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Free Trade or Economic War?

April 6th, 2018 No comments

Anyone going to school in the U.S. after WW II has learned the breakdown in world trade was a primary, though not only, cause of the Great Depression. It is said import tariffs and barriers caused world trade to be constrained. There is little doubt it was a cause.

I grew up believing it and have done so with little retrospective most of my life. As U.S. auto plants closed in the 1980s and forward (I was a GM dealer at the time), I blamed the unions, the workers, and incompetent auto company management. Whole swaths of the country from the Great Lakes to Maine back to the Mason-Dixon Line started to lose industrial plants, in the heartland of America. They became destroyed areas, bereft of jobs and hope. The bombing campaigns of W.W. II Europe couldn’t have caused greater damage.

FreeTradeOrEconomicWarMartyLavin475

Yet with the belief in free trade in the country so ingrained, we blamed the fallen for their fate. I was part of that crowd. It never occurred to me to ask if free trade was so good, why is its impact so disastrous for the U.S.? Not until recently, that is.

And surely our race for government control of every aspect of our economy led to manacled industrial results, especially in heavy industry. But I heard our technology would bail us out. Who needed autos, steel, aluminum and other smoke stack industries, what with their pollution and dirt? Not the U.S. Uhm, we forgot we needed their jobs.

This all played a terrible self-destruction to our heavy industry and their secondary affiliates. The politicians in power either didn’t see the developments, didn’t have answers, or didn’t care. We have seen recently how quickly our economy can respond when unleased. How hard was that?

It’s obvious that the last 30 years, especially our last 8 years prior to 2017, that one of the most important OleMartyBoy Principles was not understood by our heros in government: “You get more of what you encourage and less of what you discourage.” Simple, eh, but entirely overlooked by our government until last year.

YouGetMoreOfWhatYouEncourageLessofWhatYouDiscourageMartyLavin

I understand Free Trade means that each of the parties share similar rules as to access, tariffs, government industrial financial assistance and the like. Each of the parties is to operate in trade under similar rules, with shared understandings.

Still, the economic talking points by the media trumpet Free Trade, when even the dead and buried know there is little of it with many of our trade partners, especially The People’s Republic of China. That is the problem seemingly overlooked when media discussions center on the subject. Often the quoted experts are those who profit from trade, free or not, usually the finance contingent.

When a trading partner has rules heavily skewed in their direction, as in the case of China, it is very difficult to achieve free trade. Does each party have similar access to the other’s markets? Are tariffs similar? Are privately owned companies in the U.S. competing against government backed Chinese companies who can survive long after a privately-owned U.S. company would be long gone, and thus undercutting its pricing? And most importantly, does the other country operate in a relatively free market?

China has over a billion plus person population. It is a giant country that has been backward, isolated and extremely poor. Coming out of W.W. II, it had a puny, agrarian economy. Its communist dictatorship created a command economy. The U.S., as it had done with Germany, Italy, Japan, and non-communist Europe helped re-establish the shattered economies of these countries with trade. China, under the yoke of brutal Chairman Mao, spent much of the post-war period avoiding the U.S. and brutalizing much of its citizenry. Like all old men, The Great Prick, Mao finally died. A special place is reserved for Him in Hell.

The new generation of Chinese leaders decided their best bet to continue to rule the dictatorship was to open their economy to trade so fewer of their citizens starved every year. We now enter in the final phase of that stage in China. It’s emergence as a world power has been achieved by an almost capitalist drive for growth and trade. Now that fewer of its citizens are starving, it has turned its attention to waging an economic war on the rest of the world.

After the war, Germany sprung economically quickly, Japan following behind, then most of non-communist Europe followed suit. Ex-Communist Europe still struggles. China followed very slowly for years. Their agrarian economy, lack of infrastructure, large over-population, and strict communist control hindered easy solutions for China’s emergence.

But once going in the 1980s, to the present, they blew forward. And who became their greatest trading partner and deliverer of free technology they seemed incapable of creating? Why, good old Uncle Sam. Sam made many concessions to the Chinese to help them economically. In fact the emergence was so great, that the New York Times’ ace reporter, Tom Friedman advocated the U.S. should adopt the Chinese model for the economy. We saw how well that direction worked with the economic performance of Tom’s favorite President, Barack Hussein Obama.

I suffered thru much of the 1980’s when Japan, Inc. was running rough shod over our economy and we all believed they would easily control us. They were going to buy everything in America! Lost any sleep on that one recently? We sure did then. They were then the Asian powerhouse, akin to their speed in conquering much of South East Asia during the war, then unable to maintain their advantage against the U.S., just like in the war.

In Japan, the command economy stumbled badly in the 1990s and continues to do so. Picking many winners in the economy early boosted them, but command economies seem incapable of letting the losers die, dragging down all with them, by not cleansing by dying. The losers stayed alive with government help, as many do to this day.

Lying in wait in the Chinese economy lurks the same virus, as it does in all command economies, germinating even as we breathe. The trade deficit in the news is that China is enjoying a $350-$500 Billion-dollar annual trade deficit with the US and a $300 billion-dollar annual technology transfer as a gift, (actually by theft). Quickly, who has the most to lose in this transaction? China or Americans no longer able to go to Walmart to buy more cheap unneeded junk?

