The Pause In The Dock Strike And Its Effect On The Supply Chain, with Guest Scott Costa

[00:00:04] Welcome to Around the Horn in Wholesale Distribution, with Kevin Brown and Tom Burton.

[00:00:10] Sponsored each week by Leedsmart Technologies, Tom, Kevin and their guests review the news

[00:00:15] of the week and dive deep into the topics impacting manufacturers, wholesale distribution,

[00:00:20] independent sales agents, and the global wholesale supply chain.

[00:00:24] Whether it's M&A, SaaS and cloud computing, B2B e-commerce, or supply chain issues, we

[00:00:31] peel back the onion with our guests into the topics that impact your business the most.

[00:00:37] Good morning.

[00:00:38] Good morning.

[00:00:39] Good morning.

[00:00:39] It's bright and early here.

[00:00:41] You have me sitting in the dark.

[00:00:43] Yeah, well, you know what?

[00:00:44] You were up anyways, so it's good.

[00:00:48] Scott, you're in, uh, you're in, uh, in Los Angeles, right?

[00:00:51] No, I'm in Los Angeles.

[00:00:52] Los Angeles.

[00:00:53] Yeah, yeah, exactly.

[00:00:54] Thanks for having me back.

[00:00:56] I really appreciate coming on.

[00:00:59] No, it's fantastic to have you.

[00:01:00] Uh, I am in Boulder, Colorado, so we're hitting, uh, at a conference, so we're hitting three

[00:01:06] time zones today and, uh, and getting together.

[00:01:09] Scott, you're joining us kind of last minute.

[00:01:12] You were a great guest when we had you in the past.

[00:01:14] Very appreciative of you being with us in this setting.

[00:01:17] And, uh, we brought you in because you had done some great work yesterday to

[00:01:21] get some good feedback on some labor issues and the doc worker strike.

[00:01:25] So we're going to chat about that a little bit.

[00:01:27] Why don't I really quickly do our little bit of housekeeping work because we're a little

[00:01:31] short on time today.

[00:01:32] We're starting early.

[00:01:33] We're going to cut things a little bit short, but we didn't want to miss the show.

[00:01:36] So we're doing it kind of remotely here today, but I'm Kevin Brown here as I am

[00:01:41] almost every week with my lifelong friend and co-founder of Leedsmart Technologies,

[00:01:46] Tom Burton.

[00:01:47] Tom, when I worked together at Leedsmart, Leedsmart is a AI enabled customer intelligence

[00:01:52] and CRM solution that brings new and innovative insights into distribution and manufacturing

[00:01:59] businesses to gain greater insight on customer intelligence, sales teams and overall business

[00:02:06] views to help accelerate growth within distribution and manufacturing.

[00:02:10] Leedsmart is a sponsor of our show, which is why we talk about them there, but

[00:02:14] we get together every single week when we can.

[00:02:16] I was joking saying unless somebody's in the hospital on an airplane or stuck in the

[00:02:20] middle of a presentation or something, we get together.

[00:02:23] We have guests like Scott that join us that are industry leaders and thought leaders that

[00:02:27] can help us unpack the news of the week.

[00:02:30] What we do on our show is we review a newsletter that we publish each week.

[00:02:34] It's called Around the Horn and Wholesale Distribution and Manufacturing.

[00:02:37] It goes out to about 10,000 people each week.

[00:02:39] If you don't get that, we'd be happy to send that to you.

[00:02:42] You can send us an email at hello at leedsmarttech.com and we will send that out to you.

[00:02:49] You can also go directly to the website for the podcast, which is www.aroundthehornpod.com

[00:02:57] and sign up there as well as looking at past episodes there.

[00:03:01] We go live each week, as we said on LinkedIn, live YouTube, live Facebook live.

[00:03:05] Later in the day, John, our producer and editor takes all that data, puts it together,

[00:03:09] and will be then on all of the popular podcast formats around the world.

[00:03:15] I think last week when I looked, we had been downloaded in over 60 countries.

[00:03:20] So kind of an exciting stat to start seeing.

[00:03:22] I didn't know that they were focused on listening to podcasts on Wholesale Distribution

[00:03:28] and Nepal, but we had downloads there.

[00:03:31] So we'll take them, right?

[00:03:33] We'll take them.

[00:03:34] Yep. Tom, does anything there before we dive in?

