Vasque Clinic @ North Cove Outfitters

Two nights ago, Debbie presented at North Cove Outfitters, in Old Saybrook, Connecticut. She represented the Vasque US Trail Running Team and shared her enthusiasm for trail running with a group of fellow outdoor enthusiasts. Several people were new to trail running and looking for more inspiration. Several others had never run trails, but were interested in trying. A few brave souls were particularly interested in hearing about her ultra-marathon trail running adventures. Maybe a 50 kilometer, 50 mile, or 100 mile trail run is on their horizon…

I played the Sherpa Dad role again, which usually consists of multi-tasking with three or more tasks. I manned the audio/video system, took photographs, and watched the kids. I also enjoyed hearing Deb recount some of the awesome adventures that we have had trail running, adventure racing, fast packing, and hiking during the past 10 years. We had fun putting together her presentation because we got to pull out photos from many of our  past adventures.

The folks at North Cove were really helpful and appreciative of her contribution to their weekly seminar series. They have one of the best outdoor gear stores around. No one has more kayaks in stock! We got a chance to chat with the founder/owner, Norm Cavallaro. As a student of business, I know a successful one when I see one. They have a cool culture fueled by employees who love the outdoors. It was a cool night for a cool talk on a cool subject at a cool venue.

Hartford’s North End: Remembering the Old Neighborhood

Last month, I was searching for a gift for my father’s birthday, when I heard a report on the radio about a book called, Remembering the Old Neighborhood. The book chronicles the history of Hartford’s North End. I went on to read a Hartford Courant story about the book. That led me to stop off at the Jewish Historical Society of Greater Hartford, to pick up a copy.

Rather than review my comments about the book (I haven’t read the whole thing yet), which I gave to my father, a North End native; you can read a summary at this blog, called Tracing the Tribe. My father, Stanley Livingston, was born in Hartford and grew up on Edgewood Street, a short walk from Keney Park. He is a Weaver High School graduate. My grandmother, Sylvia Hurwitz Livingston, also grew up in the North End. Horst Engineering was founded on Garden Street, four streets over from Edgewood. The business started on the second story of a barn and my grandfather, Harry, operated the business in Hartford for four years before moving it to East Hartford in 1950. We haven’t moved our domestic plant since, and we are badly in need of more space and more modern digs, but that is another story.

Hartford’s North End was a cultural and economic hub for much of its modern history. The neighborhood has changed a lot in the past forty years. A mass migration of predominantly Jewish families, to the suburbs, left the neighborhood to a new generation of residents. My grandparents moved to Bloomfield in the late 1960’s. Nowadays, you cannot ignore the fact that the North End is home to many of the city’s poorest residents. It is also a place where crime thrives. This doesn’t make it a bad place, but it does mean that some of the cultural heritage is lost and that visiting isn’t as pleasant an experience as it once was. I will occasionally ride my bicycle through the neighborhood on a quiet Sunday morning. Fortunately, this new book does a good job at reviving some vibrant memories for the neighborhood’s past residents.

If it isn’t Wall Street or Main Street, it must be a Side Street

What is going on with the economy? Don’t try to answer. That was a rhetorical question. I have to admit that I follow this stuff closely. I’m practically addicted to the numbers. I have to be. My decision-making as CEO of Horst Engineering requires that I be well-informed. Truthfully, whether you are a CEO or not, you should pay attention to issues that impact our global economy. I follow the local, state, national, and international news in an effort to gather as much information (intelligence and knowledge) as I can.

At times, I’m overwhelmed. There is so much information out there and it has become a cliche to state that information is traveling faster than ever. There is no shame in admitting that one cannot keep up with the depth and breadth of information that floats through the air. It is also important to remind oneself that just because it is news, doesn’t mean it is fact. Regardless, there is a lot going on right now. This massive stimulus plan has created a bad situation. The fact that the equity markets (public equity markets) have roared back makes the situation even worse.

