Unions Have No Shame

Nothing would inspire the werewolf to indefinitely forsake professional car-washes more quickly than to learn that they have been unionized. If the macro-circumstances weren't so pathetic, this NY Times article on the steel workers' union attempt to strong arm the dudes that wipe down your car into a union would be somewhat funny. However, it isn't funny and it is freakin' disgraceful. First of all, the fact that the steel workers are out there footing the bill to try and agitate the mostly illegal Mexicans workers who are the backbone of LA's car-washer workforce show how desperate and fakakta the unions have become. This is nothing more than a racketeering attempt to squeeze struggling small business owners.

The national unemployment rate is cresting 10%, consumers are afraid to spend, employers are terrified to invest capital in hiring, and the American public has the overall confidence of an awkward pubescent dweeb at his 8th grade sock hop. How out of touch can the unions really be? These guys have out-lived their structural usefulness in an era of heightened consumer awareness and expectations, and via their greed have clearly demonstrated that they are impediments to American recovery.

One car-wash operator states the obvious ramifications in the article.

"Mr. Crestall said the unionization push would hurt everyone. “Having a union will mean higher wages, and that will lead to higher prices,” he said. “That will mean fewer consumers coming to carwashes, and fewer jobs for these workers.”

This lame micro-push is just a regional symptom of larger flaws in our governance structure and understanding of how leverage markets to betterment of all participants. Who knows if this push will succeed or not, but believe me you, this wolf's wheels will never be touched by a union member. (This acknowledges that his wheels were born of union hands, but that was beyond my control.)

The irony will be when the proponents of real corporate social responsibility (CSR) understand how adversely unions impact cost and operating structures, and ditch de-couple themselves from out-dated left-wing ideology for the potential third-way benefits that the concept of CSR can offer.

The cascading impact of the crude spill in the gulf

The story about the BP sourced oil spill in Gulf keeps getting worse. The slick is now the size of Jamaica and will likely devastate the coast-lines the five gulf coasts states. Not only will be the economic and ecological impact be catastrophic for the folks in the region, but the werewolf thinks there will be very nasty macro-effects that will haunt the America psyche for a long-time to come. The two most sinister macro-legacies will be reinforcing the misbegotten notion in the minds of Americans that government intervention is increasingly required to handle everything. The current administration will most definitely use this to exploit that idea.

Additionally, America's energy policy will be screwed over as the over-reaction to this disaster will likely lead to massive reductions in the ability to exploit the abundance of domestic energy as irrational fears take over. This will increase America's dependence on overseas oil, screw over the domestic energy worker, hamper American owned energy interests, and further divert American capital away from strengthening our internal energy infrastructure. We will self-sodomize ourselves on account of the emotional scars this will cause.

Much like how Three Mile Island made American Luddites and retards  when it come to appreciating the beauty and benefit or nuclear, this gulf spill will open a Pandora's Box of contemptible retardation.

Lesser, but still severe effects of this spill will manifest themselves interestingly.

The anti-humanist environmental movement will get new life breathed into it. These people want us to have no kids, eat freeze dried air, attach sails to our cars, and live in homes fueled by love. They suck.  After a series a recent setbacks and the virtual debunking of global warming had rendered them impotent, it's unfortunate that they'll have a voice again.

There will be a spike in oyster, shrimp, and certain fish prices. The werewolf loves the fruits of the sea and has no money. The price increases will be felt. Not to mention the real tragedy of a regional American industry being virtually destroyed.

BP has really screwed the pooch. One wonders if they are competent and fit to operate. They lied, mislead and mis-managed this whole affair from the get go. $25 billion in shareholder equity has been wiped out. That's a mere glimpse of what we can expect when this is all done. Tens of billions more can reasonably expected to evaporate as the situation gets worse. This is all before the lawsuits, regulatory fine fines and consumer outrage kick in.  BP has invested millions heavily in making themselves the "nice energy company." However, it is clear that it was all sham. The werewolf loves the energy sector. He is pro-energy sector, pro corporate social responsibility and pro growth. BP has manged to blow the lid of these things through their vile display of incompetence.Compliance, proper risk management, foresight, and honesty are all part of the bargain of believing in the power of the private sector. BP doesn't erode all of that, however, they are dead to to the werewolf.

As mentioned earlier, the government, which has been asleep at the wheel, and Americans should learn to shun, will leverage this to further expand as the all consuming leviathan that dominates our lives.

The double standard of how the current administration is being given a pass is shocking, especially when one considers the mountains of unfair shit hurled at President Bush. (Granted Bush and his PR people should have fought back with more vigor).

This whole thing is tragic. The werewolf is convinced that the impact will be much more far-reaching than anyone currently realizes.

Higher education's crashing endowments.

According to Business Insider, here are the ten worst performing higher education endowments.

1. Harvard, down 30% and $10.9 billion.
2. Yale, down 29% and $6.5 billion.
3. Duke, down 28% and $1.7 billion.
4. Brown, down 27% and $730 million.
5. Syracuse, down 33% and $327 million.
6. University of Minnesota, down 27% and $312 million.
7. Cornell, down 26% and $1.4 billion.
8. University of Southern California, down 26% and $918 million.
9. California Institute of Technology, down 26% and $483 million.
10. Grinnell, down 27% and $396 million.

