January Issue: Looking Back, Looking Forward
The past few weeks a good deal of the Oregon/Washington area we’ve been driving through has been shrouded in fog of varying densities, freezing temperatures, navigating with the eyes wide open, proceeding cautiously, watching the surrounding traffic and avoiding hazards. Very much a mirror of the business climate we’ve been navigating through the past several years. We’re confident the conditions will improve in both scenarios, but moving cautiously.
For those of you still in business, or part of a crew working, you have some appreciation of this over the past few years. Whatever fat there may have been in the operation has long since vanished. To use the descriptive phrase of operating “lean and mean” is why the often maligned “capitalist” system works well, in encouraging innovators and flexibility, and being able to adjust with a constantly changing world. It reflects the natural world of flora and fauna where flexibility and adaptability are the key to long term existence and success. For instance, the Barred Owl is thriving in Pacific Northwest forests and taking more habitat that had been home to the infamous northern Spotted Owl because it is larger, and far more adaptable. The ability to change is its own reward in nature and is demonstrated by those species who survive and thrive; they are adaptable.
Contrast that to the vast social disasters we’re again witnessing in other areas of the world, in addition to our own country, where socialism and social planning has wrought protection of old technologies and rather than pruning the inefficient and unnecessary agencies instead encourages bloating, overstaffed, over-managed bureaucracies who suck the marrow from productive society. Capitalism has its own check and balance of accountability: when you no longer serve a need, or cling to yesterday’s passing fancy, you are no longer in business. Just as in nature,
adapt or perish. This past year business has adapted, most government has not... the general rule being the closer to the electorate and accountability (i.e. city, county) the more efficiently they run. The further away (that is to say the more regional, state and federal) governmental entities, their grasp of reality first diminishes, then vanishes entirely. Those who suffer in this scenario are those who actually are earning a living in the real world of business as outlined above.
A perfect example of that we witnessed just prior to the “Black Friday” sales after thanksgiving, when a much younger friend of mine (in his early 20s) was salivating over a “big screen” television that was a “great” buy. This thinking, exhibited by many, mirrors the mind-set of government (showing once again we in fact elect those who reflect our thinking): “I want it, so I’ll buy it on credit!” I listened dismayed over his thinking then reminded him, “...what about your being flat broke a week ago? You didn’t have money for gas, you were eating cereal, and yet rather than living within your means now you’re going to buy a big screen TV with money you don’t have, which means you’ll put it on a credit card and pay 1424% on the unpaid balance... all for something you don’t need? Have you lost your mind?” Of course, instantly I was the Grinch, a label I’m only too happy to wear when it comes to absurd and ill-placed priorities.
The good news in all this, he changed his thinking and didn’t spend what he didn’t have.
We know all about this in the logging business the past several years.... cash is king, frugal is smart, priorities are a must because survival is on the line, for our business, for our crews, and we’re doing that, and operating lean.
Over the past few decades the electorate, and with it many of our elected officials, are separated that having a job is not a right, or guaranteed, but occurs with your ability to help that enterprise grow and profit. thus your job hinges entirely on your ability not only to perform the job but do so at a profit for the employer. You’re not just there to fill a position; you’re there to be a part of making that business profitable. No profit, no job.
Thus when our president speaks to businesses chastising them for not hiring more people, he betrays his contempt and appalling ignorance of business, in addition to any grasp of his part in creating the very uncertainty that further erodes confidence in planning for the future.
Be careful what you wish for
Four decades ago with the start of the ecology movement, there was little doubt we could do better in terms of operating sustainably and cleanly in our environment, all fine and good. Who can find fault in clean air and water? And thus the growing political movement began its march, growth, and influence unabated as some in the general business community had the audacity to suggest there be a balance and understanding that there is a background baseline level and exceeding that level, exceeding rules and regulations could have a negative effect on growth, choice, business, freedom and therefore jobs. “Foolish, radical, excessive” was the cry from the eco-purists and merrily the culture changed from sustainability to celebrating waste, and discouraging business in the mistaken belief we were “better off” without businesses.
The interests of government switched from “finding a solution” to “command and control,” where the regulators had no stake in solving problems.
Flash forward to present times, some 40 years later, to the present “occupy Wall Street” protests, and their general anger with business and capitalism in general, particularly the financial melt-down. We’d agree that with the general lack of ethics, and absence of any apparent morality, it is appalling that some firms who received federal bailouts in turn paid fat bonuses to executives who led their companies to financial ruin. Before getting out the rope however, remember the greed train went well beyond the bankers, including realtors, insurance agencies, elected federal officials whose policies insisted on truly stupid lending policies.
At least some of the responsibility for our current lack of jobs lays squarely at the feet of those so social activists whose idea of a clean environment had no bounds then, or now. To them we said at the time, and we repeat today, in light of the results, “be careful what you wish for.”
We’d suggest to the “protest/occupy” crowd that when you over tax, over-regulate, over-permit, and create a time-table for business that’s measured in years if not decades, that while you certainly have a “clean” environment, that the very lack of flexibility and excessive demands on business have created such a hostile environment that balance has been abandoned, and your unemployment rate and decline in livability comes as a direct result of the very policies you’ve insisted upon and celebrate. you’ve created the very stew you’re soaking in. The problem is not capitalism gone awry, it is the infringement of socialism and interference that’s encouraged business to abandon our shores.