Dow 10,000 masks the true problems. We all pay too much attention to the fortunes of the largest companies on this Earth. Fortune 500, S&P 500, Forbes list, NYSE, NASDAQ, FTSE, DAX–whatever the list is, this isn’t reality. Reality is that the vast majority of businesses are still small businesses. Small businesses employ most US workers. They are the ones that create value. I was reading about the top global brands in BusinessWeek, and I wanted to vomit. Sure, I cheer on the stock market rally when my mutual funds loaded up with GE, Coke, Amazon, Berkshire Hathaway, Google, Microsoft, and Apple rise. I also want our customers, many are on these lists, to succeed so that we can succeed.

But, that isn’t reality. How come Horst Engineering’s value hasn’t shot up 50%+ in the past six months? We seem to still be struggling with the real problems that are squelching growth and job creation. We continue to invest in our enterprise, but there are major disincentives to hiring. The cost of doing business (especially in manufacturing) are horrendous and the government continues to put up road blocks. The next road block is even higher health care costs.

In Connecticut, this is particularly bad at the state level. Rather than lowering costs for businesses, the state is driving our costs through higher taxes, fees, and mandates. This will not encourage growth. Certain things, like environmental regulations, crime, and homelessness, need to be legislated and governed, but government should allow the free market to work. This is particularly important for small businesses. Unfortunately, we get lumped in with ALL businesses. This is not good.

This whole Wall Street vs. Main Street debate is hilarious. I actually joke that Horst Engineering is on a Side Street. We stay out of the fray by keeping our nose to the grindstone and focusing on what we can control. Most successful businesses are off the radar. They go about their business and contribute real value to our society. You have to believe that most business leaders are altruistic. The greedy crooks may garner all of the headlines, but they are not representative of the true work ethic that makes our economy strong, even in recession.

It was ironic that Jeff Skilling, the former CEO of Enron, made headlines last week. He is seeking a re-trial. He is locked up for a long time, but he has peers who have been just as greedy and crooked, who are walking the streets. Heck, many are still leading the firms that are seemingly so important to our country and our economy. His decision-making hurt a lot of people, but it isn’t fair that others have been treated differently.

The real problem is that our bureaucratic politicians, our two-party system, and our massive government spending need reform. That last statement is vague, broad, and not meant to offer any solutions. I’m simply stating that as an example, government financed projects that result in more asphalt (an oil product) being laid down on roads, isn’t going to strengthen our economy for the long-term. I’m afraid that we are headed in the wrong direction, and I’m not alone. We need leadership and debate at every level of government. It is painful to think that we may be stuck in a position where no real good can occur. With the cyclical nature of the economy and the cyclical nature of politics, we may be in for a long rough ride.

Hartford Cross/Connecticut Riverfront Cyclocross

Several years ago, Horst Engineering was instrumental in bringing the sport of cyclocross to the Connecticut River waterfront, when Team Horst Sports hosted an event at Riverside Park in Hartford. Cyclocross returns to Riverside Park on Sunday October 25th. This time, the event is being promoted by the Central Connecticut Bicycle Alliance and theConnecticut Chapter of the New England Mountain Bike Association. The venue is managed with help from Riverfront Recapture.

Photos courtesy of Amanda Lawrence

Click here for information about the event, including directions. Cyclocross is the most spectator friendly type of bicycle racing. The discipline requires speed, endurance, and excellent bike handling skillls. Riders negotiate a loop course with both natural and man made obstacles, including steep run ups, mud, sand, and barriers. It has been described as steeplechase on a bike. Horst Engineering is proud to support CCBA, CT-NEMBA, and Riverfront Recapture. Crosstube.net is a great resource for seeing what the sport is all about.

Compared to a decade ago, cyclocross is a much different sport, at least in New England. The entry fees have gone up, the expectations are higher, and the number of quality races on the schedule has increased. Team Horst Sports used to promote the Frank n’ Horst Cyclocross in Keene, New Hampshire, but when we struggled to attract enough riders, we called it quits. Bigger races with bigger prize lists, outside of New England, but in adjacent regions, were scheduled on the same day as our race. It made no sense to compete. The glut of races is good for local riders who don’t want to drive, but last weekend, there were four races in New England on Saturday alone. That is too much to support the sport. This weekend, we have the Hartford race on the same day as a big race in Maine. Regardless, cross is a fun sport for spectators and riders alike.