Wow. The total loss for the above endowments is about $23.67 billion. (this is just sample of a population of over 800 endowments) That is some serious cheddar. Some of the most "elite" schools in the country are represented on this list. One would think with portfolios the size of a small country's GDPs that risk management and hedging would be a core strategic component of endowment management. Guess not. What will be interesting is measuring the long term costs of these staggering losses to the reputations, quality, moral, and perceptions of the aforementioned schools and other top losers. Endowments were a huge value add to differentiating these institutions in the marketplace. They underwrote specialized faculty members who added prestige, exotic resources, important research, unique facilities, and scholarships among other things. When these dry up, what happens?

From a consumer perspective, tuitions will definitely increase at all of these schools due to acute operating budget shortfalls. (They'll increase everywhere) Due to systemic failures, there are few, if any, white knight philanthropists able to bridge the budget gaps of this magnitude. Value will get harder to define. Much like the collapse of the storied and allegedly invincible investment banking houses last year, is higher education slowly entering a new era in terms of how universities are perceived and managed? Will the titans fall? Given that the squeeze is near universal, it's hard to gauge who will win and who will lose. The werewolf still hasn't gotten his paws around the implications of these imploding endowments. Considering they took generations to build, most of them will likely never regain what they've lost from a balance sheet perspective. Once the balance sheet goes south, it's open season. It should be interesting to watch how this all plays out.

Here is the methodolgy:
24/7 Wall St. has analyzed the data for all 842 institutions and made comparisons based on 1) absolute dollar gain and loss, 2) percentage gain and loss, 3) greatest percent and absolute dollar gains and losses at the largest endowments (those with over $1 billion under management) with a special focus on those that lost 5% more than the average endowment in the survey or 23.7%, and 4) colleges and universities with endowments of more than $300 million which outperformed the average endowment loss of 18.7% by 5%–that is, those which had percentage losses of 13.7% or less.
Based on this analysis, 24/7 Wall St. picked the 20 worst managed university and college endowments and the 17 best. There were not enough colleges and universities to make a list of the 20 best based on our criteria. 24/7 also picked a “best of class” of endowments of more than $100 million which had absolute percentage gains over the one year period. Only 33 endowments of any size in this group of 842 had positive gains.

Walmart vs. Whole Foods: Who rules the roost on locally grown fresh produce?

Corby Kummer (sounds likes a porn-star moniker, doesn't it?) over at The Atlantic, has penned a fascinating piece titled "The Great Grocery Smackdown." It is a thorough examination of a yuppie-liberal trying to procure fresh locally grown produce via two well established mega-chains, the iconic feel good Whole Foods, and the dreaded corporate titan Walmart. The piece makes for an interesting read because at prima fascia, everyone thinks the answer to this question is a no-brainer, right? Whole Foods dominates, hands down. Well, wrong. Based on the evidence provided by the author, the answer is actually colored by several shades of gray.  Walmart and Whole Foods each have distinct advantages and disadvantages in certain realms of local produce sourcing and quality. By virtue of that simple fact, this turns out as a rather massive victory for the Walmart brand.

The werewolf loves each enterprise for different reasons and holds them both in high esteem. Walmart has revolutionized the retail industry on so many levels that addressing it merits a post unto itself. It has lowered prices for consumers, leveraged its volume to influence CPG manufacturers to make more sustainable packaging and shipment operations that benefit most stakeholders, and become a staple of the American consumption psyche. Sure, it gets accused of cultural and product homogenization, squeezing out mom and pop shops, paying its employees what the market says they are worth, and being evil on account of its massive success. While, some criticism is warranted, most criticism is rooted in typical liberal economic bigotry and ignorance.

Whole Foods has captured the yuppie, bourgeois aspirations and demands for premium foods, exotic spices, diverse offerings that theoretically are all well sourced and organically produced where it counts. The werewolf thinks Whole Foods CEO, John Mackey, is one of the finest honchos out there and has done marvelous things with his enterprise. There is an arrogance and entitlement to Whole Foods that it is somehow intrinsically "better" by virture of the aforementioned business value adds. It has earned the pejorative name "Whole Paycheck" in some circles, and whereas Walmart is every-man's store, Whole Foods still maintains a bit of an exclusionary cache to its brand. Plus, one could argue that Whole Foods aggressive acquisition growth strategy is more corporate than Walmarts organic growth approach turning the whole presumptive nature of which company is more in-touch with its base on its head.  Regardless, when times are good, the werewolf is a patron of Whole Foods. 

The moral of the story is that the fierce competition of the American marketplace is forcing American's best and biggest retailers to respond to the needs of consumers in innovative ways. Trends like this are a win-win for just about everybody. The added bonus of rattled rattling the cages of economically ignorant and elitist yuppies is a just a cherry-on-top.

Recall U.S. Interests In Auto Industry

Sometimes stating the obvious is tough and readily apparent evidence is thin. Over at Forbes, George Pieler and Jens Laurson take the aforementioned circumstances and author a solid article addressing the issue as it relates to the concerns over government ownership of large swaths of the US auto industry. They also speak well to Toyota's raft of problems independent of U.S. government's conflict of interest. Can a regulator who owns the competition truly be objective? Who gets screwed by this lack of objectivity?

"In a way, this is business as usual and reflected in the drop of Toyota's share prices. What is not business as usual is that Toyota's competitors include not just other car companies but also the U.S. government, due to its effective ownership of GM. Whether foul play is involved, it's a bad idea for government to run a car company and regulate all competing car companies at the same time. The conflict of interest is obvious, but the government--certainly not at La Hood's initiative--didn't recuse itself. Did he suggest that "Toyota thinks they know how to fix the problem" to cast doubt on its actual ability? What would otherwise be an innocuous statement arouses suspicions under such circumstances.

