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LEVERAGED CAPITAL NEWSLETTER Leveraged Capital, is a free monthly newsletter that presents growth and strategy issues effecting entrepreneurs and owners of small to medium size enterprises (SME's). Leveraged Capital is published and delivered electronically to subscribers. Your privacy is strictly respected and we do not share or sell subscriber email addresses to anyone outside of Graham Financial Corporation. If you enjoy what we present, please forward a copy of Leveraged Capital to clients and associates. They can subscribe to Leveraged Capital, by clicking on this link: http://www.GrahamFinancial.com/newsLetter.htm and filling out the quick form.
Ok, here goes: stock market up - again - last week, consumer confidence rising along with an elevated Canadian dollar (I'm actually not too keen on the latter), sort-of, kind-of lower gas prices, Toronto off the WHO list for SARS, and our son got accepted into his University program of choice despite the double cohort. All in all, the past couple of weeks were pretty good. But wait - just when you thought it was safe to venture out again, the US Fed has said this good news just might be bad news in the form of deflation. Given that consumer spending accounts for almost two thirds of all the US economic activity, we'll have to make sure that we don't just hang on to all the dollars in our pockets and treasuries waiting for even lower prices. Spending those dollars on capital investments and increased production levels will help this sputtering economy actualize some strong signals of coming back to life. Much (long-term) success to you, DPG.
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In This Months Issue: (Click on the Article Title To Go To The Full Story.)
Quote Of The Month: Investment Hindsight:
This article is the first in a series relating generally to US work permits and how to go about obtaining work authorized status. The series will provide information about a range of US work permits - one at a time. The series is intended for those of you who may be carrying out activities in the US that go beyond meeting clients, attending seminars or conferences, and the like. If you are carrying out work for clients while in the US, read on. If you believe that under the you do not require a US work permit because you may be paid outside the US or because you enter the US intermittently and work for short periods, be forewarned, as you may still require a work permit. The Department of Homeland Security's Bureau of Citizenship and Immigration Services (BCIS - formerly INS) is keeping a close watch for persons who are working - even for one day - without the proper authorization. Given the post-September 11 border and immigration controls in the United States, you might wish to consider the merits of obtaining the appropriate work permit even if your travel to the US is intermittent or you are paid outside the US. In today's feature, we cover the TN (Trade NAFTA) work permit. In the next article, we cover the H-1B. TN status allows designated Canadian and Mexican professionals persons to work in the United States temporarily pursuant to the North American Free Trade Agreement (NAFTA). The information provided below applies to Canadians only, as there are separate processes for Mexican applicants. As this is general information only we strongly advise you to seek appropriate advice in any specific situation. TN Professional Occupations. How do I qualify for TN Status?
Take note that not all professions listed in the NAFTA require a bachelors degree for issuance of the TN . For example, Management consultants can have either five years of related
consulting experience (which must be proven) or a bachelors degree.
Systems analysts may qualify on the basis of either a related bachelors’ degree or, by the completion of a related two year (full-time) post secondary diploma or certificate and three years of related experience. Accountants may qualify for the TN by virtue of a professional designation such as a C.A. or by holding a bachelor’s degree (for example, a bachelor of commerce or accounting). Engineers also qualify either by membership to a professional
engineering association and designation as a P.Eng or by holding a related
bachelor’s degree. Validity of TN Status and Extensions. Alex Israel is a qualified US & Canadian attorney practicing immigration law with Aylesworth LLP's business immigration group. For further information, please contact him at 416-777-2406 or aisrael@aylaw.com. Visit their web site at http://www.aylesworth.com
Many issues are dragging down
the morale of outside sales representatives. They have to sell in a tough
environment, characterized by "reactionary buying," in which customers
buy goods and services only when absolutely essential. In addition, while they
have always dealt with price resistance, it has grown more pronounced recently
because of the economic recession, the manufacturing slump and world events. "Sales employee retention is of particular concern right now," says Tom Reilly, president of Tom Reilly Training in St. Louis and writer of Industrial Distribution's Strictly for Sales monthly column. Not making enough sales to earn commissions is disheartening to many new employees. Making the problem worse, Reilly says 70% of company executives have no experience running a company through an economic downturn, and 60% of salespeople have never sold during trying times. "It can be like the blind leading the blind," says Reilly. "It's having considerable impact because in tough times, salespeople must create opportunities, not just respond to them." Sounds easier said than done? Below, he and several distributors tell you how, offering 10 ways you can boost your sales team's motivation and productivity: 1) Rethink your goals and incentive programs. Don't just rely on same ol', same ol'. For example, Industrial