Cross Spikes Won’t Drive the Bottom Line

So, I finally did a cyclocross race again, and cross spikes are now top of mind. I didn’t encounter the expected mud bog  on Saturday because the Mansfield Hollow course was dry and sandy. However, elsewhere in the Northeast, it was a quagmire, especially yesterday. So, what does one do? They call Horst Engineering for a set of precision machined aerospace quality stainless steel toe spikes for their cyclocross/mountain bike shoes.

 

Horst Engineering is a contract manufacturer, otherwise known as a job shop. The business is high tech, but the design of products are handled by our customers. We produce what they design. Plain and simple, well sort of. At Horst Engineering, the manufacturing processes need to be designed, and they are pretty complicated; but the branding and sales of the product to the end users are handled by our customers.

So, back to cross spikes. This is one of the products that we do sell to consumers. They are called Horst Spikes and they are popular in these parts at this time of year. We made our first batch in 2008 and we are still selling from inventory. We don’t sell direct because we aren’t set up to take credit cards and we don’t offer any other cycling products. We sell to distributors, like www.cyclocrossworld.com. They are good at what they do and we are good at what we do, so it is a good partnership.

We aren’t going to build a new factory with the revenues generated from cross spikes. My rough calculations suggest that we would have to sell 645,161 sets (four in a set) at the wholesale price before we ever consider a plant expansion. That has to be decades of sales, though there hasn’t been a significant market study done by the folks at Harvard, Wharton, or Kellogg. I could be proved wrong by the bean (or spike) counters. I’m just going on a hunch here since we restocked our main distributor with 30 sets last week. That should last him a while, unless this post triggers a rush on the global stock of this product.

I got an e-mail from a New York City crosser this morning who was pleased to discover us on the Internet. He was still cleaning the mud out of his ears after a weekend of crossing in hellish conditions. He went on to surmise that “…cross spikes won’t drive the bottom line at Horst Engineering…” but he thanked us and said that it is cool that we are giving back to the sport. Well, that is pretty cool. Another happy customer! Harry Livingston, our founder invented a lot of stuff in his day, but he was better at making stuff (high quality stuff) for high tech customers. We didn’t invent cross spikes, but we aren’t ashamed to say that ours are the best. Who else makes cross spikes with precision roll formed threads? Did you know that the tensile  and fatigue strength of rolled threads is 30% greater than cut or ground threads? You can learn lots of cool business lessons when you design, market, manufacture, and sell your own products. Do yourself a favor, pick up a set of Horst Spikes, whether you cross or not!

Zaslow and Sully…and Hoelzer Too

I always enjoy reading Jeffrey Zaslow’s byline in the Wall Street Journal. His writing is high quality. He once wrote about the “Huntsville Rocketeers” who emigrated from Germany to Huntsville, Alabama. Helmut Hoelzer was one of those rocketeers and he was a friend of my grandfather, Harry Livingston (Horst Liebenstein back then). They traveled in similar circles in Germany during the 1930’s. The rocketeers became the nucleus of NASA’s rocket program. Gramps knew Helmut and many of the other rocket scientists from school and work before he got out of the country in October 1938. I contacted Zaslow about the rocketeer story and he was very kind in his reply.

Zaslow’s byline caught my eye again this week. He wrote about Chesley Sullenberger, the pilot who famously landed his commercial airliner in the Hudson River after its engines failed following a take off bird strike. Sully, has been the toast of the United States media for months now. His heroics have been discussed, dissected, and debated. Zaslow nabbed an awesome responsibility as the co-author of Sully’s book, “Highest Duty: My Search for What Really Matters.” The story of Sully’s journey is fascinating and there are some awesome lessons to learn from this man’s humility. I was engrossed by Zaslow’s story in the WSJ. I’m deeply behind on reading (books), so I’ll need to wait for the abstract. No time to read another one cover to cover. With the rocketeer story and now the Sully story, Zaslow has added to his aerospace credentials.

