The Opinion Page
News and comments about the issues facing today's SCM and Inventory Management professionals.
Top Ten Lists are ubiquitous at this time of year, and who am I to buck the trend? Here are ten stories that grabbed my attention over the past 12 months:
1. The Canadian Dollar:
Good news in the short term for importers and southbound travellers, but bad news, at least in the short term, for exporters, the Canadian Dollar is closing 2010 at, or close to par with the US Greenback. I was never a proponent of the low-value dollar policy adopted a decade or more ago by successive Liberal Governments at the federal level, since it excuses business process inefficiencies that creep in to many industries. The Canaidan economy appears to be responding well to the economic crises of 2008 and 2009 in spite of a high dollar (or a low greenback), and insofar as the high dollar increases consumers' buying power, I say "bring it on!".
2. The HST is Implemented in Ontario:
Many of my colleagues will disagree with me, but I say the HST (Harmonized Sales Tax, which is a combination of the old GST - Goods and Services Tax - and the PST - Provincial Sales Tax) is a bad tax implemented at the wrong time for Ontario. It has its benefits (such as system simplification), but I do not believe for one minute that the HST will be the job-creation machine that our Province's Premiere claims it will be. The middle class is being ripped apart in Ontario, and the gap between the very rich and the poor is widening. This is just another level that the governments can pull to draw more wealth out from the beleaguered middle class. Besides, the manner in which the tax was introduced to Ontarians was underhanded, to say the least.
3. The BP Gulf Oil Disaster:
BP's initial estimates of the volume of oil leaking from the Deepwater Horizon site was 1,000 barrels per day. This estimate grew to 5,000, then 12,000, then 25,000 then 40,000 then 60,000 barrels of crude, or 2.5 million gallons per day, pumping into the Gulf. The scars left on planet Earth are immeasurable. It was an abject failure of safety standards. In a move reminiscent of comments made by Snow Brand Milk's President Tetsuro Ishikawa on July 1, 2000 the the wake of a Japanese food poisoning catastrophe, BP President Tony Hayward says, "we made a few little mistakes early on", and his famous, There is no one who wants this thing over more than I do. I want my life back." (For the record, Mr. Ishikawa yelled eerily similar comments to a press gallery who were pursuing him for answers, "I haven't slept!". My heart bleeds for these poor folk.
And today 12/30/2010 it is revealed by the Washington Post that the administrator of the $20 billion compensation fund set up for oil spill victims, Ken Feinberg, is paying an ethics professor from New York University to testify that he is independent of influence from BP. The madness never ends.
4. The Price of Gold:
As the year closes, the price of gold surpassed $1,400 CDN per ounce. I clearly recall sitting in the parking lot outside the Bank of Nova Scotia in Markham, Ontario with the intent of going inside to purchase $20,000-worth of gold bullion at $800 per ounce about three years ago. I talked myself out of it, as too risky a venture. Stupid, stupid stupid.
5. The Toronto Mayoralty Race:
In October, the City of Toronto made a monumental decision in electing conservative candidate Rob Ford. After years of hubris, waste and arrogance at City Council, Ford's message was simple: "I will stop the Gravy Train." Ford promised that City Hall would, subsequent to his election, respect the taxpayer, and that all staff would focus on the needs of the citizens. What a novel idea. There were many interesting sidebars to the election, which included the Toronto Star newspaper's unabashed support of candidate George Smitherman, and their raw hatred of Mr. Ford, Smitherman's attempts to distance himself from the notorious eHealth scandal which occured during his watch as Minister of Health and Deputy Premier with the Ontario Government, Councillor Kyle Rae's inexcusable retirement party, where $12,000 of taxpayers dollars were wasted, and mud-slinging extraordinaire at Mr. Ford. It is my hope that Toronto will become a more business-friendly jurisdiction as a result, with more value being delivered to the community.