[00:03:38] Let's do it.

[00:03:38] I want to say good morning to Bob and Paul.

[00:03:42] Scott, you have a fan already coming in.

[00:03:45] It's good to see we have people here even though we changed the time

[00:03:48] and we're on so bright and early.

[00:03:50] I guess it's not so bright and early everywhere else, but just here.

[00:03:54] Just there and you and anyone in Hawaii, I guess,

[00:03:57] and maybe a few other parts of the world.

[00:04:00] But Scott, before we dive in and talk about the news,

[00:04:03] let's talk about Scott, your work with the Electrical Distributor Magazine.

[00:04:08] Why don't you give us just a little bit of feedback on that

[00:04:10] so we audience can know who you are and where these great insights

[00:04:13] you're going to have in a few minutes come from?

[00:04:15] Sure. So we're the 10 magazine is for the Electrical Distributor.

[00:04:20] The T is lowercase.

[00:04:22] E.D. is Electrical Distributor.

[00:04:24] We're the publication connected to the National Association of Electrical Distributors.

[00:04:29] We're the magazine's been in business for almost 60 years now.

[00:04:35] I've been with the magazine for almost 13 years.

[00:04:38] We've obviously changed radically over the time that I've been with the magazine,

[00:04:44] we've certainly ramped up our online coverage with tedmag.com and reporting daily news.

[00:04:50] News that happens today, we post today like the Dock Worker Strat,

[00:04:54] which I know we're going to talk about here,

[00:04:55] but in addition to some other things.

[00:04:58] We started a second website July 1st called Electrified with the capital EDE at the end of it,

[00:05:03] which focuses on electrification, which is the new, the rewiring of the United States through

[00:05:10] renewables and clean energy, which is a massive, massive under $1 trillion undertaking plus.

[00:05:17] And then we still do a publication, a magazine.

[00:05:19] It's digital only.

[00:05:21] We do 24 issues a year, not 12, not six, twice a month, the first in the 15th.

[00:05:27] So just came out with our issue a couple of days ago.

[00:05:30] It is all digital, it's free to anybody.

[00:05:33] Just go to tedmag.com on the top corner, you see where it says current issue,

[00:05:37] you can click on that.

[00:05:37] You can check out what we're talking about.

[00:05:39] It's filled with best practices, strategies,

[00:05:42] things that are happening throughout the distribution community.

[00:05:48] So it's a great, we really enjoy working on the publication.

[00:05:52] We work on a great association filled with really top notch thinkers

[00:05:58] and pass that information along as best we can and as creatively as we can, obviously.

[00:06:04] But Paul Kennedy guy's kind of involved there, right?

[00:06:07] Paul Kennedy is the NAED chair for the next year and what is it, eight months I guess.

[00:06:18] And he provides a column every other month in the magazine and I keep in close communication with

[00:06:23] him. He's one of our speakers at our regional conferences, so we talk about the content of

[00:06:28] that and I help him.

[00:06:29] We do rehearsals the day before our meetings.

[00:06:32] We're almost in constant contact, Paul Kennedy and I.

[00:06:36] So it's great to have people like him as a part of my life.

[00:06:41] I gotta tell you, he's just a great guy and I'm not just saying that because he's the chair.

[00:06:46] We've had a long relationship and I always enjoyed being around that, just the truth.

[00:06:52] Very good. Well, I've got some time on the calendar scheduled with Paul at

[00:06:56] Inchacool in a couple of weeks for a little social time and catching up and chatting biz,

[00:07:01] so we're looking forward to that.

[00:07:03] Well, let's kind of dive into the newsletter again.

[00:07:05] If you're listening on the recorded podcast later in the day or sometime in the future,

[00:07:09] you would not be seeing the newsletter that we're reviewing right now

[00:07:13] and you can certainly reach out to us to get that.

[00:07:16] But we're going to start off by talking about the port shutdown that started on Tuesday this week,

[00:07:22] ended last night, released Push Pause I guess is a better way to push,

[00:07:26] put our finger on that.

[00:07:29] So across the eastern US from Maine down the east coast all the way across the Gulf Coast

[00:07:38] was a shutdown of all of the ports.

[00:07:41] Large percentage of the goods that come into the US market come through there,

[00:07:48] a vast majority of produce and things like that come through those ports.