The charge of bias can't be proved or dismissed. The accusation of pro-GM mercantilism will always be raised when its competitors are targeted. Genuine protectionism in favor of GM and Chrysler (as well as Ford) would be very bad for American consumers and American autoworkers employed by Toyota. But even the credible appearance of it is bad enough. If the public has to second-guess every one of La Hood's pro-safety actions and pronouncements on the ground he may be tilting the table for GM, it's not only Toyota or U.S.-Japan relations that suffer. The credibility of U.S. policies on automotive safety will be harmed most, which means that for public safety reasons alone the U.S. should discharge its ownership positions in GM and Chrysler as soon as possible and let them swim free." 

There is another conflict of interest that the werewolf believes is getting short shrift. The relationship that unions have with domestic vs. foreign automakers. Although not universal, the vast majority of foreign automakers who have established manufacturing operations in the United States have located their plants in "right to work" states. The automakers include Honda, Toyota, Nissan, Hyundai, BMW, and Mercedes-Benz and some of the states domiciling these operations include Alabama, Georgia, Kentucky, Mississippi, Texas, South Carolina, and Tennessee. 

Despite the recent contraction in credit, lower sales volumes, and poor macro-economic conditions a spectrum of reports suggest that these plants are more efficient, breed happier workers, and have a generally less adversarial relationship with management.  Given that the current administration is beholden to the labor unions that contributed handsomely to their election coffers and that the unions hold profound contempt for the foreign operations of competitors being sourced domestically under non-union negotiated labor contracts, and that since the government owns the companies that employ large segments of union membership that there is an inherent conflict of interest at work? The answer seems painfully obvious to the werewolf, but then again he doesn't want to be accused of chasing mice in his mind. Still the implications of such decisions impact stakeholders from consumers, workers, lenders, suppliers, and tax-payers that it would behoove us all if more attention was paid to the issue.

Barone - Unions Bleed Taxpayers

Michael Barone pens another superb piece on the economic hurdles imposed by unions on taxpayers, consumers, and business. Some very alarming trends are emerging. The article points out that private-sector union ranks are collapsing (a good thing), yet more than a third of public-sector employees are now unionized ( a scary factoid). Unions are no longer stewards of decent wages, improved workplace conditions, and agents of disenfranchised stakeholders. They are the new entitled fat-cats that have been very effective at eroding America's competitive advantage in key industrial and manufacturing sectors. From a sustainability and corporate responsibility perspective their needs to be an honest assessment of the costs they incur on all of us. Here are some well articulated highlights on impact of unions on the auto industry from Barone's article.

"Private-sector unionism is adversarial. Economic studies show that such unions do extract premium wages and benefits from employers. But that puts employers at a competitive disadvantage. Back in the 1950s, the Big Three auto companies dominated the industry and were at the top of the Fortune 500. Last year, General Motors and Chrysler went bankrupt and are now owned by the government and the UAW. Ford only barely escaped.

Adversarial unionism tends to produce rigid work rules that retard adaptation and innovation. We have had a three-decade experiment pitting UAW work rules against the flexible management of Japanese- and European-owned non-union auto firms.

The results are in. Yes, clueless management at the Detroit firms for years ignored problems with product quality and made bonehead investment mistakes. But adversarial unionism made it much, much harder for Detroit to produce high-quality vehicles than it was for non-unionized companies." 


With that kind of well documented legacy, do we really want to straddle our already obese and incompetent governmental infrastructure with a new bracket of unsustainable obligations? 

Toyota Totaled?

Despite the tragic implications for a few very dead individuals, watching the national drama unfold around Toyota's deadly brake pedal flaw has been fascinating. The National Post has an interesting op-ed by  Terence Corcoran covering the details of what is happening to Toyota from a skeptic's perspective. He downplays Toyota's culpability, and focuses on the domestic reaction from both a governmental and business perspective. There is no questioning that the Obama administration and certain congressional democrats have behaved like buffoons, that Detroit is giddy with joy, and that Toyota itself has tripped pretty severely on the public relations front. Given the multiple forces at work, this business drama has the makings of great business school case study.

First things first, Toyota screwed the pooch. One of the hallmarks of Toyota's brand image was quality. That association is a core component of what distinguishes Toyota from it's American rivals in the minds of consumers. Every large scale auto-manufacturer will have a recall at some-point or a design flaw, especially if they are volume players. Managing these moments is what determines a company's brand image in the minds of consumers. Remember the famous Tylenol Recall of 1982 that did wonders for Johnson & Johnson. Getting ahead of the issue, preempting any fears from consumers by letting them know that they are a priority, and exceeding crisis management expectations are essential from a brand image preservation perspective. The werewolf is dismayed that Toyota didn't have some massive contingency drawn-up just in case a disaster like this occurred.  It's risk management 101 for a company like Toyota.  Toyota's management clearly seemed a little slow to respond, was skeptical of consumer fears, and allowed the issue to explode into a North American market drama that the werewolf thinks has adversely  impacted their brand for the short and potentially medium term. Given Toyota's discipline as a company, their weak response and poor brand management is the most shocking element of this tale at work.

