Category: Business

Non-profit versus for-profit in the power restoration Olympics

by philg

“Governor DeSantis Calls on Lee County Electric Cooperative to Accept Additional Mutual Aid to Expedite Power Restoration” (Saturday):

At this time, Florida Power and Light (FPL) has restored power to more than 45% of their accounts in Lee County, while LCEC has only restored power to 9% of their accounts (18,000 out of 183,000 customers).

Florida Power and Light is the Evil Empire of Electricity in Florida, a for-profit regulated monopoly.

What about LCEC?

LCEC is one of more than 850 not-for-profit electric distribution cooperatives located throughout 46 states and serving 75 percent of land mass in the nation. Cooperatives are in business to serve members at the cost of service. This business model is different from investor-owned utilities, which typically share profits with investors globally.

It seems as though the profit-seekers invested substantially more in resiliency than the non-profit folks.

Sunday morning: LCEC had 177,105 out of 199,097 customers tracked (11 percent on; note the inconsistency in total Lee County customers with the 183,000 figure above).

FPL had 132,930 out from among 288,630 in Lee County (54 percent on).

On Monday morning, the outage site still showed roughly the same number out: 177,369 out of 199,097 in Lee County. Either LCEC made no progress at all in 24 hours or we are seeing #FakeNews on the poweroutage.us site (someone’s computer system is broken?). Over the same roughly 24-hour period, FPL had reduced its Lee County outages from 132,930 to 100,220. I checked Twitter and found the following update from LCEC:

The power outage site shows 184,751 LCEC customers out across all locations.

Related:

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When the going gets tough, send in the Chief Diversity Officer

by philg

This summer we stayed in a hotel that was hosting a Knanaya Catholic Congress of North America convention. There were some very fine people attending the KCCNA convention, but others couldn’t resist partying until 4 or 5 am in the hallway outside our room and there were elevator issues. I decided to see if there was a way to contact Marriott’s “unhappy customer” line. Here’s the “Customer Care” section of the Bonvoy app:

What is the #1 concern of a hotel guest who requests “care”? “Where Can I Find Information on Diversity & Inclusion?”

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Some interesting numbers about container shipping

by philg

“The Hidden Costs of Containerization” (prospect.org,m February 2022) was recently emailed to me by a reader. It contains some fascinating numbers:

According to data from the Marine Exchange of Southern California, as of the first week of January, there were 105 container ships backed up outside the Ports of Los Angeles and Long Beach, by far the busiest ports in the United States. There was more cargo in the water offshore than the ports processed in all of November. Across the world, nearly 400 container vessels have piled up outside U.S. and Chinese ports, carrying 2.4 million containers.

But why? If factory output is lower due to shortages and coronapanic shutdowns, shouldn’t we actually expect there to be a smaller number of containers going through the ports and no backlog at all?

By contrast, the crisis’s big winners are the nine ocean carrier companies controlling 80 percent of global shipping, which are raking in so much money that they have no reason to fix the problems and end Valeriano’s virtual imprisonment. The price of shipping a 40-foot container from China to the United States was once around $2,000. By August, it had soared to a record $20,000, a tenfold increase. By January, rates receded, but only to around $14,000, still enough to produce incredible profits for a concentrated industry. Shippers earned $25 billion in 2020; research consultant Drewry predicted $300 billion for 2021 and 2022.

Making money is a dirty business:

Nearly all cargo ships use low-grade ship bunker diesel combustion engines to power themselves. Some of the biggest tankers can carry approximately 4.5 million gallons of fuel. Ships emit a plethora of toxic substances such as CO2, nitrous oxides, and sulfur oxides, which are known to cause acid rain. The pollution one ship emits produces the same amount of pollution as 50 million cars; emissions from just 15 ships would be the equivalent of all of the cars in the world.

Do we believe this? Cars operate perhaps 2 hours per day while ships run 24 hours per day, so we can divide 50 million by 12 = 4 million. A car engine might be producing 20 horsepower on average, so that’s 80 million horsepower continuously from 50 million cars. A big container ship uses an 80,000 horsepower engine (example: the Evergreen A-class). If we assume that the container ship uses 100 percent horsepower at all times, it can pollute more than the 50 million cars only if it produces 1,000 times as much pollution per unit of power.