[00:07:53] So really big risk to the supply chain in general,

[00:07:56] but we'll kind of talk a little bit more about the wholesale distribution

[00:07:59] and kind of the markets that we all serve a little bit closer about that today.

[00:08:04] But Scott, the reason I reached out to you last minute yesterday,

[00:08:08] you've been a guest with us before and we enjoyed having you and want to get you back for a full show.

[00:08:13] But you made a post yesterday on LinkedIn that caught my attention right away

[00:08:17] and you reached out to your broad network on LinkedIn and asked for some good feedback.

[00:08:22] So before we dive into some of the feedback, kind of our thoughts,

[00:08:26] the three of us on what's been going on.

[00:08:29] And then we certainly welcome any comments that come across from those that are listening live

[00:08:35] this morning. Maybe any other thoughts, Scott, from you or Tom, about what I missed about the

[00:08:39] overview of the strike?

[00:08:44] No, for me. Tom, anything you want to throw out there? Go ahead.

[00:08:47] No, I mean, it sounds like obviously the strike got suspended last night.

[00:08:57] Scott, you understand your take on this as it relates to

[00:09:02] what you think may be happening here. So are they kicking the automation can down the road a bit?

[00:09:09] Is this a strategic move from the management side of things to maybe give,

[00:09:15] throw the bone over of some pretty substantial pay increase? But really the big issue about

[00:09:22] automation is we're just avoiding that and maybe we can dodge it all together.

[00:09:27] What do you think is happening here, I guess strategically or is it just what it looks like?

[00:09:33] Yeah. I'm going to be as equal as I could possibly be. I'm not going to be a pro

[00:09:41] business side or the pro worker side on this one. There's certainly, like you said,

[00:09:46] there's two big things at play. One is the union has reported these companies are making

[00:09:52] record profits without significant pay increases for the union members. So I get that side,

[00:10:00] not going to say that I don't get that side. The flip side to that is again, so whatever,

[00:10:05] they agreed on a 62% pay increase that has pushed this strike back at least until

[00:10:12] January. The second part of it, like you were saying, Tom, is the automation side.

[00:10:17] And the fact of the matter is if you're a business today and you're not embracing

[00:10:21] automation in some way, Ted Magazine is going to be embracing automation in some way between now and

[00:10:30] 2040, 2035. And I'm sure that the same thing is going to happen at ports across the country,

[00:10:36] whether you're on the East Coast or the West Coast. So if you're going to be the last company,

[00:10:42] I'm not saying that you want to be the first, but if you're going to be the last company

[00:10:45] to embrace automation, you're going to have a hard time staying in business. So this just

[00:10:49] kind of pushes that automation thing. It doesn't matter if it's ports or McDonald's or

[00:10:55] companies that make shoes, I mean, Amazon's, their warehouses are fully automated for crime.

[00:11:03] If we're not going to embrace this and accept this and figure out how to negotiate our contracts

[00:11:07] with automation being a part of it, it's really going to force some businesses into a tough

[00:11:14] situation, maybe not today but certainly in the very near future.

[00:11:19] And that's going to be a issue. Well, I think you're right with all of that.

[00:11:25] To your point, Scott, the two critical issues were the union is saying zero additional automation.

[00:11:32] We're not doing this and they wanted an 80% pay increase over the sixth year or whatever

[00:11:41] the contract was going to be. So now we're at 61.5. I've got CNBC on in the background

[00:11:48] here in my hotel, Boulder and 61.5% pay increase over six years. That's settled.

[00:11:56] But now we've got this automation issue and Eric Hoplin with the CEO of the National

[00:12:01] Association of Wholesalers has been, I think three times in the last week on live TV talking

[00:12:07] about this topic. And this morning watching CNBC and reading some other things from Bloomberg

[00:12:14] and so forth. The reference point for this on the automation side is to Rotterdam.

[00:12:21] And the Port of Rotterdam is nearly fully automated now with very few employees in comparison needed.

[00:12:30] Safer environment, more efficient environment. Automation doesn't go on strike me.

[00:12:37] It breaks occasionally. And to your point, look, I think there's a need for people there.

