Archive for the ‘markets’ Category

I’ve been interviewing with a lot of companies lately, and I recently heard a comment on the state of the industry that attracted my attention.  An employer I was talking to mentioned, off-hand, that despite the economic conditions and the number of people looking for jobs, companies are having a surprisingly difficult time finding personnel with middling experience, the solid earners who are not too junior, not too senior. As this was a side point and the speaker was developing a thought, I never did share my observations on the matter, but they have been scratching at the back of my brain since.

The economic meltdown has everyone pinched, and engineering companies have tried different approaches to weather the rough spot.  Some started dropping their fees dramatically — even below sustainability level, what we call in the business “buying work”, so eventually many others had to follow.  Retaining personnel to do the work became a challenge.  I observed four main strategies (not all at companies I worked for):

  1. Squeeze the personnel.  Cut the employee list then get everyone who is left afraid, and extract the maximum “productivity” by directly passing the pressure of under-costing jobs, giving too few hours and the same deadlines so that employees will essentially do work for free.  Ruthless, makes for unhappy employees, but also for a lean and mean proposal style and minimum management headaches — in the short run.
  2. Half-time. Cut hours across the board and distribute the work as evenly as possible. Humane and fair but you may still lose employees and spreading the work is a management challenge. You don’t always have the right personnel to match to work coming in.  As a result, only small and committed companies take this approach.
  3. No parachute.  Give the junior personnel responsibilities well ahead of where they nominally are and let them learn through doing, very fast and under pressure.  If they are talented, they will learn very fast from this accelerated exposure and become extremely productive at low billing rates.  If they screw up, management can fire them and control damage, then move on to the next expendable wizkid.
  4. Retreat to the core.  Keep only the most essential pillars of the company, the people with 30 years of experience who ensure continuity, and give them raw recruits to do the grunt work.  The idea is that the veterans will catch most mistakes and any rework will be relatively cheap at junior personnel’s rates.

In the long run, this tends to give all companies an age pyramid that is pinched in the center, with a wider base and top, a topiary look.  It’s most pronounced in case #4 because it’s integral part of the approach, and least in case #2, because these companies try to retain all their employees.  Cases #1 and #3 tend to have a narrower top than #4, but a wide base and narrow middle too.  But in the long run, even type #2 ends up making it financially non-viable for the middle-range (say 8-15 years of experience) professionals who have families to support — especially women — so that a lot decide to move into other fields with more employment, for example computer/information technology.

Moreover, everyone is thinking in terms of the last three years’ worth of economic morass, but they forget that for several years before that, the economy was already screwed up for any work that was not related to the housing bubble.  In my business, that means pretty much any work except what is related to site development or redevelopment.  So a lot of environmental engineering and science work was already curtailed and I have observed the various coping strategies used early on in those specific types of work.

No, I’m not particularly surprised to see an unfortunate distribution among environmental professionals’ experience range.


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This week I had to make a little trip toward the eastern edge of the state, to Susanville (which I discovered to be a really pretty, charming little town.) I left in the evening and stayed in Redding overnight so I could meet with my colleagues there in the morning before heading out to Susanville.

Since our company has a corporate account with the chain, I stayed at the Red Lion Inn. It’s handy, it means the bill is handled directly; I don’t have to put the charge on my credit card and get it reimbursed. Besides, as far as I’m concerned all these chains offer more or less the same comforts; all that separates them is price and service.

I’ve stayed at the Red Lion Inn in Eureka before; it’s fine, not a memorable experience but OK. Well, the Redding Red Lion made Eureka’s look like a shining beacon of suave, cosmopolitan charm.

It’s not that anything terrible happened; it’s more that the service was generally disappointing. For example, the room had a single bath towel, and half a pot of old coffee had been left in the little in-room coffee-maker. But the best was the bar.

It was 8:30 pm when I got to the hotel, and I was tired and parched. I checked in, dropped my luggage in the room, etc. so it was at most 9 pm when I came back to look for something to drink. The dining room was closed but the bar seemed open so I went in, looking for a glass of iced tea, lemonade, soda, cold water, whatever. Two off-shift employees were talking to a crusty old bartender who looked and sounded like a triplet to Selma and Patty Bouvier. I had seen the off-shift employees a little earlier, smoking outside; now they were chatting animatedly with the bartender.

I looked around; there were no customers at all. The three employees, including the bartender, paid no attention to me at all as I waited for a few moments. I thought maybe the bar was closed and the crew was about to clean up the place so I stepped out to check the posted hours, which extended until 10 pm. I went back in, waited another moment until somebody took a breath, and asked the bartender: “Is the place open?”

“What?” growled Bartender Lady.

“Is this place open?” I repeated.

“Is WHAT open??”

I was a little baffled, but one of the off-shift employees helpfully clarified. “She wants to know if the bar is open. Oh yeah, there’s at least half an hour to go.”

