Friday, December 3, 2010

Sticker Shock

It was past time to buy new tires for the
snowplow truck. I always try to reward the
best service oriented businesses with
purchases. That means, in the case of tires,
that I will deal only with a firm that stocks
the items I need and that maintains a large
enough a staff to service all who come in
through the door without relying on making
an appointment for another day.

That's not the way things are done in Iron
County for tire sales. I don't accept a
restaurant requiring me to come back another
day when it is more convenient for them, or
a grocery store, or any other commodity
provider for that matter. I drop firms that
make such demands, and refuse to do business
with them.

If we reward those who provide the best service
on a regular basis, then the entire industry,
whatever it might be, has goals that the
providers can look at as targets. The entire
idea of accepting second best, for the
convenience of a businessman, is self-
defeating over the long haul. We can never
expect better service unless we demand it,
and enforce our demands.

I found that the prices were consist no matter
where I went, a number close to $800 for a
set of four tires, mounted, balances, new
valve stems, and installed. The dealer who
can't get to it till tomorrow because he
doesn't stock the item, or because he doesn't
maintain the manpower to do the installation
today, or whatever excuse he has, charges the
same as the dealer who not only inventories
the product you need but has the manpower
necessary to serve you within a reasonable
amount of time after you walk in his door.

That isn't right in so many ways.

I got my tires and came home thinking about the
experience and the price. President Obama had
announced in September of 2009 that a tariff
would be imposed on tires imported from China.
The first year was taxed at 35%, dropping after
a year to 30% and after 2 years to 25%.

Researching the effect this has had on employment,
the excuse for imposing the tariff, has proved
fruitless. The most recent real numbers I found
available are for 2008. According to the bureau
of labor statistics, there were 21,400 tire
builders employed in the USA and the projected
2008-18 employment change is that this number will
decline rapidly.

If any significant improvement had taken place in
the tire industry we'd certainly have heard about
it from our government a year and two months after
the tariff was imposed. There has been no report
of improvement, or even one of stability in the
industry. Instead the average prices have merely
increased across the board for tires by
approximately 20%.

That means that the on the tires I paid approximately
$800 for, I would have saved about $160 had I bought
them two in August 2009, not very long ago.

Unfortunately few of us outside the US Government
have the information available to determine the
overall effects this huge price increase has had on
us as a country. It seems that in the end, government
has achieved a windfall in taxation, and those
manufacturers who have not exported their high end
tire manufacturing to China have benefited. That
doesn't mean that they didn't ship some of their
manufacturing off shore, only that they didn't send
the work to China, the only country hit with this
tariff.

The odd thing is that the tire industry didn't complain
about jobs going overseas, it was the steel industry
unions that was losing employees as tire manufacturing
moved away.

And apparently it didn't do them any good.

China keeps growing as an industrial power because, at
this moment, they're competitive. In the case of the US
the converse is true, and that, unfortunately, is why
our economy is shrinking.

It is a shame I couldn't buy these tires in Iron County.
There's certainly some competition among our local
providers. But they're all "tomorrow" sales. Not one
is prepared to stand and deliver today with any regularity.

We can never get anything any better unless we demand it.

Bill Vajk

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