Supply Co., Indiana, has been eschewing a goal-oriented sales approach, but company executives soon realized that they have to clarify that approach and the accompanying incentives in order to thrive in a slow economy. "From a management standpoint, we want to better establish and define the sales goals-both for the company itself and for the individual sales reps," says Jack Simpson, vice president and general sales manager. The new system will stress "performance measurement," not just incentives, says Simpson. He adds that the company is still determining what types of rewards-whether monetary or other-to offer. But one thing is certain-the goals will be set at the executive level and will include a given number of weekly sales calls, a monthly number of accounts serviced, obtaining new accounts and adding more products to current accounts. "We'll measure performance more aggressively in hopes of increasing sales, sales reps' salaries and improving customer relations and growing customer loyalty," he says. 2) Don't rely on money to make the problem go away. Simply increasing sales reps' salaries won't necessarily make them perform better. According to Reilly, too many sales managers are unaware that what their reps need most is support, training and motivation. Instead of a reworked compensation system, he says, most reps want managers to sit down with them and help them handle difficult issues. Managers can accomplish this through regular sales meetings, says Reilly, during which reps can express their concerns as well as share any positive experiences. "Salespeople need to be able to shine the spotlight on things that are making them feel good as well as bad," he says. "By letting them brag at a sales meeting-rather than just commiserating over bad stuff all the time-the entire team will be infused with a good feeling." 3) Pound the pavement. Managers can't energize their sales team from behind a desk. They must travel with sales representatives, not only to give salespeople the feeling that everyone is in the same situation, but also to let customers know that the company is stable. In addition, Reilly encourages sales managers to collect both quantitative and qualitative feedback when hitting the streets with reps, and focus on the qualitative to keep motivation and productivity high. While quantitative measures deal with total product numbers and gross margins, qualitative issues involve customer responses to sales calls. "Salespeople have immediate control over those qualitative issues, so that's where they need to focus," says Reilly. "That way, they'll feel like they're driving their business to the best of their ability." 4) Train. A lot. Many companies are surviving in this economy by pursuing new markets. As a result, training sales reps is even more important because they have to be equipped with the tools and know-how to break into new markets. Through training, reps can learn to talk knowledgeably about any relevant regulations and to address customer questions and concerns. Massachusetts-based Atlantic Fasteners, for example, found that comprehensive sales training courses helped its 6 outside sales reps. "We did it to enhance the reps' sales skills and demonstrate our commitment to their success," says John Kraus, vice president of sales. "It not only boosted their self confidence, but it also helped them identify their strengths and weaknesses and learn new ways to build their sales pipelines." 5) Keep in touch. Sales reps are the manager's connection to end users, who have their own needs and issues. To gain an understanding of these needs and issues, Kraus from Atlantic Fasteners keeps in contact with his sales reps regularly. He conducts weekly phone or in-person sales meetings, covering the results of the previous week, which major customers were phoned, the results of those calls, plans for the upcoming week, the status of the sales pipeline, and what measures reps are taking to build those pipelines. "This is a strategy that's allowed our company to grow at a compounded growth rate of over 18% for the past 21 years," says Kraus. "And although we-like many other distributors-aren't experiencing that kind of growth right now, we still think that motivational strategy prevails over the long run." 6) Make sure they get a lot of customer face-time. When times are tough, don't let your sales reps just sit at their desks, waiting for calls and discussing how slow business is with colleagues. Sales slumps actually represent an opportune time to leave the office and obtain greater face-time with existing and potential customers, says Reilly. "Part of the management challenge right now is keeping sales reps focused on issues that they have control over, such as their calling activity," says Reilly. "In tough times, I recommend that salespeople increase their face-time with customers by a minimum of 25 percent, and managers need to make sure they are doing that." 7) Encourage them to sell more to current customers. Acquiring a new customer is five times as expensive as serving a current one, so it makes sense to persuade your reps to work on expanding existing accounts. For example, at Pennsylvania-based Pro-Am Safety, Inc., sales manager John Gieder regularly pushes reps to return to current customers and show them more products. The company's outside sales reps receive a lot of inside sales support and training on new standards and products so they can better sell to existing customers. "A good part of my day is spent looking at new products," says Gieder, "and packaging them in a way that my reps can use them to present to a customer and increase business." 