And with this, the same off-shift employee returned to telling and miming her adventures at dog obedience training class. The three slightly turned their backs to me and Bartender Lady was pointedly enraptured in the conversation. I stood there for a moment more, stunned, tired from a day of work and three hours of driving, trying to figure out to whether they would actually offer any service to, you know, a customer. Unasked, Bartender Lady pulled out a bottle of Jack Daniels and started pouring for her pals.

At that point, I got the message and gave up on even asking for the location of a soda machine. I walked to a nearby gas station and got a bottle of ice-cold water.

(By the way, the next morning I received friendly and competent service in the hotel restaurant, which went a long way to improve my view; I dutifully filled the little feedback card and praised the nice lady there.)

None of the experience was particularly traumatic, especially for someone who’s had to sleep in some pretty damn roachy motels (including a bed set up in a basement boiler room, next to the janitor’s mop, with water running on the floor.) But given that the hotel looked about 30% occupied, and is set on a strip filled with other similar hotels, you’d think they would make more of an effort to offer service in this economy.

I would not be surprised to learn that there have been employee cuts and the remaining ones are disgruntled. Whatever — the root cause is still bad hotel management. Don’t treat your employees so poorly that they’ll give bad service, and get rid of bad apples.

This resulted in lost income for them the very same day, too! Along the way to Susanville, I told the story to two co-workers; and one said: “Oh, I have to stay in town tonight so I need a hotel, but I’ll go across the street, then.”

Instant lost customer — and you can bet I’m not going to make an effort to go back either. How stupid is that, when everyone is hurting for business?

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mpj043731900001According to last week’s East Bay Express, the California Air Resources Board (CARB) is preparing to place emissions testing requirements for hybrid cars that will make it financially impractical for anyone but the big auto industry to develop and market “plug-in” technology.  The decision is expected to be adopted at this week CARB meeting, January 22-23.  According to EcoGeek:

[Plug-in hybrid kits] are built on top of an existing vehicle architecture (generally a Prius) and sold as upgrade kits by companies like 3ProngPower or Hymotion. These kits have become more prevalent in recent years, and can make a regular Prius look like a gas guzzler.

These kits allow cars to get over 100 miles per gallon or even 150 mpg; however, CARB expressed concern over possible side effects such as increasing the rate of air emissions per gallon.

The new CARB rules would require the new startups to put their technology through the same series of smog tests as new car manufacturers, which could cost between $20,000 and $125,000, depending on how many cars the agency decides must be examined.  CARB would also require the new companies to provide consumers with warranties for the changes they make to hybrids for up to ten years or 150,000 miles.

According to the East Bay Express,

Sherwood and Guzyk [owners of 3ProngPower] say that if the board adopts the new rules at its January 22 and 23 meeting, it likely will force them to shutter their business, which just had its grand opening last month at Green Motors on San Pablo Avenue.

The makers of the plug-in technologies argue that putting this sort of burden all at once on small companies will kill them before their innovations can have a chance to penetrate the market or be further developed.  However, this will give time to the big auto manufacturers, who are not significantly impacted by these new rules, to take a few years to develop their own hybrid technology.

Small manufacturers 3ProngPower and A123Systems say they are not worried about meeting the emission requirements or providing the warranties, only about being able to afford the certification program.  It sounds like we need some sort of loan system to be instituted to help small developers of cutting-edge energy technologies to get over the certification process; and for agencies like CARB to make sure the certification process is not necessarily a one-size-fits-all (since the plug-ins are installed on existing, certified vehicles) but is adapted to the specific technology being evaluated.

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scrapmetalI was mentioning last week that the prices for bulk metals are high these days, even in this economy.  We have an indication of this in Tuesday’s article “Scrap rules coming to Humboldt County” in the Times-Standard.  The new rules discussed in the articles are ones that make it easier to identify the provenience and suppliers of scrap metals, and come in response to increasing thefts of such items as:

[…]fire hydrant bolts, manhole covers, farming equipment and highway guardrails, among other things.

And, of course, thefts of scrap metals from salvage yards.

The prices for metals have dropped recently, but the market is expected to maintain better than that of other second-hand or recycled materials.

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In the Pacific Northwest in general and in Northern California in particular, we hear a lot about logging. Here is a different take on the topic, however: underwater logging. A company called Triton Logging, based in British Columbia, uses a submersible called the Sawfish to salvage lumber from forests left standing at the bottom of dammed lakes.

The remote-controlled Sawfish can reportedly log 50 trees an hour, “of any diameter”. According to Triton Logging’s brochure, some 300 million trees have been left standing at the bottom of 45,000 dammed reservoirs, including old-growth trees. This lumber is well preserved in deep water under anoxic conditions and worth an estimated $50 billion.

Triton has three Sawfish submersibles that have been used in British Columbia, Malaysia, Thailand and Brazil. The Sawfish operator works from a barge at the surface, controlling the submersible harvester via a joystick and console. The Sawfish is connected to the operator station on the barge above by a tether that provides power, fibre optic communications, navigation, and supplies air to the airbags. These airbags are attached to the felled trees to float them to the surface; the Sawfish carries 70 airbags.