The rich white people who buy all of the junk in those containers aren’t affected, of course:

Port-adjacent communities in Southern California are habitually covered in a blanket of smog emitted from ships and trucks idling in and around the ports. Yale researchers found that a 1 percent increase in vessel tonnage in port “increases pollution concentrations for major air pollutants by 0.3–0.4% within a 25-mile radius of the 27 largest ports in the United States.” Black communities are disproportionately located near ports, and Black people are more likely to be hospitalized for port-related illness.

“The communities that are being harmed by shipping activity are not evenly distributed,” said Danyluk. “It tends to be low-income communities of color … People who are already being marginalized and exploited for whatever the reason are disproportionately impacted by this activity.”

Here’s a specialized container ship docked in San Diego that everyone can love… it contains only bananas:

But why is a ship that operates in the Pacific named the Dole Atlantic?

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Why aren’t cars (and pinball machines) auctioned as they come out of the factory?

by philg

I was in an Uber the other day here in Palm Beach County. It was a Kia Sorento, a small SUV that supposedly costs $30,885 new. The driver had recently purchased it, a 2019 model, for $28,000. It had 125,000 on the odometer when he agreed to pay $28,000.

Plainly a new Sorento, uninspiring as it seemed to me, is worth a lot more than $30,885 retail. Thus, it amazes me that Kia will keep selling these to dealers for the invoice price. Why not auction each vehicle as it is about to go into production (for buyers who want to choose colors and options) or as it comes out of the factory? That would enable the manufacturer to capture most of the profits that dealers are currently getting and it would even work better in a downturn. Instead of having to work overtime with incentive programs and rebates, the manufacturers would just naturally get less for each car in a recession.

A friend found a Toyota dealer agreement on sec.gov. It says “To buy and resell the Toyota Products identified in the Toyota Product Addendum hereto which may be periodically revised by IMPORTER” is a right granted to the dealer, but nothing about whether every 2022 Camry must be sold at the same price.

When information was being distributed on paper and auctions could be conducted only in person, maybe the fixed invoice/retail pricing system made sense. But why does it make sense now given that the cost of running an auction is a few dollars per item at most?

Nearly every house that is sold is subject to an auction, effectively, right? If it makes sense for houses, why not for cars? Art and decorative objects are auctioned by Sotheby’s. If it makes sense for a Barye at $1,260, why not for a car at $20,000+?

The same logic can be applied to almost anything that costs more than $100. The limited edition version of the Godzilla pinball machine was instantly sold out at $10,500. Stern left a huge amount of profit on the table (some people turned around and re-sold their machines for $15,000 or more) and plenty of potential buyers who would have been happy to pay more were disappointed. Why did it ever make sense to have a list price for this item? Same question for the $9,000 “premium” version of the game, which has a multi-month waiting list.

Let’s look at watches. A used in-production Rolex is worth $44,500, but Rolex sells it to dealers for the retail price of $12,400 minus the wholesale-retail discount. If we assume that a new Rolex Daytona is worth at least as much as a used Rolex Daytona, Rolex is giving up roughly $30,000 of profit on every sale. From Bloomberg, the jewelry store that PPP built:

If the answer is “consumers expect fixed prices and to consider a purchase for a few months before making a final decision,” coronapanic can be the excuse for a switch to an economically rational system in which everything reasonably valuable is auctioned, if not to the final consumer then at least to the retailer (who can adjust his/her/zir/their price accordingly).

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Corporations go from greedy villains to heroic protectors of women by paying for abortion care travel

by philg

Friends on Facebook have been celebrating a variety of companies previously condemned as “greedy” for their 20-50 percent price increases that have contributed to Bidenflation. What did these companies do to get out of the doghouse? Promise to pay for employee travel related to abortion care. “Here are the companies that will cover travel expenses for employee abortions.” (NYT):

A handful of companies have committed to helping their employees access abortion services.