[00:12:43] I think it might just be a need for different jobs in that setting. We talk a lot about AI and other

[00:12:50] types of automation on an ongoing basis that are going to augment people. So maybe we don't need

[00:12:56] as many jobs there because of automation, but I think my big struggle with this and we're going

[00:13:02] to get in and talk about some of the conversations we've had with industry folks and their feeling

[00:13:06] and preparations with supply chain with these things going on is the issue for them is that

[00:13:16] unlike I would say unlike the an automaker strike, I don't feel an impact from an automaker strike

[00:13:23] right away. A port strike? Big input, right? 75% of bananas that come into the US

[00:13:29] coming to the Gulf Coast. So when you look at that, these types of strikes and the

[00:13:37] this was a pretty aggressive position from the union, right? That the words that were coming

[00:13:44] out of the union leader's mouth to Bloomberg said morning makes a million dollars a year in salary

[00:13:51] were pretty darn strong about crushing the other side. And so for that, that's what I kind of

[00:13:58] struggle with from this standpoint is like, I get it, you've got this group of workers that you're

[00:14:02] going to protect, but we also have the economy of this country that is going to be impacted by

[00:14:07] that. So that's where my struggles kind of lie. I think on the, you know, you mentioned

[00:14:13] Rotterdam. It's adopting adopt or adopting automation. You're not being an early adopter,

[00:14:19] right? It's not like you're the very first one to try it. So it's clear, I'm sure,

[00:14:24] with the ports that are automated, the value that they receive from those both financially and overall,

[00:14:30] maybe on just the overall service and value to the customer. So to me, it's an interesting

[00:14:37] your take Scott, to me, this automation is inevitable. And I think by giving them the

[00:14:45] so to speak, the pay increase now, and then pushing the other issue down the road,

[00:14:50] I don't know, it seems to me it makes it a lot easier to potentially start introducing more

[00:14:55] and more automation over time, especially since, hey, I gave you the big bone of the

[00:15:00] pay piece. I just can't see how you can ignore that and just say, oh, we're not going to automate

[00:15:04] for six years. Right. And an additional sort of angle to that is, I think, you know, a lot

[00:15:13] of folks were talking about, you know, during the strike, prices are going to go up because,

[00:15:18] you know, like you said, we can't grow bananas here. We have to bring them in from other countries.

[00:15:24] So prices were going to go up, which is and there was a concern about that. Well, you know what,

[00:15:27] with a 61.5% pay increase over six years, prices are going to go up because you know,

[00:15:34] that company's going to pass along, you know, their expenses, I mean, look at what the airlines

[00:15:39] did. You know, they were reporting record profits for multiple quarters, and then the pilots

[00:15:45] and flight attendants union started saying, well, you got to, you know, they got similar 50%

[00:15:51] pay increases. And I traveled so I look at the price of plane tickets and guess what, they're way up.

[00:15:58] So this I'm sure is just going to get passed along anyway. And as you know,

[00:16:04] if you're going to take off your business hat and put on your consumer hat,

[00:16:07] consumers probably saying, okay, well, if prices of bananas are going to stay around

[00:16:13] 49 cents a pound, then we're going to have to automate the end of the day. Most people are

[00:16:18] probably going to say, okay, I mean, I want my bananas to still be 49 cents a pound.

[00:16:23] So this is what it's going to take. You know, it's again, I don't want to stab the working man

[00:16:31] in the back by any stretch because they do work and that's not the point that I'm trying to

[00:16:35] make. But I just don't know if I want to pay, you know, 99 cents a pound for bananas

[00:16:41] without automation. Yeah, well, I think that's the case. And then when you look at the magnitude

[00:16:46] of what comes into this country, I was just, I took a couple screenshots yesterday, I was just

[00:16:51] looking at my phone from CNBC and, you know, this show is not about produce, but 82% of

[00:16:59] chili peppers, 90% of cherries that come into this country, right? And then we start talking

[00:17:05] about what we're going to get to here in a moment, in a moment, why we're here to

[00:17:08] talk about this today is what's the impact on an electrical distributor, a 5,000 fitting

[00:17:13] distributed HVAC distributor, industrial industrial safety office products, whatever that might be,

[00:17:19] what are those? What are the what is the implications that so we'll get to that momentarily.

[00:17:24] But I think we've got you know, this is a pretty big, big issue because, you know,

[00:17:28] and there was a comment made a moment ago, you know, about, you know, there's a gotta be

[00:17:33] a huge political component to this. I'm not, I will claim I'm smart enough to really understand

[00:17:39] what's going on behind the scenes with those things. But you know what? There is one party that plays

[00:17:45] a lot more to organize labor or works too in big election coming up. So never know.