The economic talking heads making their living on Wall Street or Washington, D.C. care little about American workers displaced for years. Deplorables! Now the economic bigshots lament the possible trade war with China because it threatens their stew, citing the loss of cheap goods for us to buy. Where were these folks all those years as hard working Americans were thrown from their jobs, in places like Buffalo, Detroit and Youngstown, all dead cities. You know, “free” trade is a must, for the elites.

In this blather over free trade, the one thing I have never heard is that the actions of the Chinese constitute an economic war against the U.S., and has been since Nixon went to China. Dead soldiers, bombed cities, lost industry, and loss of fortune is the result of a shooting war.  They are easy to spot. An economic war is harder to see, but the results are similar; ruined cities, lost industry, citizen agony, broken dreams, destruction of the American economy.  We have been living with that. The results are easily visible. It does seem difficult to see from Wall Street and D.C.

This war is being done on the backs of our workers and industry, and our economy. The trade rules are not similar. Technology is stolen en masse. Their markets are often closed to us. They are very smart people and have been out maneuvering us for 50 years. How dumb can we be?

Even though they now have a first world economy, by choice they have a third world pay scale for their workers. This creates quality goods at a price our companies cannot hope to match. And between their lack of free trade and subsidy of the cost of their goods, how do our companies compete? The answer is obvious, we can’t. Thus this massive transfer of wealth from us to them, allowing them to continue their economic war unabated. This has built their new cities, airports, schools, roads and infrastructure to first world standards.

Their actions in the command economy injures their workers as well, keeping a massive economy acting like they barely succeed with worker earnings. But this action is getting pushback as countries wake up from their slumber.

I am running a contest. Thinking the talking heads will prevail, and we do nothing about the predatory Chinese trade practices, I am looking for a worker’s name. I want to know the name of the last American industrial worker, the one who turns off the lights in the last manufacturing plant in the country, just as it closes. Email me the name and the winner gets $100.00 and a video tour of Detroit. ##

marty-lavin-posted-on-mhpronewsMartin V “Marty” Lavin, J.D.
Burlington, VT
Winter Residence, Miami, FL

Editor’s Notes: Marty is a community, retail, and finance veteran who is an MHI award winner.

Note 2: The content is penned by Marty, but the illustrations are provided by the editor. 

Wow!

December 20th, 2014 No comments

A drowning MH retail lot has been turned into a viable business, in just 90 days. Okay, now that I have your attention let me explain. Several of the businesses that I own currently and in the past, have been profitable. I have been in the manufactured home business for only 2 years as of October 2014. Our retail center is positioned between Dallas and Houston, in a town with a population of less than 4,000.

After struggling for 2 years doing it “my way,” I hired a professional marketing and sales coach. WOW!!! What a difference this guy has made. You may be thinking that “he,” the sales coach, just pointed out the obvious and had us do what we knew deep down we should be doing . . . and you would be correct.

However, as Paul Harvey said, “here is the rest of the story” (or part of it ;-).

I met our coach two years ago in Tunica at the manufactured housing show. I even purchased a book he was selling. So why did it take 2 years to call him for professional help?

Being a hard-headed Texan may be part of it; however, I thought I could just do what I had been doing and the business would grow. My retail lot looked good enough and surely people would want to buy their new home from me.

Flags were flying and the doors were open 6 day a week. Hundreds of cars drove past our lot every day, and that was the problem, they just drove on by.

There were days when not one customer called or came in to our dealership. I had been floating the business for 20 of the past 24 months. My way was not working, and I only had enough capital to last about 6 more months.

After many sleepless nights, and much praying, I picked up the book I had purchased in Tunica and began reading. A few days later, I made the call.

Hiring a marketing and sales coach to rescue my struggling MH Retail business was put into play. After all, professional sports teams have coaches. The coaches train the team during the week and on game day.

I wanted our team to become a professional Manufactured Housing sales team that was successful. Bi-weekly virtual sales training began immediately. After the first session with our sales coach, we all began to see MH in a completely new light. Phrases like, "affordable luxury," "systems-built" and "custom homes," were phrases that had previously never come to my mind about MH.

To say our sales coach opened our eyes is an understatement. He not only educated us on marketing and sales, but he began to systematically motivate us in ways that are hard to express.

He began with a process. Yes, a precise process that even ebbs and flows with real life situations.

The excitement has become obvious to all of our employees. One recently commented that he has seen more homes sold in the past 60 days than the previous 6 months, and another commented on how the attitude is undeniably so positive that it is exciting to be at work.

Breaking old habits is hard and yes, sometimes painful; however, the proof is in the results.

Sales have exploded, and with so much growth we are recruiting two more sales agents for our sales team. With the right training, attitude and practice, success is very much attainable.

I will begin to share our real life sales experiences in my next column, “WOW”! ##

Dwayne-Somerville-Fairfield-Homes-and-LandDwayne Somerville

Fairfield Homes & Land