Companies began to come out with policies on covering travel expenses for employees who need abortions in May, when a leaked memo from Supreme Court justices previewed their decision on the case, Dobbs v. Jackson Women’s Health Organization. This small group included Starbucks, Tesla, Yelp, Airbnb, Microsoft, Netflix, Patagonia, DoorDash, JPMorgan Chase, Levi Strauss & Co., PayPal and Reddit. Others, including Disney, Meta, Dick’s Sporting Goods and Condé Nast, joined them on Friday when the decision became final, though most of them avoided making public statements directly referencing the ruling.

“As the world’s most broadly based health care company, we strive to improve access and affordability, create healthier communities, and put health within reach for the people we serve,” Johnson & Johnson said Friday. “We also believe health care decisions are best determined by individuals in consultation with their health care provider.”

Ordinarily we assume that corporations seek to maximize profit. It is much cheaper to pay for abortion care, even if travel is involved, than to pay for parental leave and then to pay 100 percent salary for the reduced productivity of a worker with a baby at home waking him/her/zir/them up at night. But the assumption of the Righteous, who just last week were condemning these companies for “greed”, seems to be that these companies are doing the good work for altruistic/philanthropic reasons.

Yet more curious is that the folks who previously celebrated pregnant people in a rainbow of 74 different gender IDs now refer to abortion care as something only for “women”. Examples:

Women are going to die because of this horrific decision. This a cry for body autonomy, and equality itself.

Women are now second class citizens…

Are there Republicans in Congress who share the view of our [Maskachusetts] Governor Charlie Baker who will vote to protect a women’s right to choose in Congress.

I don’t want to hear from anyone about how taking away reproductive rights from women is a pro-life move.

Regardless of your views on whether abortion care should be regulated at the federal or state level (if abortion care is to be regulated at all), it seems clear that decades of progress in gender science have been wiped away by the Supreme Court.

Related:

  • “Amazon will pay US staff travel expenses for abortions and other treatments” (BBC): A message to Amazon staff said that the firm will pay up to $4,000 (£3,201) in travel expenses each year for treatments not available nearby. (Why is there a limit if abortion care is important?)
  • Broody hen compared to gravid human in the office (2018): Just as a broody hen negatively impacts a farmer’s productivity, a gravid human poses a significant inconvenience to her employer. That’s why companies like Google, Facebook, and Apple pay for female employees to extract and freeze their eggs. It’s great to see tech companies empowering women the same way that factory farms empower their battery hens!
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Progressive Insurance is Progressive

by philg

I wanted to check on our car insurance, so I went to the progressive.com web site. The #1 priority of the company, as indicated from the position of this information on the page, is a commitment to diversity and inclusion (not actual diversity and inclusion, but a commitment). Measured by screen area and location, this commitment is roughly 100X more important than paying claims:

What do we see on the linked-to page?

Communities of color are #1 in importance (gold medal in the Victimhood Olympics). The LGBTQ community takes silver at #2 (the 2SLGBTQQIA+ community is simply left out). Everyone else is “marginalized”.

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Supply chain disruptions will end up favoring newcomers in markets

by philg

Our HVAC guy here in South Florida mentioned that he formerly installed Mitsubishi mini-split (“ductless”) air conditioners. Mitsubishi has long been considered the quality leader in this market, which they pioneered in Japan and then in the U.S. Since coronapanic, however, he’s found that most of the Mitsubishi stuff that he used to install went out of stock. “I began putting in GREE, which has a longer warranty and actually seems to have fewer problems and failures.” GREE, a Chinese company founded in 1991 (Wikipedia), isn’t a supplier he would have considered prior to the interruption of his supply from Mitsubishi that was occasioned by the various lockdowns. Now he will default to GREE even when Mitsubishi is available.

I was going to put a UniFi system into our house. This is the brand that I knew and that a friend has had positive experience with. However, everything was out of stock. So I took a reader’s suggestion and purchased TP-Link’s Omada products, which are half the price of UniFi and, more importantly, in stock for 2-day shipping.

Is it fair to say that the “sorry, it’s out of stock” messages from the traditional market leaders are going to turn out to have been the most lasting market disruption of coronapanic?