[00:17:54] If I'm fortunate enough to have my union contract expire,

[00:18:00] you know, 35 days before a presidential election, and it's a major, you know, supply chain contract,

[00:18:08] then why wouldn't I politicize it? Yeah. You know, I mean, I guess that's, that's, you know,

[00:18:15] that's just the way it is. Another part of this too, that I think we haven't touched on much.

[00:18:21] Again, we're talking about bananas because we can't, we don't really grow them.

[00:18:26] It's hard today to build manufacturing plants in the United States and avoid

[00:18:30] poor reports just so we're clear. Again, I'll take the electrical side of it just,

[00:18:34] everybody's talking about, hey, you heard from both sides again, I'm not being political,

[00:18:38] you're from the Republicans, you're from the Democrats. We need to increase American

[00:18:41] manufacturing. It's hard to build factories today. Just so we're clear again, just

[00:18:45] taking electrical first of all, we're short electricians. Anybody will I talk to? I was

[00:18:52] at the NECA conference last weekend and every contractor that I talked to said we're way short

[00:18:59] on people. We have to turn down jobs that we would love to take because we don't have people to do

[00:19:03] the work. The flip side to that is, it doesn't matter anyway, because we don't have switch gear,

[00:19:08] we can't turn the power on anyway, because it's going to take 40 something weeks, 40

[00:19:12] something months to get switch gear. So I don't have products to install anyway.

[00:19:17] So when you're talking about, hey, we need to fix American manufacturing,

[00:19:20] we're still probably two years away from, if we started today, we're still probably a couple

[00:19:26] of years away from just building the factories that are needed to make American products.

[00:19:32] So we don't have a resolution to importing key components or products that we need

[00:19:41] to be a functional society basically. We don't have what it takes right now

[00:19:47] to build more factories. That's a problem in terms of labor and products.

[00:19:54] Well Scott, let's dive in a little bit to what you heard yesterday.

[00:19:59] Of what you can share, you don't necessarily need to say the who unless it's appropriate,

[00:20:04] but you reached out to your network and when we were messaging yesterday afternoon,

[00:20:09] you mentioned you'd heard from manufacturers, distributors and some manufacturers reps.

[00:20:14] My first question would be, and maybe you can weave this in to what you share a little bit with us is,

[00:20:20] was similar sentiment between all three of those roles in the supply chain

[00:20:26] manufacturers rep and distributor? Yes, very similar sentiment in terms of one,

[00:20:36] everybody wanted to work together in the supply chain. Whether you're a manufacturer,

[00:20:40] you wanted to work with your distributor partners, or you wanted to work with your reps to make sure

[00:20:44] you're getting as much product going. If you're a distributor, you certainly were working very

[00:20:48] closely with your supply chain partners. So there was no doubt that there was

[00:20:52] a lot of increased communication effort to try and make sure that the most needed products

[00:21:01] were on hand and were going to be available over what you also just were saying was

[00:21:08] the short term obviously because nobody knew how long this strike was going to last.

[00:21:13] So there was quite a lot of effort on the manufacturer side to get products into the

[00:21:21] country whether they were going to literally shift coasts, which I couldn't imagine would be

[00:21:25] expensive on that or load air, but when I talked to ABB, they're fine with me talking about that.

[00:21:31] Loading products onto airplanes and flying it in instead of having it on

[00:21:35] ships at least what they considered their key component parts. But there was definite

[00:21:43] opportunities for constant communication to make sure that you knew where everything's

[00:21:49] stood in terms of at least key parts to keep job sites function.

[00:21:55] Right. So any idea from your experience and maybe others that might be listening could

[00:22:03] give us some feedback on that. I don't know what it does, but it's got to be significant.

[00:22:07] But you are putting electrical parts which some are lightweight, but many aren't onto aircraft.

[00:22:14] What is that? What does that add to your costs at that point in time?

[00:22:19] Yeah, I would think that it's, you know, cargo planes are big,

[00:22:24] but you're not big enough obviously to ship like ships do obviously. So

[00:22:31] again, I'm just kind of looking at again what ABB sent us and they really, again,

[00:22:37] one of the things they knew this was coming. So they were increasing inventory trying to get as

[00:22:41] much product into the US as they possibly could before last Tuesday. It said that they were

[00:22:50] they were, I'm just looking at what they say is part of our standard operating procedure.