Granted, Toyota has long been the arch-rival of GM and Ford ever since their arrival on these shores four decades ago started eroding Detroit's dominance in it's home market. Toyota built better cars leveraging more operational efficiencies, their cars lasted longer and developed a perception of quality, and they avoided detrimental union obligations. Most importantly Toyota offered the consumers what they wanted instead of boring automotive bureaucratic abominations pushed by Detroit. Detroit's resentment of Toyota is not unlike the blood-feud between the Hatfield's and McCoy's. In today's day and age, conflicts of interest abound. The US Government has a large ownership stake in both Chrysler and GM, those dastardly unions heavily financed and supported the current occupant of the White House, plus this administration has displayed a tendency to be protectionist and anti-free trade. It doesn't take a genius to see the potential problems at play working against Toyota from a governmental standpoint. However, these problems aren't insurmountable, they just need to be noted and Toyota needs to integrate them into their communications strategy as they launch a recovery.As much as Detroit seems to be enjoying this meltdown at Toyota, they seem to be missing the message the credibility isn't going to be sourced in a nasty web of conflicts of interest and lame rhetoric. Good management and valuing consumers will do that just fine.

Brand image and commitment to that image are what lead to credibility. Credibility fuels consumer purchasing and loyalty. At the moment, credibility seems to be wanting in all sectors of this drama. What do you all think?

Corporate free speech is not un-American!

Opinion | Corporate free speech is not un-American | Seattle Times Newspaper

The op-ed piece in hyperlink above, written by Bill Maurer, highlights some very important points about the importance of the recent Citizens United vs. FEC. Here are some highlights from the piece:

"Corporations are each different. Some will see this decision as an opportunity to support pro-free-market politicians. Some will use it use it to support liberal politicians. And some will ignore politics completely and simply try to provide goods and services the public wants. This is because a corporation, like every association — a marriage, a neighborhood association or a nonprofit organization — is made up of people. It is the people who are now free to speak and to choose the form they believe is the most effective for disseminating their message.
 

This is America. We do not ban books. We do not make it a crime to speak because the speech may be too influential. With this decision, Americans will get more information, hear more debate, and learn more about their elections. With all due respect to Sen. Schumer, what could be more American than that?"

There is this weird assumption that in this day and age of diversified interests along with multiple information sources with easy platforms of access, that corporations always have nefarious aims and objectives and that the use of corporate money pollutes politics. Hogwash.

Corporations have budget limitations and fiduciary responsibility to their ownership to work at turning a profit. Even the wealthiest corporations can't write blank checks (although very large ones on occasion can be issued) It's a very honorable an open set of objectives to be chasing  bottom-line in the black. Plus, it is explicit by the very nature of the capitalist beast. More so, than can be said about the motives of certain individuals. As high-lighted in the article, the public has long been suspicious of various corporate marketing initiatives that have failed despite having millions of dollars pumped into them. Money might be able to purchase airtime, but it doesn't guarantee results.

The werewolf wonders if corporations should be treated more like an individual on some levels, but will flush that out in a different post. However, he has also thought that if the government and anti-free speech activists really wanted to curb corporate speech in good faith, why don't they push for an elimination of corporate taxes? A reduction in stakeholder status can certainly be linked to a reduction in assumed rights. Food for thought.

An Encore for the Saab Story?

While it is way too early to declare this a happy ending, it looks like GM's red-headed stepchild, SAAB, is getting a new lease on life and being sent home to Scandinavia. Well, sort of. The WSJ offers coverage here.

Spyker, the new owner of SAAB, has announced its intention to turn SAAB into a lower-volume, more premium oriented car maker. The werewolf thinks this a bold, but troubled move. GM, the corporate king of conformity, has spent the last two decades eroding SAAB's quirky and unique image. Beyond purging its designs of all GM DNA, Spyker will have to invest heavily in reversing the damage GM has done to SAAB's brand image. The werewolf would be a very concerned investor.

However, the real drama in this tale is told in the numbers. Between 1989 and 1999, GM paid $725M to acquire SAAB in addition to assuming all of SAAB's debt and liabilities. In 2010, SAAB was sold by GM to Spyker for $74M.

Who are the real enemies?

Bashing bankers is always fun. Despite being an MBA, and a righteous advocate of free markets, the werewolf harbors a natural skepticism towards both bankers and lawyers. They make profoundly easy targets, mostly on account of their natural arrogance and insular thinking. Still, the werewolf realizes that bankers, more so than lawyers, offer one of the most valuable services to the health and prosperity of this nation and the world. They enable people to take risks and create opportunity by extending lines of credit and providing financing. That is why he is alarmed by the President's aggressive pivot, and new populist assault on this country's larger financial institutions. The Financial Times has solid coverage here.

The werewolf feels that these moves to create bogeymen via the bankers is a cynical attempt to play politics with this nation's crucial drivers of growth. As long as the bankers are beaten down and paralyzed by reckless and punitive legislation, they will be unable to lend or extend credit that is needed to drive growth. It speaks very poorly to the president's intentions about enabling opportunities for growth and reinforces the notion that the policy wonks in his administration have been sidelined by the political hacks.

Don't get the werewolf wrong. He actually doesn't like most bankers on account of their arrogance, master of the universe persona, stunted short term thinking, and militant alpha dog attitude. While pursuing his MBA, the werewolf briefly flirted with the banking profession, like all good unoriginal MBA's, but quickly realized that he and investment banking would be uglier than watching a great dane mount a chihuahua in heat. They screwed up by taking the TARP money and proceeding to pay huge bonuses, despite the macro-challenges facing the nation. That's their arrogance that he resents so much and the subject of a different post. Still, he loves the invaluable service bankers provide and knows that despite being easy targets, they are the farthest things from being the enemy, in fact, they are one of the most important allies to growth and prosperity this county and the economy have.