8) Be supportive and reassuring. When business is bad, sales teams often end up the scapegoat. "If a company is laying off employees," says Reilly, "it's inevitable that someone will complain that 'if the salespeople would just get off their butts and sell something, we wouldn't be going through this." With such finger-pointing, it's hard for managers to keep reps energized but nevertheless, they must reassure their teams that everyone in sales is in the same boat, says Reilly. "Managers have to reinforce the fact that this too shall come to pass, and that it's not never-ending," he adds. "They also have to get their reps focused on issues that they can control, and let go of what they can't control." 9) Keep them in the know. To keep motivation high in its 75-person inside and outside sales team, California-based Porteous Fastener Co. conducts contests, giving out monetary rewards to those who sell the most products or the highest-margin products each month. But Jay Hebert, senior vice president of sales, realizes that such strategies are not complete without a crucial motivational technique-keeping sales reps informed. Hebert makes sure that his reps know what's going on in the industry, the competition, the sales environment and the company itself. "We keep our reps in the loop about how the company is faring," says Hebert. "While the reps read the papers and know the score, they also need constant reminders about how their own company is doing." 10) Be inspirational. To help sales reps sell in an environment where customers demand more but would like to pay less for it, Pro-Am Safety's Gieder tries to keep them inspired. He often reads them a quote from Admiral James Stockdale, "retain the faith that you can and you will prevail in the end, regardless of how difficult the situation is. At the same time, you must face the brutal facts of the reality that you're dealing in." Gieder also has some words of inspiration of his own. "The challenges are out there, all around the reps," he says. "I tell them that if they keep working hard and plugging through, they'll be successful. That's my message." Source: "10 Ways to Motivate Your Sales Team," Bridget McCrea, Industrial Distribution, Feb. 1, 2003
Though by 1900 the United States ranked as the greatest steel-producing nation, the leaders of its major firms despaired of achieving financial success to match their industry's stature. Output had nearly tripled since 1880, but customers, not producers, seemed to benefit. Productivity-enhancing technology encouraged an even faster rate of investment than sales, as did the relatively low cost of "rounding out" existing plants. Then, during recessions, demand plunged wildly, taking down output, prices, and profits. Initiated by Charles M. Schwab of Carnegie Steel, who publicly addressed the advantages of combining competitors to rationalize production, in early 1901 negotiations among J. P. Morgan, Elbert Gary, Andrew Carnegie, and Charles M. Schwab himself created United States Steel. The new corporation combined three significant finishing firms (American Tin Plate, American Steel and Wire, and National Tube) with two major integrated companies, Carnegie Steel and Federal Steel, itself a recent merger of Illinois firms with Minnesota mining interests. Its size was enormous: capitalized at $1.466 billion, it included 213 manufacturing plants, one thousand miles of railroad, and forty-one mines. In 1901, US Steel accounted for 65.7% of national output, and almost 30% of the globe's. During World War I, its annual production exceeded the combined output of all German and Austro-Hungarian firms. However, at the century's end, the corporation fought for its very existence, as imports and mini-mills undercut its sales in one product line after another. Spun off by a very diversified company in 2001, US Steel reemerged in 2002 with plants in three American locations (plus one in Slovakia) that employed fewer than one-tenth the 168,000 workers of 1902. Big Steel is Kenneth Warren's attempt to narrate the chief events at US Steel and to explain the almost continual decline in its share of the national market. Well acquainted with the secondary literature and the industry generally from his previous study, The American Steel Industry, 1850-1970 (University of Pittsburgh Press, 1988), Warren is an emeritus fellow of Jesus College, Oxford. For Big Steel, he used corporate archives and benefited particularly from studies conducted for the corporation. The result is a well-reasoned volume of lengthy paragraphs overflowing with information and helpful statistics, something that judicious editing might have transformed into a truly remarkable read. Elbert Gary, Charles Schwab, and other founders clearly sought prosperity through size. As Warren recognizes in the early chapters, larger size promised many advantages. Larger units provided greater capital, labor, and managerial productivity, and they conserved energy. Rather than producing multiple products in one mill, the larger firm could specialize and thus reduce costs. It could also increase the level of research, smooth the production of specialized units, and reduce cross-hauling on the increasingly expensive railroads. Finally, the US Steel chairman, Judge Gary, (but not his former Carnegie executives) clearly expected market share to enable the firm to hold prices during economic downturns. This philosophy of steady public prices, acknowledged geographic patterns, and informal cooperation with other firms earned the label "Judge Gary's umbrella" for a policy that benefited the entire industry. Nevertheless, Warren concludes that its great size harmed US Steel from the start. Its management started with far too many plants, scattered irrationally (some 100 in Pennsylvania alone). Its unwieldy managerial structure failed to overcome the traditions and defensive attitudes inherited from some of the merged firms. In the early years, earnings on capital and per ton of output fell below those of the predecessor companies, particularly Carnegie. Size also imposed a tremendous constraint on the firm's market behavior. Not until 1920 did the federal government abandon serious consideration