Related:

  • The pre-coronapanic situation… “Is Lack of Competition Strangling the U.S. Economy?” (Harvard Business Review, 2018): There’s no question that most industries are becoming more concentrated. Big firms account for higher shares of industry revenue and are reaping historically large profits relative to their investment. … incumbent firms in a wide range of industries — airlines, beer, pharmaceuticals, hospitals — are wielding market power in ways that prevent rivals from emerging and thriving. The winners are winning bigger, while the number of new start-ups is falling. With waning competitive pressure, productivity growth slows, wages stagnate, and the gap between winners and losers widens. … Ten years ago, the top four U.S. airlines collected 41% of the industry’s revenue. Today, they collect 65%.
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Swiss versus American CEO

by philg

From an interview with the Markus Bucher, the CEO of Pilatus (in Switzerland)….

For the first time we produced and delivered over 140 aircraft to our customers in one year, taking us virtually to the limit of our current production capacity. The enormous demand for our General Aviation aircraft, the PC-12 and PC-24, exceeds all our expectations!

The interviewer, from an in-house magazine, asks “Were our ambitious corporate goals achieved in 2021?”

2021 was a mixed year… I’m not entirely happy! Demand is incredibly positive and our finances are very health. But we work inefficiently and we remain under a lot of pressure because of the need to bypass many standardized production processes due to faulty materials and insufficient quality from our suppliers.

Readers: let me know if you can find anything similarly candid from a U.S. CEO (other than Elon Musk)!

Related:

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Should Disney sell a planned itinerary?

by philg

Disney supposedly has cut its maximum capacity, but the new maximum still results in multi-hour waits for rides, up to a one-hour wait to get through security before even reaching the ticket booths, no way to get food without waiting in an epic line, etc.

We stayed at a hotel near Disney Springs in mid-March and would not have been able to go to Disney if we’d wanted to because all of the reservation slots had been taken. The guests who had planned months in advance and who did go to the hotel reported having a mediocre or bad experience. They paid extra for the Genie+ system that is supposed to enable getting on rides without waiting in line, but using the app was a huge hassle. We heard about some folks paying an out-of-park planner $1800 to manage their Disney app interactions and then text them with instructions for where to go.

Disney obviously has captured 100 percent of the market for people who want to plan their vacations three months in advance, including which rides they’ll do and where they’ll eat, etc. They also have an offering for people who have an extra $850 per hour to spend on a VIP guide. The guide can’t get guests into restaurants, however, as explained in my 2019 review of this experience. In that review, I posted the following idea:

Plainly the mobs are buying a lot of hotel rooms, food, and souvenirs. But I wonder why Disney doesn’t have “Crowd-hater Days” in each park to capture the market of people who would be willing to pay a lot more to have the 1990s experience. There are four core parks within Disney World. Why not say that every Monday through Thursday one of these parks will be designated “Crowd-hater” and tickets will be sold at whatever price it takes to keep max line length down to 15 minutes? If ticket prices were doubled, for example, I think Disney would actually make more money in ticket revenue since demand should not be cut by more than 50 percent. By using a high price to limit admission to only one park at a time they should still be able to keep all of their hotels filled (tourists who don’t value the less-crowded experience will still go to the other core parks and/or the water parks).

Apparently, Disney is never going to do this. So I have a new idea… a pre-planned itinerary that includes reserved meal stops. It will be like Genie+ except that the guest doesn’t have to plan, think, or do anything other than show up at the pre-planned times and pay for whatever is ordered at the meals. The Disney in-house expert figures out in which order all of the rides should be done so as to minimize walking time. I think that this could easily be sold for 2X the price of a regular park ticket plus Genie+ and the cost to Disney and impact on the park should be the same as if someone diligently used Genie+ as designed. Perhaps there is a risk of cannibalizing the VIP guide sales, in which case the price would have to be higher.