There is also this desire by the populists and the left to squirt all of the blame on bankers for the macro-crisis. This is a grand and dangerous illusion that if continually pimped, will exacerbate our collective woes. The bankers deserve a solid portion of the blame, and believe me you, the recent slaughtering of banking titans like Bear Sterns, Lehmen Brothers, Washington Mutual, Wachovia, and Merrill Lynch is evidence of that. However, let us not forget that a raft of thoughtless government policies that pushed the banks to issue risky loans or face punitive action, government sponsored entities like Fannie and Freddie Mae that distorted the market place, or the fact that millions of borrowers willfully misrepresented themselves on financial disclosure loan documents, all served to be the catalyst for the perfect storm that struck sixteen months ago. It's time to adjust the incentive structure and perhaps require different capital ratios for banks to make loans, etc, but beating them down even more helps no one at this point.

Assaulting and hating bankers isn't the solution. The president should know better. Shame on him. We have real enemies in the form of Al Qaeda, the Taliban, the Mullahs in Iran, Hugo Chavez, and the North Koreans. Let's keep that in mind as we move forward.

Air America crashes for the last time.

Several hours ago, Air America announced it has ceased all programming and is terminating operations, effective immediately. That's fine by the werewolf. From all reports, it possessed heinous programming. Even the werewolf's liberal friends trashed it.

From it's very inception, Air America struck him as an unviable business operation because it wasn't founded to fulfill a legitimate market need. Beyond all other things, business is only worth pursuing if there is demonstrable market demand for it on some level. Air America, spat in face of common business sense and the marketplace, and was founded because a few liberals, accustomed to their inherited print and television media monopolies, couldn't figure out why they didn't have a stronger radio format presence. First of all, the fact that these investors were blind to the publicly subsidized presence of NPR as the 800lb gorilla of liberal radio makes the fact that they got cleaned out and lost their money very amusing. He's impressed that it took six years for Air America to crash for the last time. The werewolf listens to NPR semi-frequently, and thinks on occasion their programming is decent from a human interest perspective, although anyone with a GED could spot their analysis is unabashedly left-of-center. (Not a bad thing, just the way it is, as most talk radio formats are right-of-center) They are unquestionably the voice of uninhibited liberalism on America's airwaves and most of their market is the hoity-toity urbanites and other liberals making their morning and evening commutes. From a corporate governance perspective, it shocks the werewolf that this facet of the strategic landscape was not considered before launching Air America and it stinks of a professional liability suit somewhere along the line. The market Air America went after was fully saturated. The proof is in the pudding as the nails have been driven into the coffin of Air America and NPR is trucking along just fine. The question the werewolf has, would NPR be able to survive if it weren't publicly subsidized? Alas, he gets ahead of himself.

GlaxoSmithKline sets a great example.

The Guardian is featuring an article about GSK's CEO, Andrew Witty, who recently announced that GSK will open its internal research findings on malaria drugs to the global health community to hopefully expedite the search for a cure. It's a brilliant move on GSK's part and it clearly showcases the power of disciplined corporate social responsibility as a management philosophy. Given the time consuming, capital intensive, and complex trial and error research approach with a variable hit ratio that yields successful drugs, it makes sense from a moral, ethical, financial, and strategic perspective to release this data. GSK doesn't have the time, money, or will to bark up the 13,000 research leads it is releasing to the world, yet, releasing them undoubtedly increases the chances of producing aproduct that can measurably improve peoples lives. It's a win-win of the best sort.

Pharma has long been in a bind. They perform an invaluable service to humanity and have been doing so for the most honest of motives, profit. Regressives, left-wingers, and even some liberals have long wallowed in the sea of their ignorance of basic economics and shamelessly hounded pharma for "not doing enough." Well, given the FDA has increased the barriers to research through insane bureaucratic standardization, that pharma is inherently a high risk, high reward industry, and that profits reaped are in part needed to sustain these various research initiatives since most flop, pharma has had to be judicious in guarding their intellectual property. GSK gets a huge image improvement, paves the way for pharma to reassess how they manage their internal research flows, shuts up the ignorant lefties(wishful thinking), helps sick populations, and allows itself to focus on drugs with high profit returns that can sustain the cycle.

In an age of changing consumer expectations, increased corporate transparency, and broader stakeholder constituency awareness, the werewolf has long realzied that the opportunity of a well integrated CSR strategy, and the upside it presents to the bottom-line, is too important to leave to the anti-capitalistic, self-loathing do-gooders who frequently claim to be stewards of CSR. They are the enemy. Capitalism and free-markets are the path to humanity's prosperity. CSR, properly executed, reaffirms that very notion.

Good for Google

It looks like Google is growing a pair. According this NY Times article, Google may be withdrawing from the Chinese market. A series of Chinese state-sponsored hacks into Google managed email addresses for anti-Chinese government agitators has prompted this move.

The werewolf has no problem with doing business in China, as long as you are honest about the pros and cons. China is a growth market on some levels, can potentially offer cost-savings to American companies, can offer American consumers cheaper priced goods, and can even emerge as a destination market for American exports at some point. He believes businesses have a responsibility to consider it as an option, if serious production synergies and value can be created. However, the werewolf also thinks the politburo in Beijing is loaded with some really nasty customers, that the mid-level bureaucracy is woefully corrupt, and that there is a moral cost do doing business with a murderous totalitarian regime. Just be upfront about your business decisions. We live in an age where businesses need to leverage all options to succeed and create the value that benefits us all. Plus, China isn't the only nasty regime where companies do business, it just happens to be the biggest nasty regime in world.