Common sense... talk is cheap
Certainly we live in interesting times of constant change and innovation unlike any other in recorded history, in no small part to the unprecedented availability and quantity of information and opinion. The sheer volume of “background noise” from television, radio, the internet, and print presents a constant challenge to ferret through the chaff and find the useful, reliable, and accurate information that fills the knowledge gap with fact rather than spin.
Adding to the spin is the strategic use (and misuse) of language: redefining terms, morphing meanings with the express purpose of misrepresenting the issue at hand, for instance using “investment” in a conversation rather than the correct term of “tax.” This has become commonplace in the political arena the past few decades, and while some would wish to credit this bastardization of language on public relations firms, the real scoundrels reside in the legal community, ironic in that the specifics of language, meaning, etc. within the law are both arcane and specific, but in the new world of politics, controlling the field of play is controlling the language, tone and tenor of the rhetoric, thus the object of language in the political realm is not clarity but confusion. The reason for this obscuring of language emanating from the lawyers is clear: it pays. For the legal community, whichever side prevails is secondary to prolonging the conflict, because conflict means fees. Is it shameless? Yes... but good for their business (and principles, eh, that’s so old-fashioned).
The past few decades’ clarity has been further eroded by the use of imagery to bend and create carefully edited “factoids” along with the stifling of freedom imposed by the greatest cancer on our society that is political correctness. As we are seeing, when you squash dissenting opinion, regardless of how, what suffers most is the future of our own freedom.
What spurs this particular line of thought is directly related to the ongoing travels, speeches, campaigning, and blather of our current president. The first defense many would use at this point is that, “...everyone does this,” but never to this degree. Not even Pres. Clinton was so glib with throwing out “facts” and “figures,” and when he did, his figures were verifiable meshing with reality, even if at times they were “massaged” to fit his message. Pres. Obama is not phased randomly pulling figures from the air, with nothing to back it up, if not being a totally bogus. This is leadership?
While one can be a bit dismayed with political leadership at any point, this president, at this point in our history is the living personification of the proverbial “empty suit.” And while there are any number of issues we find dismaying in him and a number of his colleagues, his utter disdain and guttural dislike of business in general, and contempt for capitalism as a whole.
In his presentations Obama will frequently make reference to “common sense” as the underlying foundation of the policies, current legislation, and management style he embraces. While those words are compelling, the actions fall entirely off the table when it comes to implementation. After the press conference and media releases, reality takes leave. This is entirely about “show” with zero accountability beyond the headlines.
Much of what we’ve seen from Washington DC the past several years has not even a passing familiarity with “common sense.” Over the past few decades, common sense is increasingly uncommon, in no small part due to a lack of practical experience with the real world of humans and nature, where your actions have real benefits and real consequences, rather than being filtered and mitigated by political correctness, a team of attorneys and accountants.
Common sense’s foundation is earned from familiarity, and real world experience. the mere fact that so many families, governments, and other entities around the world live well beyond their means, and continue to do so in good and bad economies, is stunning. While you expect this as your teenage children struggle to understand it’s easier to spend money than to earn it, we do expect our kids to learn through time and experience... it is critical to survival, and ultimately emerges as “common sense.”
Yet presently we have not only individual families who glibly live on credit month to month, but well trained “experts” in government on many levels, who have concluded their spending can continue on with the cure being to raise taxes, and fees on individuals and business, rather than re-organizing, pruning programs, personnel, and reducing their own expenses. this is common sense? No.
We must demand our candidates actually have a demonstrated background of real-world leadership, success, and a record of working within a budget, actually having demonstrated through experience an ability to successfully manage and lead, operating efficiently, and changing with a changing environment. That is common sense in action, and stunningly missing in many state capitals, and in particularly absent in the federal government.
Supply and demand pipeline
A few times through the course of the past year we looked towards the eventual recovery and ramping up of the economy, and some of those problems on the horizon including being prepared and aware of your parts inventory, due the depletion of the supply pipeline, and the availability of parts, some of which you may need to fabricate. also the availability of new machinery... with the depleted pipeline you may now have four to as many as nine months between the order and delivery of new machinery. There is a lot of pent up demand for machinery with many putting off purchases due to business doldrums. Once there is a change in the environment, more than just loggers will be seeking replacements and upgrades, further exacerbating supply issues for some while.
But for logging in particular, the past few decades many have noted we have too many loggers for the number of jobs out there, which had beaten logging prices down...supply and demand. In 2012 the past few years have leaned out the number of companies and people in the logging business, which when added to the aging work force reality, means we are at or rapidly approaching the point of depleted supply of skilled loggers. an uptick in business, especially a surge in demands for wood, should finally bring a commensurate increase in logging prices, again supply and demand.
The trick with any uptick in business comes in keeping our work force healthy, and rationing your experienced crew members with new crew to maintain production, quality and safety.