The wood thus harvested is marketed as eco-friendly SmartWood and is reportedly of architectural quality.

Triton is not the only company in this niche, but others use divers to retrieve sunk lumber already logged, or underwater saws. The Sawfish makes it a more expensive proposal but also potentially a safer and more productive one.

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In an interesting column in Tuesday’s Times-Standard, “Recycling market woes”, Dave Stancliff points out that the global economy, drop-off in consumer spending, and reduced demand for raw materials, as well as the increasing availability of recycling programs and therefore of the supply, the prices for recycled materials have also dropped dramatically.

Even on the best of days, recycling is always extremely sensitive to the prices for bulk materials. In the last few years, the prices were best for metals and for white paper, but quite marginal for cardboard and mixed paper, for example. The local bulk prices plus transportation costs mean that for a given community, especially outside big urban centers, certain materials are not “worth” recycling.

But this article attracted my attention to the issue — I had not yet considered what effect the current economic turmoil would have on this market. I poked around Google News and found a slew of articles on the topic.

I suspect that for metals the market will pick up again before too long, for a while at least, because world-wide metal prices — especially ferrous metals — have been driven extremely high by the Iraq war. Mining areas that were considered played out or too expensive to mine have been reopened and more are being targeted by mining companies, making readily available recyclable metals quite attractive.

Nevertheless, it’s clear that the problem is significant for the recycling and waste management industry, state and federal environmental agencies, and for cities that have recycling targets to meet.

Naturally, if the cost of end disposal was included as the “cost of doing business” for various industries (as they increasingly are in Europe), the picture would change quite a bit. Not only would companies have an incentive to reduce packaging and extend the service life of their products, but local governments and taxpayers would not be on the hook to pay for such a large share of the final disposal costs.

Moreover, by making recyclables a commodity subject to the same market fluctuations and supply-and-demand factors as other sources for new materials, the current system forces all producers of recycled materials — cities, counties, rural service districts, etc. — to compete against each other and edge one another out of the running.

Logically, recycled materials should be given the preference (as long as they meet minimum quality requirements for a given use) and receive a certain cost break because every bit of material we reuse — plastic, glass, metal, paper — is another bit we don’t have to extract from natural resources. We save for later, avoid some disposal costs, and prevent some environmental impacts linked to resource extraction.

What we need is a revision of our way of costing everything.

Links of interest:

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In the California environmental consulting business, there’s been a bit of dismay for the past month over a letter sent by the State Water Resources Control Board to various participants in the Underground Storage Tank Cleanup Fund.

The Underground Storage Tank Cleanup Fund Program was created in 1989 to help owners and operators of petroleum underground storage tanks (USTs) meet federal and state financial responsibility requirements. As some friends of mine sometimes remember, the changes in regulations regarding the pollution created by USTs, especially at fuelling stations, often became a difficult burden for small owners. They suddenly had to meet environmental standards they were not ready for; excavating old tanks and the contaminated soil around them was expensive.

The program was created to help the owners and operators of leaky USTs clean up their sites. Claims are prioritized in four categories:

  • The highest priority, Class A, is reserved for residential tank owners
  • Class B is reserved for small California businesses, nonprofit organizations and governmental agencies with gross receipts below a specified maximum
  • Class C is for certain California businesses, nonprofit organizations and governmental agencies not meeting the criteria for Class B
  • Class D is for all other eligible claimants

Here’s the kerfluffle: a few weeks ago, the Board notified participants that it was short on cash and payments would be delayed several months. The primary reason cited was poor revenue; you see, the Fund is financed by a per-gallon fee paid by the UST owners who are required to have a permit — but not as a percentage: as a flat amount per gallon sold. With the record highs on gasoline prices this summer, people drove less and the revenue, ahem, tanked.

So first, payments for already authorized and completed work are on hold for who knows how long. Then the Board announces that Class C agreements are suspended altogether. (Class D is not even on the horizon right now.) But to top it off, the Board tells Class B and C claimants:

“Have your consultant prepare a line item budget covering planned corrective action activities for your site for the 18-month period January 1, 2009 to June 30, 2010.”

Notice a problem with this? (1) “We’re holding your payments and we’ll pay out by priority.” (2) “Ask your consultant, which you now can’t pay, to do more work!”

But wait, there’s more! The budgets have to be submitted no later than February 1, 2009. And with the Holidays in the middle, you can bet all consultants are delighted to create a bunch of unscheduled budgets from whole cloth, for which they will have a hard time getting paid by their clients left hanging in the breeze.

On the one hand, the Board does need those budgets in order to plan and prioritize. On the other, the suddenness of the changes is really hitting a lot of clients hard, and the getting-paid-for-work issue is non-negligible. Fun times!

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