Herein lies the rub for Google. First of all, the werewolf thinks Google is managed by some of the most pretentious falsely moral hippie capitalistic butt plugs in the world. (He loves the hippie capitalist part) However, despite always being angry at them for their pretentiousness and empty moral preening, he uses a bunch of their products. The werewolf has a gmail account, he likes Chrome, and despite an effort to try and use bing.com more often, he still finds himself reflexively using google as his primary search engine. What can he say, the butt plugs make some excellent products.

However, the butt plugs at Google have an informal motto "Don't be evil." Google is really proud of that motto and wears it like a tramp stamp on their lower back. Fine. The werewolf actually agrees with the component of the ethos that drove the motto that emphasizes long term strategic considerations over quarterly profits. Evil can be construed as many things, and there isn't enough space to deep dive into that philosophical debate. Although, there is very little wiggle room when you strike a deal with a severely oppressive regime to enter their market and agree to completely comply with that awful regime's obscene censorship regulations. In a bid to enter the Chinese market, Google dropped their trousers and allowed Beijing to rough ride everything Google claimed to stand for. That hypocrisy never sat well with the werewolf and he resented the continual moral posturing and preening from the company, despite being a willing accomplice to Beijing's oppression of its people.

Google learned firsthand that Beijing takes you for a bad ride in more than one way. He thinks Google's decision to voluntary vacate the Chinese market is a bold and impressive move, that has begun to restore some of their damaged credibility in his eyes. He also thinks it is great for an iconic American company, like Google, to send the signal that avoiding the Chinese can be a good thing. He wishes there was more perspective on the whole China debate.

Here's to unexpectedly raising a paw in salute of a good move from Google.

Entreprenuership and Efficient Energy in Africa.

The werewolf recently stumbled onto the technology blog White African via Instapundit. Excellent web destination! There's a great post on the introduction of low cost solar technology to the Kenyan market. The werewolf is fascinated by such things, and thinks observing them will be revealing in how to both potentially understand the pitfalls of solar technologies for developed energy grids, as well as monitoring a potential, and long overdue entrepreneurial revolution in Africa(qualified statement).

Firstly, the werewolf has always loved the old joke "What did Africa have before fire?"

Drum-roll for dramatic effect...


ELECTRICITY!

There's a very long, tired debate about the nature of colonialism both pro and con. The werewolf has no interest in going there right now. Although, it's crystal clear to anyone who has spent any time in Africa, that the crumbling foundations of the old colonial infrastructures are still in primary use in most countries. It's a sad statement, especially in light of the billions of dollars in foreign aid that has been wasted in Africa over the last four decades, with so little to show.

Anyhow, the werewolf is skeptical of how aggressively certain "green technologies" are being subsidized and pushed in the United States. He likes the concept very much, but still thinks the technologies need to mature and have better applications for integration before they can be viable for widespread adaptation. He doesn't think "going green" with theoretical, feel-good technologies, that are being propped up through extensive tax credits and subsidies will have a long-term positive effect, or is truly more efficient at this stage in the game.

However, by keeping keen eyes on a nation like Kenya, where the infrastructure is archaic, the demand for modernization legit, and the ability to by-pass a traditional western developed energy grid is possible. It seems like a great incubator for really understanding the power of mobile solar energy capture is being presented. The nascent stages, as mentioned in the article are about raising awareness and usurping the dependence on kerosene, yet, since the grid is worthless, watching the scale of small operations dependent on solar ramp-up over the next few years (assuming it all works), could providing fascinating insight in how to integrate such technology into a developed grid. Also, given that many Africans who will likely adopt this technology are living in rough market conditions, and the spirit of ingenuity tends to thrive in such places, a raft of new applications may be uncovered.

The werewolf thinks certain hypes are unwarranted, but in this case, he'll keep his eyes on Africa in the hopes that long-term aspirations of inexpensive, renewable, and easy energy application lessons can be learned. In the meantime, let's build some nukes on the home front.

London prepares to "hoist with own petard."

There is irony in this Daily Telegraph article about a pending skirmish between London's boy-wonder Mayor, Boris Johnson, and Labour's Treasury Select Committee, a.k.a., the taxmen. As the financial downturn has crushed major western financial centers like New York, London, Hong Kong, Chicago, Geneva, and Zurich, governments have experienced sharp reductions in tax revenues as jobs vanished. It's the natural order of things. However, this clash between Johnson and the taxmen could have some interesting implications for the full recovery of London.

The taxmen want to target wealthy bankers, by imposing a windfall tax of 50% on bonuses in excess of £25,000(about $44,800). While this is estimated to impact between 9,000-10,000 bankers in London, the long-term impact could be devastating to London's financial service sector recovery. Dropping aside the odious elements of class warfare and populist exploitation that are partially fueling Labour's rationale, the werewolf is shocked that the British government is seriously picking a fight on this issue. This sends a clear signal to all financial service employers that the British government isn't serious about recovery and could potentially prolong London's downturn by compelling bankers to do business somewhere else. Recall, that London's primary business is financial services. (Could you imagine Hollywood taxing all actors an extra 50%) Is the deliberate hamstringing of your long term prospects worth a brief spike in revenue collection? For the werewolf, it boils down to the alignment of long-term versus short-term incentives. The self destructive desire to score short term points by destroying long term prospects, leaves him completely flummoxed. London is slaughtering the cow for a sirloin tonight, but is forgetting it will lose the cow's precious milk flow, and it'll be thirsty for a long time to come.