[00:22:54] Yeah. They're doing it. They were just said that they were doing everything they could to remain

[00:22:59] unaffected over the short term in terms of the products they had through air shipments.

[00:23:07] So, I mean, I guess the way to maybe think about that is we don't put containers on

[00:23:12] aircraft. We'd put pallets on aircraft, right? Yeah. Exactly. So you're certainly talking about,

[00:23:17] right? Yeah. So we're probably talking about smaller components, but that's got to add

[00:23:22] a very significant I would obviously it's got to be double digits of what that adds to the costs

[00:23:28] of getting components in that trickles down, right? We already have had just working coming out of the

[00:23:35] COVID supply chain issues, right? We're probably safely safe to say we're out of those issues now,

[00:23:41] but now we've got this and you know, probably a three day strike didn't have the impact that

[00:23:47] a week long, right? But I think they were there was a statistic I said, I think they said it takes

[00:23:53] was it three to five days post strike per day to catch up. Now, you know, we probably had some

[00:24:03] slowdown on some ships and some ships sitting out in some harbors waiting to come in and

[00:24:08] will have those slowdowns. So we'll probably come out of this pretty quickly. But I think

[00:24:11] the bigger factor to talk about, we talked about this on the show quite regularly,

[00:24:16] is so we had last year, we had the threat of a strike on West Coast ports.

[00:24:24] Not didn't have the strike did have a strike on the way on the ports on the west coast of Canada.

[00:24:30] We had a rail strike in Canada earlier this year, right? Which you might say, well,

[00:24:37] that's Canada I'm in the US. Well, guess what? A big part of the oil coming to the US is

[00:24:42] coming on rail cars into the US from Canada from oil sands or wherever else it might be.

[00:24:49] Then we have had threats of a handful of other slowdowns and then you we push the

[00:24:55] us things outside of the US, right? We got geopolitical issues China, Taiwan,

[00:25:01] right that we're watching concerned about. We've got geopolitical issues in the Middle East.

[00:25:06] We've got the Panama Canal that was low in water and you couldn't get enough containers through for

[00:25:13] the last 18 months. That's slowly improving now. And then you've got Hootie rebels that are

[00:25:20] throwing low cost bombs from drones at container ships in the Suez Canal.

[00:25:30] And you start putting this together and we have a very different supply chain that we might

[00:25:34] have had even just pre COVID. Well, I'll say with that right. And so the volatility

[00:25:41] has probably never been higher globally than what it is right now in the overall supply chain.

[00:25:47] Scott, that's a big statement I made. Would you you're probably tied a little bit more to this

[00:25:52] than Tom or I are? Would you agree with that statement from a volatility standpoint?

[00:25:58] I would absolutely agree with that. And I think there again, there's a number of manufacturers

[00:26:05] that are looking at different ways to shorten up this supply chain, which has been an issue for

[00:26:13] it's not like this happened last weekend. This has been going on for more than a decade.

[00:26:20] We certainly hear about a number of our manufacturers just within the 48 states where

[00:26:27] opening up new warehousing or new production facilities on the West Coast because we were

[00:26:33] East Coast based and we don't want to make people wait two days to get copper wire or fittings

[00:26:38] or whatever it might happen to be. So I mean, we hear that a lot and that's going to be again,

[00:26:44] I think that's going to be a key to some of these problems is shortening up that supply chain

[00:26:52] real distance from where a product is made to where it gets delivered.

[00:26:57] It's not like I said before, that it's not magic. It's not going to happen in the weekend.

[00:27:02] But it is definitely something that I'm hearing from manufacturers small and big

[00:27:08] about trying to kind of tighten up that distance traveled because of like you said,

[00:27:13] these these crazy things that are happening. You know, again, the fact that there's

[00:27:19] rebels firing, you know, firing bombs from drones. Nobody wants to be dealing with that.

[00:27:27] I mean, just crazy. No, it's crazy. Tom, were you going to add something there? I'm sorry to jump

[00:27:32] in on that. Yeah, I wanted to we talked, I think it was last week, right? We were talking,

[00:27:37] there was an article we were talking or maybe two weeks ago about the complacency that is set

[00:27:42] back in and a lot of organizations about supply chain, right? Post COVID is like, oh, wow,

[00:27:47] okay, we're back to quote unquote normal. It's not really an executive issue anymore, all of that.