How crowded is Walt Disney World now that Americans don’t need to go to work? Disney Springs, which is essentially just an outdoor shopping mall, had 45-90-minute waits for tables at the various restaurants on a Wednesday night in mid-March. Then people would wait in line for another 45 minutes to get a generic ice cream from Ghirardelli. Here are the lines to check out of the Disney trinket shop with $40 T-shirts, to get some BBQ, and to go into a LEGO store that sells the same sets as the LEGO store in your local shopping mall:

The Road to Serfdom is dedicated to “socialists of all parties,” reflecting Hayek’s view that love of central planning is near-universal. Why not a centrally planned no-line Disney vacation?

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COVID-safe restaurant chain idea

by philg

Even as thousands of Americans continue to be felled by SARS-CoV-2, state governors are lifting COVID-related protections. Soon it might be possible for a 5-year-old, for example, to go to a restaurant without anyone checking to see if the 5-year-old has been injected with an experimental use-authorized vaccine against a disease that kills 80-year-olds. Mask requirements are being dropped as well. People will be unmasked as they walk into the restaurant, not just when they’re sitting at tables.

Let’s assume that at least 20 percent of Americans Follow the Science and are extremely concerned about COVID-19, albeit not concerned enough to stay home. That’s a potential market of 67 million people (source for total population) who want a restaurant where they are fully protected against COVID-19 by cloth masks and vaccines that cut risk by a further 97X.

Even in the Florida Free State, there is no law against a restaurant checking vaccine papers (as mine were checked at Art Basel) and requiring masks. The legislature has blocked government agencies from engaging in this kind of behavior, but private companies can do whatever they want (e.g., hassle unvaccinated employees with periodic testing demands).

How about a restaurant chain that voluntarily imposes all of the restrictions that mayors in Washington, D.C., New York, San Francisco, Boston, et al. imposed by force of law? You will need to show a photo ID and vaccine papers to get in. You will need to wear a mask, preferably cloth but N95 is also okay, as you walk from the door to the table. The restaurants will close at 10 pm in honor of the curfews that many European nations imposed to prevent SARS-CoV-2 from spreading during the night hours.

Because obesity is not a significant or newsworthy cause of death compared to COVID-19, the menu will be 100 percent items that people love. Fettuccine Alfredo, potatoes au gratin, crème brûlée, etc. Because cancer is also insignificant next to COVID-19, smoking and vaping will be allowed.

What will the new chain be called? Karen’s.

Before everyone heaps ridicule on the above idea, remember that the U.S. government thought that there would be a significant number of people who would remain concerned about COVID-19 prevention immediately after a nuclear weapon had destroyed one or more cities. From https://www.ready.gov/nuclear-explosion (retrieved 2/28/2022; it was still all about the hand sanitizer!):

When you have reached a safe place, try to maintain a distance of at least six feet between yourself and people who are not part of your household. If possible, wear a mask if you’re sheltering with people who are not a part of your household. Children under two years old, people who have trouble breathing, and those who are unable to remove masks on their own should not wear them. … If you are told by authorities to evacuate to a public shelter, try to bring items that can help protect yourself and your family from COVID-19, such as hand sanitizer that contains at least 60 percent alcohol, cleaning materials, and two masks per person.

The authors of the web page assume that the nuclear weapon(s) did not take out the 9-1-1 and health care systems:

If you are sick or injured, listen for instructions on how and where to get medical attention when authorities tell you it is safe to exit. If you are sick and need medical attention, contact your healthcare provider for instructions. If you are at a public shelter, immediately notify the staff at that facility so they can call a local hospital or clinic. If you are experiencing a medical emergency, call 9-1-1 and let the operator know if you have, or think you might have, COVID-19. If you can, put on a mask before help arrives. … Many people may already feel fear and anxiety about the coronavirus 2019 (COVID-19). The threat of a nuclear explosion can add additional stress. Follow CDC guidance for managing stress during a traumatic event and managing stress during COVID-19.

There is a helpful photo:

Anyway, if there are people who want to wear an anti-COVID mask in the fallout shelter after a successful nuclear attack on the U.S., my theory is there are people who will want to have dinner in a fully masked environment (except for all of the customers who are unmasked because it is a restaurant and they’re eating).

Related:

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