CBIA Manufacturers Spotlight

Horst Engineering is one of the companies featured in the Connecticut Business & Industry Association Manufacturers Spotlight. Leading Connecticut manufacturers are periodically featured on the CBIA website’s business page. Horst Engineering was featured in early October. The full directory of Connecticut manufacturers who support international trade can be found at this link.

It is good to see that the CBIA is advocating for Horst Engineering and fellow manufacturers at a time when we need as much support as we can get. With all of this economic turmoil (and more bad news from major companies like Boeing today), the challenges that manufacturers face is greater than ever. Higher taxes, higher fees, more mandates, and more health care costs are a recipe for disaster. Government should allow business, especially small business, do what they are best at. Let us innovate and we will create jobs. If government keeps putting barriers and cost in our way, then we will not grow and the economy will stagnate even more.

Silence that Idiot Box

Last weekend, I read an excellent editorial by the Boston Globe’s Jeff Jacoby. The premise of the editorial was that Americans, especially children, watch way too  much television. I think we all know this, but it makes sense for someone to point it out from time to time. Jacoby shares some startling statistics. Americans watch 8.2 hours of TV a day. This is in addition to the time that they spend on the Internet, which has its own issues. Still, the Internet is a very different medium from TV. Sure, I hear my critics and Jacoby’s critics crying foul. They want to highlight how education certain channels are. I hear this argument from people all of the time. Why would you want to watch the nature channel our outdoors channel when you could be outside in nature enjoying the real outdoors?

Why would you watch cycling if you could go cycling? There is a direct correlation between the obesity epidemic and the amount of TV that we watch. Turn it off. Get outside and move your body. It is s simple premise, but there must be something seriously addictive with the boob tube. The health care crisis that we face should address this. TV makes us sedentary and stupid. The advertisements on TV promote the worst possible foods. Americans are sitting in front of this electronic box and poisoning themselves. For the sake of the next generation of children, I urge you to read the Jacoby editorial and share it with others. They need to be reminded to turn the TV off.

Manhattan Madhouse

My trip to the Family Firm Institute Annual Conference in Manhattan was extremely short. I hopped a train in New Haven shortly after 6:00 A.M. and was in Grand Central Station by 8:00 A.M. I walked to Times Square where the conference was held at the Marriot Marquis. New York was its usual busy self.

The conference went all day, but before I caught a 7:00 P.M. train back to New Haven, I walked over to the B & H Superstore on 9th Avenue. B & H is one of my favorite photography retailers and their Manhattan store is one of the largest photo/video/audio stores in the world. I do all of my ordering online and had never been to their headquarters. There were 60 registers/attendants in the digital SLR area alone. Conveyor belts run all over the store and automate the fulfillment process. It is an amazing retail establishment and was worth the walk.

I grabbed some dinner and a juice on the way back to the terminal and boarded an outbound train for New Haven. It was a short, but fun trip to the city that never sleeps.

Family Firm Institute

Yesterday, I made a quick day trip to mid-town Manhattan for the Family Firm Institute Annual Conference at the New York Marriot Marquis. It was well worth the drive, train ride, and walk to get to Times Square for the conference. FFI describes itself as “the global resource for intelligence, education, and professional development of the family business and family wealth fields. FFI serves as a think tank for the sharing of skills and knowledge, facilitate essential connections both domestically and cross-culturally, and provide vital interdisciplinary education for the advisors, consultants, educators and researchers dedicated to advancing the family enterprise.”

I’ve been familiar with the work of FFI for years. Our family has worked with advisors and consultants who have benefitted from their own membership in FFI. The organization is geared more towards the professionals who serve family businesses, but there is still a lot to learn from FFI if you are a family firm.  I was invited to attend the show by Family Business Publishing Group, the publishers of Family Business Magazine and several handbooks. I represented the YPO-WPO Family Business Network and Horst Engineering. It was great to meet up with several family business professionals and educators who I have known for years. The conference drew people from all over the world. I attended several workshops, including one that compared the epic Titanic disaster with family businesses. Using Titanic as a metaphor for family business failure was a clever idea hatched by Priscilla Cale of the University of Connecticut Family Business Program and David Tate of Yale University. Cale and Tate were entertaining. I’ve been witness to a few family business failures and I’ve read about  many others. They are never pretty. No one likes to be on a sinking ship…