[00:27:54] But you know, Scott, I think we were talking a little bit about this before we went on.

[00:27:58] I'm not sure there's ever a place where you can be complacent about your supply chain process.

[00:28:05] And you just never know, right? When it's going well, enjoy it while it lasts

[00:28:10] because it's probably not going to be permanent and and you better have continuities and other

[00:28:14] things on that. I agree and you flexibility is tough. And let's add on, you know,

[00:28:25] tariff potentials that are going to add cost if you wanted to manufacture stuff in Mexico,

[00:28:30] which by the way, Mexico doesn't have a lot of capacity left for manufacturing anyway,

[00:28:35] especially near the borders of Texas. Yeah, yeah. So it's a, you know, innovation I think is going

[00:28:46] to be a key on the manufacturing side. It'll be interesting to see how they work from an

[00:28:51] electrical standpoint, how they work with their distributor partners to try and speed up supply

[00:28:56] chain issues over the next few years because I think this is where a lot of folks are going.

[00:29:02] You know, no one wants to wait 52, all of them are generating. They're still doing that.

[00:29:09] That's been going on for four years. I think there's a significant factor here

[00:29:15] though that we should talk about a little bit. Scott, I'm really interested in what

[00:29:19] your thoughts are and what you might have heard. You know, I've spent my entire career

[00:29:24] in distribution of manufacturing and as a manufacturer, I've wrecked myself for about 10 years.

[00:29:29] I just think back to the days, you know, and this was, I just told the agency in 2003, I guess it was.

[00:29:38] But you know, it used to be if you were a distributor, it doesn't matter what you're

[00:29:42] distributing, but if you're a distributor, supply chain is like you got a fax from,

[00:29:48] you know, in the old days, you got a fax from, old days, you got a letter from

[00:29:52] a 3M or Honeywell or ABB or whoever it might be is, you know, in reference there is,

[00:29:58] you know, about some issues. Then you got a fax. Hey, you know, we're concerned about this and

[00:30:04] we may have to adjust some pricing or we may have some shipment delays or order now

[00:30:09] and then emails started with that. Well, now we're in a, and people waited to hear from their

[00:30:15] suppliers. And I think now we're coming into a world where we've had, we've had distributors

[00:30:22] on this show that said that they're literally in communication about supply chain issues

[00:30:27] weekly or multiple times a week with all of their key suppliers where, you know, years ago it was,

[00:30:35] yeah, for the most part, things are just going to move along and we'll wait to hear from them

[00:30:38] with any issues. What thoughts on that, Scott? I think that's absolutely the case and again,

[00:30:45] technology and automation and communication has certainly provided that opportunity. So why not

[00:30:52] take advantage of it? You know, there's a, I'm looking at copper wire these days, you know,

[00:30:59] and there's only so much copper on the planet. Yeah. And China wants about 75% of it

[00:31:07] and the United States is trying to rewire itself. So the competition is, you know,

[00:31:13] I mean like what's available and how do I know it's available and what's the price? The price

[00:31:17] is, you know, the price changes every minute for CrimerCloud. Deliveries for copper, you know,

[00:31:23] project out but by the quarter I guess they're projecting out toward the first of the year today.

[00:31:31] And so there has to, you know, I think that there are, that's why there are procurement

[00:31:34] people working in major positions that distributors these days. That's all they do. They need

[00:31:41] to know what's out there, where it is, what the price is, how fast I can get it. And those are now

[00:31:47] major roles that are being played at distributorships large and small again across the country.

[00:31:54] And regionally like if you're a major, if you're an Excel, you've got dozens of procurement people

[00:32:00] and that's all they do, you know, and that's really I think been a radical change from,

[00:32:05] like you were saying when you were getting a fax, you know, a few days ago.

