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You know the Seinfeld episode where everything is backward? Kramer gets an office job (with no pay); George becomes attractive to beautiful women; Elaine meets the opposites of Jerry, Kramer and George; and Jerry dates Man Hands? As Seinfeld describes it: "Up is down. Down is up. He says 'hello' when he leaves, 'goodbye' when he arrives." Frankly, when I look at the world today, I feel like I have been transported to Seinfeld's Bizarro World. For example, here's a sampling of recent USA Today news items:
- Ford to lay off 25,000-30,000 workers nationwide.
- GM loses $3.2 billion in last quarter; no end in sight, with retiree benefits costing the equivalent of $1900/car produced.
- Bush's trip to India results in technology swap for mangos. (Guess who gets the mangos?)
- Delta Airlines loses $300 million in January alone; $4.1 billion since the beginning of 2005.
- DJIA still above 11,000 and flirting with new highs.
The Dow Jones above 11,000? Seems like it should be dropping like a rock!
Gas GuzzlersDespite rising gasoline prices, automobile makers worldwide are producing the highest horsepower engines in the history of car design. Mercedes has several models with more than 500 hp; Chrysler is putting its high-output Hemi engines in everything from family sedans to Jeeps; Cadillac is selling 400-hp cars these days; and the new Bugatti Veyron has (gasp!) 1000 hp and a top speed of 253 mph! Don't get me wrong-I love pavement-ripping cars. (The rocket in my garage has 394 hp and will light the tires on fire in first and second gear.) But the current trend seems wildly out of step with the times, even for me.
I recently had lunch with a plant manager who bemoaned the high cost of fuel and how it was really hurting his company.
He explained this as we drove to lunch in his Ford Excursion, which averages around 10 mpg. Not that there's anything wrong with wasting energy; if he can afford it, fair enough!
Beat the Energy CrunchMy point is this: Many of us are missing the point! Today we face a new paradigm of energy availability and cost. The forces that affect us are changing, and volatility is the norm. But some trends are inviolate. Unless there is a worldwide recession, energy prices will continue to grow as worldwide demand continues to rise. China's economy is growing at nearly 10% per year, and with that growth comes tremendous demand for energy. Unless our government policy changes and conservation becomes fashionable, energy costs are going to continue to rise over the coming years.
As I write this column, natural gas prices have dropped to slightly below $8/mcf, owing to a mild winter in the U.S. Don't let that lull you into thinking that everything will return to normal; as stated often in this column, the best defense for your operations is to develop a conservation program. Continue to invest in personnel training and upgrades of your fuel-consuming dryers and kilns. Manufacturers that have focused on reducing energy consumption now find themselves with a significant competitive advantage in 2006.
If you have read my column in the past, you know that I advocate benchmarking your energy use and evaluating alternative firing systems. If you have followed my previous suggestions, you have probably saved around 20% or more on your energy usage. However, if you haven't made any changes to your operations, dark days lie ahead.