I was bummed to miss the Wednesday evening kickoff and keynote address by mountaineer and filmmaker, David Breashears. Breashears has climbed Mt. Everest five times and his films, including the IMAX film, Everest, are really good. I did get to hear the Thursday keynote by Jonathan Tisch, the Chairman and CEO of Loews Hotels. Tisch has written some bestselling business books and leads Loews, which his family still owns 23%. The $17 billion firm is one of the leading travel businesses in the world, with luxury properties all over the globe. There are more than 30 2nd and 3rd generation Tisch Family members involved with the family business in one shape or another. He spoke eloquently about business and the challenges that the US economy faces, particularly in the travel sector. I was interested in hearing his comments because the travel industry woes have had a huge impact on the demand for products that we sell to the commercial aerospace industry.

Next year’s FFI conference will be in Chicago. This year’s trip was a short one, but I hope to explore more of FFI’s offerings in the future. The organization has had a major impact on the field of family business education/research for more than 23 years.

Food, Politics, and Health Care

I’m getting weary of the health care debate, but I’m not going to stop paying attention. It is very important for everyone in our country, but as one of the leaders of Horst Engineering, a small business, it is particularly important to me. Our health care premiums are a huge part of our cost of goods. In my opinion, what we pay is just too much. In the past 10 years, we have had annual increases as high as 22% and never lower than 5%. On top of all this, the quality of the insurance has declined, co-pays have gone up, and we have been burdened with huge switching costs as we have bounced from one insurer to the next.

When you have only 75 US based  employees like we do, you are quite small. It takes a huge effort to manage our company health care system. We pay massive taxes on top of our premiums, on top of our health savings account contributions, and on top of all our other business expenses. Don’t you think the government should play some role in this mess? What role? I think they should, though I am uncertain about how deep this involvement should be. The Connecticut Business & Industry Association has a pretty good handle on the debate and so far we have sided with the groups opinion, which is to minimize government’s role in health care by getting the politicians to focus on reforms, rather than running the system.

What is lacking in this whole debate is the need to focus on wellness and prevention. That is the missing element, and food expert, Michael Pollan, spoke out this week. His New York Times editorial clearly articulates his position, which I agree with. The key quote: “As things stand, the health care industry finds it more profitable to treat chronic diseases than to prevent them.” So true. I’m an ovo-vegetarian for many reasons, including health, athletic, animal rights, and environmental issues. I don’t eat meat or dairy products and most of the eggs that I eat come from a farm on my street. I read a newspaper story last week about how it is common practice in the chicken industry to grind up less than perfect baby chicks while they are still alive. This is the type of deplorable behavior that makes farming look like the worst kind of manufacturing on earth.

At Horst Engineering, we cut metal all day long. Imagine cutting meat instead of metal. I would think the rules of engagement are different. Scrap metal is a little different from scrap chicken. We need both, but we only ingest one. Of course, only some of us (most Americans) choose to ingest meat. Needless to say, Pollan’s opinion that the country needs to engage in a discussion about food rather than a discussion about health care, is a good one. Obesity and inflammation related disorders kill most of us. What you put in your body is a big deal. Last month, NPR aired a ridiculous interview with an op-ed columnist for the Los Angeles Times. Crazily, she took the opposite view of Pollan. She championed processed foods and got hammered (with comments) for it. It is well worth reading. If you agree with her position, you are clearly missing something and should strive to learn more.

Another interesting commentary on the health care debate and politics in general, came from Thomas Friedman this week. His recent column declares that our type of democracy is a reason why we are lagging behind China and other countries in so many areas. It is hard to remain positive when you read this stuff. We export our knowledge, outsource much of our manufacturing, refuse to focus on wellness, and argue incessantly about how to fix these problems. Many of our leaders are misguided. It is important that we speak out.

Small and mid-sized businesses are not heard from enough. The Fortune 500 have their droves of lobbyists. They get their message heard and often deliver it with gobs of money in the form of political contributions. This recession has disproportionately hurt small businesses. We face higher taxes, higher business costs, and now the potential for even higher health care costs. Pausing the debate doesn’t seem like the best option, but ramming through a misguided overhaul is likely to be the worse scenario.

