Tuesday, 19 May 2009

Diet CAFE

Well, the Obama administration has announced that our cars are going on a severe diet. Environmentalists are elated. It seems that Detroit is as well, because the new national standards will preempt any state standards.

As we’ve noted before, Detroit should have developed much more flexible manufacturing processes long ago, they shouldn’t need a single national standard to shoot for.

Further, the politics of this move are absurd. What is the logic of a democratic government requiring manufacturers to build the products the public wants least? If the public wanted more fuel-efficient cars, it would simply buy them. Deciding that they should have more efficient cars and having the government eliminate the models they prefer so as to not tempt them, is a bizarre approach to responsibility. Another word that comes to mind is inanity.

If I Were King, I should tell them to eat cake, and to visit their favorite bakery in whatever car they choose to own, maintain, and operate.

Monday, 18 May 2009

Sensible conscience clause

President Obama, in his commencement speech at the University of Notre Dame yesterday, said he supported a “sensible conscience clause” for medical professionals to refuse to perform abortions, and presumably other procedures, which they found to contradict their ethical and moral beliefs.  The exact terms of such a clause weren’t stated, but despite my normal belief that the convictions of the individual should guide their own actions rather than external considerations, I have to oppose this.

That is not to say that a doctor shouldn’t be able to hang up his shingle and define his practice in any way that suits him. If a surgeon opposes abortion and decides to open a practice specializing in ophthalmology, of course he shouldn’t be expected to perform abortions. But if that surgeon went to work in a clinic that provided abortions, and then refused to perform them while drawing his salary, then that doctor should suddenly, and without ceremony or honor, find himself unemployed.

In previous invocations of this concept it has been suggested that pharmacists should be able to refuse to fill prescriptions for drugs of which they disapprove, notably the “morning after pill” abortifacients. But what if a pharmacist was of the opinion, apparently held by many otherwise-sensible persons, that ADD is not really a disorder and that treating it with drugs is wrong? Should that pharmacist be able to refuse to fill prescriptions for Ritalin or Concerta or any of the other drugs that make life with ADD manageable? The answer is no.  Federal law requires most drugs to be dispensed by pharmacists, and as such they are, in effect, a public utility and must not be able to impose their own standards on who can or can’t make use of their services.

I can certainly see a case for professional standards being maintained by physicians.  To say “I do not believe in abortion after the first trimester and therefore decline to seek the training to perform procedures to handle later cases” seems completely reasonable.  But, If I Were King, it would most certainly not be acceptable for someone to take a position that required certain work and then to refuse to perform it.

Saturday, 16 May 2009

No more tail

The car companies are up against the wall. They have to figure out how to make money in the third millennium, and at least a couple of them have to figure this out right smartly. On Thursday of this week UPS delivered notices to 789 Chrysler dealers letting them know they weren’t going to be part of the solution, the next day FedEx carried similar news to about 1100 GM dealers. Chrysler’s bankruptcy means they can make their terminations stick; GM will have a little more trouble if they stay out of bankruptcy, but that probably won’t change much. Even with strong state franchise laws, when the manufacturer wants to close a dealership they eventually will.

But why? I have my doubts about the economy of eliminating brands, but at least there was some cost saving when Chrysler no longer had to pay to produce ad campaigns for both Dodge and Plymouth, and they may have saved a couple of dozen salaries by eliminating the design effort to make a Plymouth look a little different than a Dodge. But how much can an auto manufacturer save by eliminating a dealer?

Every dealer has to have the special tools designed for specific repairs, but the dealers pay for those.

When I think of recent business successes, two names that come immediately to mind are Amazon and Netflix. Both are thriving from the “long tail” approach, a concept first identified by Wired’s Chris Anderson which means a strategy of focusing on a thousand products that sell a few units a month instead of a few products that sell a thousand each. The company that can provide you with any of ten thousand movies profitably will probably be your source for more common flicks, even if you have a Blockbuster ten minutes away.

Dell has built a huge business building one computer at a time. Yes, they’re under pressure during the current downturn, but Packard Bell doesn’t exist at all.

Yes, it’s possible that a large dealer will be more profitable than five smaller ones, but that’s the dealers’ problem, not the manufacturers. GM isn’t paying the rent on those four extra showrooms, although they probably had a lot of say in what they look like and pushed the dealers to build them. Chrysler does shell out for advertising for every dealer, but that’s all “co-op” in which the dealer pays for the ads and is reimbursed, based on their purchases, so other than processing the extra paperwork, there’s no difference.

And that, I suspect, is the crux of the matter. During a period when IT advances have made it vastly less expensive to sell small-volume products through small-volume dealers, Detroit was oblivious.

Murray Motors, the Chrysler and Dodge dealer in my home town got one of the notices on Thursday after 66 years.  When the economy recovers, will long-time Dodge owners drive an hour and a half to look at new cars, and commit to that same drive for ongoing service, or will they take a look at what the Ford and Toyota dealers have on offer?

Fashioning a marketing organization that fits the current marketplace may be challenging, but it will work a lot better than just lopping off the less-profitable parts of their tail. Chrysler and GM are making a stupid mistake. If I Were King, or even if I weren’t, they need to remember that stupidity is a capital crime on this planet.

Wednesday, 13 May 2009

Why wait?

Congress is turning its attention to abuses by credit card issuers (i.e., banks) and taking steps to reign in the most egregious of these. Most notably, Rep. Carolyn Maloney (D-NY) drafted H.R. 627, the Credit Cardholders Bill of Rights Act of 2009 with an effective date of twelve months after enactment or 30 June 2010. Apparently the Federal Reserve Board needs five months to draft rules to implement the act, which should take any reasonable group of people an afternoon – even if the group included attorneys. And the banks claim that they need time to make changes to their systems.  Stuff and nonsense! If I Were King, I’d allow 30 days, becuase I’d be a very generous and lenient monarch.

I’d allow certain exceptions, of course. Any card issuer could be granted additional time to comply if their IT staff (and here I’m talking about programmers, not the suits who wouldn’t know a variable from an array or know enough to  define “third normal form”) would come to the throne room and explain why they couldn’t have these changes coded by the weekend.