He feels that for too long, most decisions have been predicated on short-term considerations, including those decisions that laid the foundation for the current financial predicament. When leadership jobs vanish, they are hard, if not impossible to recreate. If there is a further exodus of London's bankers to New York, Hong Kong, Zurich, or wherever, a decent amount of capital will have been committed to locating personnel in those new locales, thus increasing costs for a potential return to London. A bad cycle will have been initiated. Wouldn't this be the time to make London as attractive as ever, to retain it's position as a pack leader in financial services? Because whoever makes it to the top of the mountain tomorrow, will fight to retain their perch.

Three cheers to Mayor Johnson for looking at the long-term and thinking about London's tomorrow, rather than trying to fight yesterday's class war. Here's to hoping that long-term thinking returns to the decision making process sometime soon. The werewolf doesn't want to be in exile forever.

Saab-story Saga Continues...

The reporters at the Daily Telegraph, have an interesting story about the latest potential development of GM's neglected Swedish brand, Saab. Despite proclamations of Saab's pending doom, and the inability to find a proper suitor to acquire the brand, it looks like there is a slight chance of salvation via F1 racing guru and bizarre billionaire eccentric, Bernie Ecclestone, and a Luxembourg based private equity concern. As a taxpayer with a forced equity interest in GM, the werewolf hopes our government is able to salvage some sort of value from this neglected GM division, as GM is already getting hosed with write-offs by shuttering Saturn and Pontiac, not to mention the disgrace status of its brand equity. (That's a whole other can-of-worms, the long term viability of the GM's brand and business)

This leads the werewolf to wonder, given the doom and gloom shrouding the Saab brand, along with GM and Washington's complete incompetence managing the enterprise, how does a prospective buyer attach an optimal value to Saab? The clock is ticking before Saab goes bye-bye. As the werewolf types, it's being unwound and dismembered by financial advisors and management consultants. Therefore, the werewolf would think that the value erodes with each passing day. As a perspective buyer, would I get a better deal buying Saab's assets post-liquidation, for pennies on the dollar, including the naming rights, and starting the whole endeavor over from scratch, as opposed to acquiring all of the liabilities and baggage currently associated with the brand? There are dozen of financial and strategic concerns at play, both for GM and any potential suitor, yet, the perception that nails are be driven into the coffin, I would think strengthen any potential buyer to drive down the price, extremely weakening GM's hand, and giving suitors all of the leverage. The only play for GM is to try and get suitors into a bidding war with each, however, that seems highly unlikely at this point.

The fate of Saab was likely sealed years ago when GM shamelessly assimilated it into the heinously conformist and bland Detroit collective. However, there may be some interesting lessons on corporate valuation and both seller and purchaser behavior during Saab's death throws. The werewolf will be watching.

Addition: The werewolf would like to clarify some details around valuing an enterprise as it relates to this post. Traditional metrics include, comparables (the whole auto industry is getting squeezed at the moment, and Saab was a niche player, so that's not really helpful), projected earnings or discounted cash flow (normally several models could estimate these, but when you announce your exiting existence, this goes to zero), assets (Saab has these still, but the inventory isn't moving, and who wants a bunch of pampered unionized Nordic workers?), Market value (GM is such a charlie foxtrot, that this method is murky and imprecise), plus there are the softer value points like technology, pipeline, etc. These can probably be factored and are likely the basis for the pending pricing, but again, as a potential suitor, the werewolf would think all the cards are in your hands. This goes to a secondary take-away from the werewolf's business school Corporate Valuation class (also known as Corpse Val), the bankers and advisory folks love to push corporate valuation as a science, but when you drill down to realities, such as the one Saab and GM are facing, corporation valuation begins to look less like a science and more like an art.

Meet the new boss, same as the old boss?

According to the NY Times, storied San Fransisco clothier, Wilkes Bashford, narrowly dodged going the way of the Dodo. Despite a growing population, and until recently, an expanding wealth base, it seems to me that specialized men's clothing stores have struggled as a business concept. Among other things, I chalk this up to the tragic homogenization of taste/style, men outsourcing their wardrobe decisions to their wives/partners, inconsistent dress-code policies at the office, the rise of online shopping, and the ridiculous "we're so desperate to get foot traffic in our stores" promotions that include "buy one ugly thing and get six free" at Joseph A. Banks. Also, the homogeneous big-box stores like Macy's are purely a volume play, so at some point they, too, engage in "80% off" sales to move the product they over-purchased off the shelves to make way for the next season of boring goods. While there is some price relief for consumers, a good thing, methinks, it's a sad trend for the clothes horse, but an inevitable one, I guess.

It looks like the white knight who swooped in and saved Wilkes Bashford from folding, the Mitchell family, have been successful in buying struggling local men's stores and breathing new life in to them. Interesting. Despite a slight affection for Brooks Brothers and J. Press, I always preferred getting outfitted by the local guys to the national and hyper-boring chains that dominate most of the retail scene. The local shops that were worth their salt offered better service, invested themselves in their relationship with you, usually had distinctive merchandise in stock, and made it a point to understand me as clothes horse consumer, rather than push conformist and seasonal trends my way. A few outstanding examples that I formally patronized were Atlanta's Michael Christopher(now semi-defunct), and H. Stockton; Charlotte's Old Dog, and Taylor Richard & Conger; and Nashville's Oxford Shop.