The Perils of International Business

Operating Horst Engineering de Mexico has been a tremendous experience, but it has also highlighted the challenges of international business. So many factors are out of your control. Similar challenges exist on the home front, but distance tends to highlight the issues. When drug related violence flared up on the Sonoran border last fall, we felt helpless when innocent people were impacted. When the swine flu outbreak caused our factory to be closed for a week even though there were no local cases, we couldn’t do a thing to change the situation. When Hurricane Jimena stalled over the Sea of Cortez last week, and dumped 24 inches of rain in 24 hours on Guaymas, we were in shock. Amazingly, our plant was only closed for two days and was back up and running today. The photos tell a story of devastation. The State of Sonora has been through a lot in the past  year. In addition to those three large events, earlier this summer, there was a horrible fire at a Hermosillo day care center that killed more than 40 children.

Each of these challenges have had a direct impact on all of the businesses in Sonora. Factor in the huge impact of the recession, particularly the impact on the manufacturing sector, and you have to think that things will get better from here on out. Of course, many of us felt that way before last week’s hurricane flooded our workers’ homes, smashed boats into buildings, washed out roads, and knocked out power and water. These are the kinds of events that you are used to reading about in the newspaper, or nowadays, on the Internet. It feels different when your enterprise is forced to deal with these challenges. I’ve met many Sonorans in recent years and they have a fighting spirit. I would bet that they come out of 2009 with new resolve and a bright outlook on the future.

Connecticut Newsmakers

On Sunday, I appeared on Connecticut Newsmakers with Tom Monahan, a program that airs on NBC30/WVIT, the local NBC affiliate.  I was invited on the show to share Horst Engineering’s story. I discussed Horst Engineering’s history and growth, talked about our solar PV electric system, and commented on the potential business impact of Connecticut’s budget deadlock.

It was a great opportunity to share some of our company’s successes and acknowledge some of the recent challenges brought on by the recession. Our solar PV electric power system is just one example of how we have broken new ground in our industry. Our investment in sustainable energy was forward looking and we are proud of the impact it has made. The solar system gave me the opportunity to explain how our progressive business model is unique.

Being in business for 63 years, especially family business, doesn’t happen by accident. I was keen to add my comments about the difficulties of doing business in Connecticut. All USA manufacturers face challenges, and they are particularly hard in our home state. Connecticut faces a record deficit with a huge revenue shortfall. The deficit is the worst since 1991 when the state income tax was instituted. Since then, the size of the budget has quadrupled. Government spending is out of control and this has a nasty impact on the businesses, the primary funders of the tax base. 

Legislators are faced with an unenviable task, but if they choose the path of higher taxes and increased business mandates, then they will be choosing to weaken our economy rather than strenghten it. Small and mid-sized businesses are the backbone of the local, state, and national economies. Higher business costs will hurt businesses and prevent growth. Our lawmakers should be focused on steps that will increase investment, increase innovation, and reward businesses for training their workforces to better compete in the global economy.

Phoenix–It’s Hot and Crowded

On my way home from Sonora, I opted to spend a night and a day in Phoenix, Arizona. I was going to take the red eye anyway, but it made sense to spend a night in Phoenix and visit various customers and suppliers. Phoenix is one heck of a metropolis. I just don’t get it. If it wasn’t for Willis Carrier’s invention of air conditioning, it just wouldn’t make sense to squeeze that many people into a city in the middle of a desert. A little cloud cover and drizzle kept the temperature from reaching the forecasted high of 104F.

With energy consumption and global warming among our country’s top priorities, it makes less sense than ever that people continue to flock to places like Arizona. I get a little frustrated when I see the expansion and impact on the environment. The whole growth of Arizona, particularly Phoenix, stemmed from a “California is too expensive” mindset. Sure, the weather, excepting the summer, is a great lure. So is, or was, the cheap land. But now, you have like four million people living in a place where there isn’t even enough water. Granted, in the Northeast, we need to burn oil and other fossil fuels to heat our homes in winter. Oh well.

