals to invade a government office to demand an interview with those in charge. So the net result is a loss of oversight and the inevitable scandals that we are seeing occur.

The people who are attracted to government usually have a strong interest in certain feature sets of our society. They have an agenda. Many, probably most, are attempting to right a wrong or bring about a solution to a defined problem. But they unexpectedly find themselves from time to time unsupervised and without basic constraints that would mandate sensible actions. They drift into unproductive and sometimes counter-productive processes in certain cases.

I don’t think that any business enterprise would allow certain employees to drift from the goals of the organization, taking resources away from the primary purposes intended, and instituting new goals and concepts for success that are entirely inconsistent with those that management intended. Because the structure of a business has clear leadership and ownership in place these things, though not entirely unheard of, do not occur on a routine basis.

I suppose that what I feel is that without news reporters – good ones – uncovering aberrant behavior in our government agencies throughout all of society, at each level of government activity, we are likely to have poorer results year over year going forward in time. We are likely to have the limited resources that we are able to allocate to societal solutions mis-directed. And we are also likely to continue to see obfuscation of the reality by those who are perpetrating the misalignments of resources toward the stated goals. Because of this, we will chronically have under-funded education goals, prison reforms, and health care. We will have more government involvement in senseless issues leading to stagnation. We’re over committed to the building nationally of football stadiums for example, using predominantly taxes and government agencies. Local governments compete with each other for business development, spending tax dollars on potential new businesses. Meanwhile, the same government entities are likely to be over-taxing or at least ignoring the needs of businesses already within the area who might be struggling with red-tape or some other matters that might help them to build more jobs organically. In the past these sort of misalignments of societal goals and the inappropriate deployment of resources would be published and brought into the light of day. Not enough of that happens anymore – few are listening or reading.

I am just making the case for a broader attention span by the public. The news business is dying and morphing into semi-entertainment because that’s what people will watch or consider in written form. There is no telling what that will mean to everyone once we’ve lost the regulating affect of those ‘watchers’ for our society.

Changing Health Care Now

Right now Congress is going through a debate about health care insurance. The idea is to reform the whole process, to bring millions of US citizens, who currently don’t have health care and in many cases can’t afford it, into the system again. But in addition to that goal the idea is to streamline the process, create real competition, and get rid of features such as ‘pre-exiting conditions’ which create hardships on the very people who need the insurance coverage the most.

I personally applaud this effort. While I expect that it might cost the nation more than what we pay at present for coverages, it would be worthwhile within the economic system by saving us costs for personal bankruptcies resulting from uncovered health costs. These put people into disastrous financial situations. The previously mentioned ‘pre-existing conditions’ as a cause for refusal to provide coverage are a large contributor to the problem.

The whole process is in need of refreshing. Employers should no longer be the only source for affordable coverage. They are carrying a burden that has little to do with their business models. Also, employees are sometimes trapped by the need to prevent the loss of coverage should they wish to change jobs and have a ‘pre-existing condition’. It’s not an effective way to run the economic system or the health care system. We compete with other nations that do not have this burden on their small businesses.

Some of the heroic solutions to health care are too expensive and cannot be sustained by insurance coverage. For those who can afford it, let them be allowed to augment the basic features of health care insurance. But it’s both morally right and economically feasible and desirable to fix this system now.

The question is: Do we have the will as a nation to make this change? I hope so.

Vacations and Air Travel

The Louve - Paris, France
The Louve - Paris, France

Over the last several years my wife and I have taken vacation trips to Europe. We have found that the cost of travel to Europe isn’t that much as compared to air travel here in the USA. The significant cost difference is the exchange rate and the daily costs for hotels and meals. Still we’ve concluded that a premium was still affordable and the opportunity to see historic places was worth the difference.

This year we stayed home. We visited our family and at least I have been thinking of vacationing in the USA again next year. That might change, but I’m less inclined to travel by air particularly. I am really sick of the poor treatment. The airlines are constantly crunching numbers to determine their profitability, but it seems that they’ve lost sight of the point of travel for leisure. I don’t really need them as much as they need people like me.

It would also be a good thing if our government could get it’s act together with regard to the processes imposed on us at the airports for safety. I want to be safe, but some sensible changes could occur that would add to the quality of the travel experience. When people simply opt to not travel the process has gotten too extreme.

I am less interested in privacy and more interested in quality of life and life experiences. So other options would be okay with me. Better personal documentation is one thing that might make everyone safer. But that’s getting off the subject of travel.

Apple Computer – Quarterly Results

It was an interesting quarter for Apple. They posted sales that exceeded expectations of the investment analysts in almost every category. I had only written about my own satisfaction with Apple products a few days ago. It appears that many others are likewise impressed with the products and services being offered by Apple.