of breaking up the firm on grounds of monopoly. As a result, for its first two decades the company carefully avoided predatory market behavior. In the process it probably over-reacted and created an economic environment congenial to new firms, which sought the faster-growing sectors of the industry. Size also hampered US Steel's geographical distribution. Because it cost only $100-$200/ton to "round out" existing facilities (in 1950s prices), but $300/ton to build a greenfield plant of similar size, the company's concentration of plants around Chicago and Pittsburgh led to further investment in those localities. As demand shifted, the firm did acquire and expand an integrated works in Alabama (chapter 5), but US Steel never gained prominent market share in the West or on the East coast , even in the 1950s after it purchased facilities in Utah from the government and built the Fairless integrated plant near Philadelphia (chapter 15). However, other factors besides size also contributed to lower profits and market share. For nearly three decades, Judge Gary dominated the company with an emphasis on financial factors. While his biographer, Ida Tarbell, credited him for strengthening mutual interest, cooperation, and good will in American business, Warren quotes approvingly an unidentified (and uncited) critic's label for the chairman, "restricted in imagination." Gary proved unable to retain the loyalty of experienced steel executives, and key personnel left the firm. Chief among them was Charles M. Schwab, who soon founded a more innovative rival, Bethlehem Steel. Under Judge Gary, the firm moved slowly into growth areas and lagged behind its competitors technologically. Warren focuses on these issues in chapters six, ten, eighteen, and twenty, and he demonstrates clearly the severe failures. Until the mid-1920s, the firm hesitated to adopt the new universal beam mill, with its vertical and horizontal rollers, and when it did so, Schwab discovered that it infringed on a Bethlehem patent. Decades later, it ignored the superior technology of the oxygen converter for bulk steel production, pointing out the waste of scrapping relatively new open hearth furnaces. Management remained silent on the steel capacity urgently needing replacement. Warren provides two explanations for the technological lag. First, in general, large firms may be less responsive to technological opportunity, perhaps to any opportunity, because bureaucracies change slowly, and advocates of change must convince more layers of the virtue of the risk. Second, executives at US Steel remained arrogant about the superiority of American techniques, even though by the 1950s capacity was expanding much more rapidly abroad, giving foreign producers more opportunity to experiment with new methods. Readers with interests in social history will find it appalling that the 12-hour day/68 hour week existed into the 1920s, made worse by the "long turn" of 24 hours when shifts changed from day to night. So poor were labor relations at the firm that when conditions finally improved, the impetus came from a most unlikely source: the President of the United States, Warren G. Harding, who wrote to Judge Gary about abolishing the 12-hour day. Big Steel focuses on corporate strategy rather than biography, but Warren particularly admires the leadership of two chairmen while noting the failure of others (especially Gary, Roger Blough, and Edgar Speer). Myron Taylor guided the company through the Great Depression. His program of rationalizing production replaced 30% of capacity with modern mills, and not for another half-century would the firm experience -- and benefit from -- such wrenching change. By improving labor relations, Taylor also avoided becoming a target of the 1937 sit-down strikes. David Roderick guided the corporation through perilous times the half-century later. In 1979 he replaced Edgar Speer as chairman, and halted his predecessor's treasured dream of building a greenfield integrated plant on Lake Erie. That alone did not save the company from the bankruptcy experienced by many of its competitors. Roderick also halted the pattern of dribbling investment funds in plants across the corporation, instead targeting only those units capable of meeting the world's most efficient standards and slashing the rest. He took control with capacity at 35 million tons; the year following his retirement in 1989 it amounted to only 16.4 million tons. Only three integrated works remained, at Fairfield (Alabama), the Monongahela Valley, and Gary. Even those areas suffered severe job losses. By 1984 greater Pittsburgh had lost 25,000 of its 30,000 jobs four years earlier. Through such surgery, though, Roderick saved a much-reduced US Steel, to compete with surging imports and competition from mini-mills. In conclusion, Kenneth Warren's business history is valuable for both its detail and its interpretations. The supporting material - tables, maps, appendices and bibliography - reflect fine scholarship. Nevertheless, one senses a desire to "include it all," and non-specialist readers may tire of relentless details and technical jargon. A glossary of steel terms would have been useful. Those considerations aside, Big Steel undoubtedly fills an important place in American business history, and it will be valued by specialists in a number of sub-disciplines. Malcolm Russell is a generalist on the economics faculty at Andrews University. His most recent publication is The Middle East and South Asia, 2002. Copyright (c) 2002 by EH.NET. All rights reserved. All EH.Net reviews are archived at http://www.eh.net/bookreviews
Plant
Sites & Parks’ annual Readers Poll picked the top locations for business.
The South again ranked very high based on respondent’s key relocation
criteria that included transportation access, work force training and incentive
programs.
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