I cruised the streets of Tempe after dark in my bright red Chevy Aveo. I haggled with Enterprise to get 28 hours of car time for the price of 24. As an experiment, I wanted the smallest and most economical car in the garage. That was the Aveo. I sure wouldn’t want to get rear ended in that little thing, but I drove all day for less than three gallons of fuel. Who needs hybrids? The Aveo retails for less than $12,000.

I checked out Tempe Town Beach. I’ve toyed with the idea of adding Ironman Arizona to my agenda. I was hoping to get up on Thursday morning and swim in Tempe Town Lake, the man made body of water that has been created from the Rio Salado. However, I learned from chatting up a local triathlete at the park on Wednesday night, that you can only swim on race day. They have a few other triathlons at that location, but IMAZ is the big one. My triathlete friend was a good resource. He had just finished a run, so I cornered him while he was stretching and picked his brain about the AZ tri scene. I’m having second thoughts about AZ. The venue just didn’t do it for me. After racing at picturesque Lake Placid, I’m not sure if I want to compete in dead flat Arizona’s concrete jungle. Both the bike and run courses are three laps, which is also not too appealing. We will see!

I covered a lot of ground during my Thursday in Phoenix. I visited seven customers and suppliers and pretty much explored all of industrial Phoenix south of the airport. I had to kill some time at the end of the day before my late night flight, so I explored the grounds of the Biltmore Hotel. It was very nice. I scored a free internet connection in the lobby and even got a free bottle of water from a sympathetic hotel worker. Don’t tell them…I wasn’t a registered guest.

San Carlos, Sonora and the Impact of this Global Recession

I was back in Mexico this week. I was overdue to visit Horst Engineering’s maquiladora in Guaymas, Sonora. So, I made the journey through Charlotte and Phoenix to get to Guaymas. I was prepared for the heat (nearly 100 degrees Fahrenheit) and the humidity (like 60%), but you are still slammed by the intensity of the combination. Fortunately, the plant is air conditioned. Of course, the electric bill is painful to read.

Like last time, I stayed in San Carlos, an adjacent community that is known more for its tourism and snowbirds than for its manufacturing. San Carlos has a wonderful natural harbor and is one of those towns that benefits from the juxtaposition of mountains and the sea. The Sea of Cortez is an amazing body of water that is right on the San Andreas fault. The Gulf of California, separates Baja California from the mainland of Mexico (Sonora and Sinaloa).

After each work day, I was able to get a little open water swimming in the 86F degree water. It was like taking a bath. It wasn’t refreshing at all, but it beat being in the pool with 25 screaming kids. I got a couple of early morning runs in before sunrise and didn’t stop sweating for about three hours after I finished.

Sonora isn’t a hotbed for soccer (football), but there was still a strong interest in last Wednesday night’s match between the US and Mexican national teams. The match was in Ciudad Mexico, a long ways away, but the bars were still filled with supporters.

San Carlos and all of Mexico have been devastated by the triple whammy of the global recession, Mexican drug violence, and the Swine Flu. In Sonora, some refer to it as the Phantom Flu because it never penetrated. The media has whipped the American public into  a frenzy, which has significantly cut into the tourism economy. It was stunningly quiet. The hotel only had a handful of Mexican tourists and a smattering of business people as guests. Unemployment in Sonora has skyrocketed and many US and European companies have downsized or left, so even business travel is down.

I ate out both nights that I was in town. One night, my colleague, Andy Law, and I were the only customers at a quaint beachside restaurant. There were four wait staff and the kitchen help for two of us. I’m pretty sure that they didn’t make any money that night. It was quite sad. The State of Sonora is doing its best to promote the virtues and safety of the area, but it doesn’t seem to be working. A group of businesses and sponsors have even banded together and have a Sonora is Safe website up and running. San Carlos is particularly known for deep water sport fishing. I don’t think I saw one charter go out while I was there. Granted, I was there Monday through Wednesday, but you would think that in August, there would be customers during the week.

Not so this year. I saw the impact of the recession all over on this trip. From the airports to the towns, you get a sense that it is going to take some time for spending and growth to return.