6. eco-Fees in Ontario
Hot on the heels of 2009 spending scandals from eHealth and the Ontario Lottery and Gaming Corporation, where it was found that crown corporations / agencies were wasting billions of tax dollars with little or no return and certainly no oversight, the governing Ontario Liberal Party found itself stuck in another tarpit. While the Libs were foisting an unpopular HST on the public, a new set of so-called eco-Fees were applied on over 10,000 products effective July 2, 2010 without warning. Here was an example of taxation without representation if we ever saw one. It would be kind to say that the tax was applied arbitrarily and unevenly. Eco-fees were being applied to grass seed, sun block and vitamins among other such toxic materials. The fees provided no incentive whatsoever for vendors to bring products to market in an environmentally friendly manner. Eventually, public pressure forced the government to back down and the eco-Fees ended up in the junk yard. :
7. The Recovery of General Motors:
Many of us were digging the grave for GM to fall into - in 2008, it appeared to be just a matter of time. But we must extend credit when credit is due. The Wall Street Journal Reported yesterday 12/29/2010:
"In a series of bullish reports from banks involved in GM's initial public stock offering last month, the analysts predicted GM shares would hit anywhere from the low $40s to $50 within the next year. GM stock has been trading in the low- to mid-$30s and closed Tuesday at $35.32 in New York Stock Exchange trading, up 72 cents.
But even the most optimistic prediction would have the U.S. government losing money on its $50 billion bailout of the auto maker last year. To break even, the U.S. must sell its remaining GM shares at around $53 each.
The reports come as GM and its stock underwriters are increasingly optimistic that the Obama administration will sell most or all of its remaining stake next year, rather than offloading shares gradually over the next few years. The U.S. Treasury reduced its GM stake to about 33% from 61% in the $23.1 billion IPO."
Great news for my friends in Oshawa and St. Catharines, and even a confirmed Hyundai owner like myself was impressed with some of the new GM products, including the GMC Terrain and Chevrolet Equinox. Congratulations, and keep up the great work.
8. The Eruption of Icelandic Volcano Eyjafjallajökull
Thank goodness that the human cost of this disaster was minimal. However, the volcanic eruption disrupted travel and exposed flaws in supply chains around the world. With JIT and Lean processes in place, it is more important than ever to plan for potential disruptions. Firms must look for vulnerable spots in their supply chains and plan and practice evasive actions.
9. Potash Corporation:
A staple of the Saskatchewan landscape for decades, August of 2010 saw Australian mining giant BHP Billiton mount a $40 billion hostile takeover bid of the Canadian PotashCorp. The bid was considered by the Federal Government for some time, amongst considerable drama. Finally, Industry Minister Clement announced in December that the deal was effectively dead.
10. After some deliberation...
It was difficult for me to select my tenth story this year. On the short list were rising energy prices in Ontario, the meltdown of economies in Europe including Greece, Ireland, Spain and Portugal, the growing trend of co-opting of the term "green" to justify all sorts of consumer rip-offs, the suicide of Mark Madoff and the tragedy that was his father, and even the continued meltdown of the Tiger Woods Empire. In the end, I decided to go with what has almost been a non-story: the strength of Canadian Banks and the Canadian Banking System. In Canada, we love to hate our banks, and often with good reason. They charge us with userous credit card interest, exhorbatent user fees for account maintenance, and offer measly interest rates on savings of less than 1%. But, their strength, and the strength of the system, carried Canada through the Recession that endured from late 2008 through most of 2009. I am thankful that our economy did not collapse, and that my savings were relatively safe throughout. I was thankful that I was able to proceed through the last two years being able to make normal transactions in my accounts with no interference. And I am thankful that I have made the right deciions regarding my savings for my children's education. So, I somewhat begrudgingly give a thumbs-up to our banks - even if we the public do have to carry the bankers on our backs to the Champagne Bar on Friday afternoons.
Cheers!, and Happy 2011.
John Skelton is the Principal Consultant and founder of Strategic Inventory Management.