Despite several visits to San Fransisco over the years, I never made it to Wilkes Bashford, although it was always a store I heard was worth walking through. It does sound too pricey for my blood. What I find interesting is now that Wilkes Bashford, which served the hoity-toity monied elite of the bay area, has been acquired by east coast clothiers, will it still be able to select merchandise that its patrons are accustomed too, or will it lose some of its uniqueness by being part of a larger purchasing collective with an east coast bias? Clearly the old model didn't work out, as Wilkes Bashford was in death throws only a few weeks ago. However, I am always interested in the claim that nothing will change when new ownership takes the helm, despite the notion that change is clearly afoot. There are certainly upsides by being absorbed by a larger owner, like leveraging suppliers on volume purchases, along with other economies of scale, yet, there also exists the potential to get product dilution and lose the sense of local distinctiveness that was once a source of viability. The jury is out and change is clearly afoot, it will be interesting to see if the new model for local guys is to band together and consolidate in the name of staying alive. Here's to adapting and surviving.

Unions are like herpes and John Mackey is the Man.

John Mackey and Whole Foods: newyorker.com

Here is a must read profile of Whole Foods CEO and co-founder John Mackey. The big kahuna of hippie capitalism and one of the few leading business luminaries I actually admire and respect. His career is a testament to what modern corporate social responsibility (CSR) management theory should consider and implement if it was honest with itself. There's too much content in this article to parse out in one post, but this newly discovered Mackey quote “The union is like having herpes. It doesn’t kill you, but it’s unpleasant and inconvenient, and it stops a lot of people from becoming your lover" is epic, and spot-on. (The werewolf may have it chiseled on his tombstone)

As a great admirer of conscientious capitalism, I have always been dumbfounded by the lefty, do-gooder, hippesque adoration for unionized labor. Unions represent a huge threat to stakeholders like consumers, suppliers, shareholders, management, and the even the long-term prospects of employees themselves. (has anyone looked at Detroit and the US auto industry lately?) Monopolizing labor is just as dangerous for the long-term, as the monopolization of any other good or service in a market driven economy. I have long been fascinated by the inherent incompatible realities of unions and those who claim to care about all stakeholders, as CSR stewards. It's time to address the elephant in the room and realize that one of the most ethical and socially responsible moves a company can make for its employees and workers is resist unionization at all costs. If CSR is serious about itself as a concept, it will file divorce papers from the liberal/democratic interest groups and de-link itself from partisan politics. Wishful thinking.

A Saab-story's final chapter.

GM recently announced that Saab, like its stablemates, Pontiac, and Saturn, is to be wound down into oblivion. It makes sense. Saab, despite a certain cache and decent potential, reminds me of B-movie actor Michael Biehn. They both always dwelled on the cusp of potential, developed a decent reputation, and loyal following, but never achieved the star status that always seemed within their mutual reach. Biehn played prominent roles in well known films like "The Lords of Discipline," "The Terminator," "Aliens," "K-2," "The Abyss," "Tombstone," and "The Rock." Yet nowadays, he can be found working for a case of hard liquor doing voice-overs for computer games and flunkie films for the Sci-Fi channel.

Traditionally, Saabs have been quirky. (This statement excludes the heinous rebadging GM engaged in) Their engines are small, but turbocharged, the ignition is located on the center console near the transmission between the front seats, and they have bizarre Nordic design features and ergonomics. Cute quirky differentiators that meant something once upon a time, but were lost long ago in the bureaucratic labyrinth that encapsulates GM. Over the last few years, Saab had morphed into a useless Scandinavian appendage on the GM collective. Like the Borg, GM has been known to assimilate its acquisitions and totally strip them of any distinctive value added features in order to more quickly ruin them. Over the last few years, Saab's were nothing more than rebadged Chevy's and Subaru's. Even Saab's brand managers lost the quirky Saab brand image by vacillating between two abortive advertising campaigns that overemphasized a "state of independence" or being "born from jets." Neither was great, but the fact that they couldn't stick to one certainly added to the mayhem of Saab's identity in the GM stable.

My experience with Saab's go back to my day's as a boarding school student in New Hampshire. My girlfriend during senior year was one of the few day students where I was enrolled. She had a winterized blue 1990 Saab 900 coupe with a 5-speed manual transmission. One of the many things I learned from her was how to drive a stick shift. It's a very fond and positive association for me, and while she is long gone, her gift keeps on giving.

In 2003, I bought a new silver Saab 9-3 linear sedan that I affectionately named the "Saab-story." Despite looking halfway decent and aging well visually, the car is a mechanical nightmare that has pillaged my checking account on several occasions. Since the warranty ended several years ago, it feels like I have been stuck paying alimony to an bitter and undeserving ex-wife. All these ludicrous expenses, constant nagging and bitching, with no benefits, pleasure, or piece-of-mind. Despite the fact that the werewolf is obsessive compulsive about maintenance and keeping an orderly car, little things that are absurdly expensive frequently fail on the Saab like clockwork. It reliably starts about 80% of the time. Not to mention that every Saab dealer I have been to in Georgia, Tennessee, and New York finds a way to shake you down worse than a Jersey mafioso. I have been detached from the Saab-story for years, but as an underemployed, recently minted MBA, I am in no position to jettison the gray lady. I look forward to the day where I can wind down my own Saab-story. That being said, it's sad that the such a quirky and iconic brand has fallen victim to GM's quest for mediocrity and sub-standard automobiles.

Someone remind me why we bailed GM out?