[00:32:11] Yep. So what did you hear from your post yesterday and your network from the distribution side of

[00:32:18] things? Yeah, yeah. So they were great. One of our distributors, you know, they, they were,

[00:32:26] it wasn't a surprise. So they were stocking up well in advance, you know, they said that

[00:32:32] they had at least 30 days worth of, you know, full stock products where they really believed that they

[00:32:39] would be able to fulfill all needs and not be impacted. And that's probably about as good as

[00:32:46] you can do. I mean, there's only so much warehouse space on the plant, you know what I mean? You

[00:32:49] probably can't do much better than that. Their approach was that they were going to maintain

[00:32:56] a higher level of stock materials and move them around their multiple locations as needed

[00:33:04] at their own expense to try and meet whatever those needs were. So they were certain, like everybody

[00:33:10] was hoping that it wasn't going to be an extended strike, but they were certainly paying attention

[00:33:14] to it and had done some proactive work. And I kind of got, they didn't say this,

[00:33:19] but I kind of got the feeling that it was sort of one of those, look, you know, in times of trouble,

[00:33:27] in times when you might have a hard time, you know, sourcing products, we're going to,

[00:33:33] we're going to take good, we're going to take as best care of you as you possibly can. And we

[00:33:37] hope that down the road, you're going to remember us whenever you need anything, you know,

[00:33:42] so it seemed like the, those who strategize well felt like it was really going to have a longer

[00:33:48] term. Yes, it was going to take care of everybody short term, but that was going to kind of create

[00:33:53] the tattoo, the stamp of we're there for you all, we're there for you 365, not just during,

[00:34:00] you know, what potentially was a 30 or 45 day. Yeah. So being a very short strike,

[00:34:08] probably didn't get to a place of allocations, right? From manufacturers to distributors,

[00:34:14] distributors to end users, right? Yeah. And we're a little bit about unwinding, to be honest with

[00:34:19] you, you know, again, some of the, some of the manufacturers said we're going to ship stuff

[00:34:22] to the West Coast now, there's massive expense there, you know, boat around the, you know,

[00:34:27] through the Panama Canal, which is hard enough as it is. So now they're going through some

[00:34:32] unwinding of saying, Hey, how do I turn this back around again? It's the lowest expense

[00:34:38] that I could possibly have. So there's, yeah, still a lot of plenty.

[00:34:43] That's a big, that's a big issue when you start putting sand in the ship that's supposed to be

[00:34:47] going to the East Coast, the West Coast in a lot of instances, but I also saw something of interest

[00:34:52] through this week, Tom and I are both born and raised in Long Beach, California.

[00:34:59] Funny, funny fact other than we've been friends forever, we were born in the same

[00:35:02] Moscow. But the ISAN interview of the executive director, CEO, I'm not sure what his title was

[00:35:10] of the port of Long Beach and through the port of Long Beach, the Port of Los Angeles are just

[00:35:14] separated by a spit of man made peninsula there that they have. But if you put those

[00:35:24] together, I think they're combined, I think through the third busiest port in the world.

[00:35:27] But the head of the port of Long Beach was talking about being interviewed on the local news before

[00:35:33] I left town on Tuesday or Wednesday, I guess. And he was talking about the, they were being

[00:35:39] interviewing him about port strike and he talked about the implications in the port in Long

[00:35:45] Beach and or LA. And he was saying, you know, we're seeing a slight uptick of,

[00:35:49] you know, maybe a little bit of containers wouldn't normally be coming here.

[00:35:53] But it was really intriguing to me and I wish I could remember the wording,

[00:35:58] but he was alluding to the fact that their unions in the port of Long Beach

[00:36:04] are not excited to have extra work because it's being pushed away from their brothers

[00:36:11] right in the Gulf Coast and East Coast. So now you had this and if he was willing to

[00:36:18] even go there at all and touch that topic, you know that there's a pretty significant factor there of,

[00:36:25] you know, nobody being excited about unloading, at least unloading quickly, anything coming that

[00:36:31] had would have been not been able to be unloaded in another spot. So that kind of got to me and

[00:36:37] made me a little bit nervous when you think about again the issues that go with the supply

[00:36:41] chain that we work within, within wholesale distribution manufacturing. So it sounds like

[00:36:46] you should automate. Well, I searched that a little bit this morning before we got on and

[00:36:53] they didn't have a chance to read the article but the articles that came up. But as we talked about

[00:36:59] the automation component of that, there was a, I just searched the port of Rotterdam and one

[00:37:07] of the articles I saw was written in 2015 and it was comparing the port of Oakland with

[00:37:13] the port of Rotterdam and the efficiencies or inefficiencies compared to the two of those.

[00:37:19] And I think about, yeah, we've been talking about this, you know, I mean 2015, nine years ago,

[00:37:25] almost 10 years ago, but it's a long time to be having not made really any progress in this country

[00:37:32] along that line. So we'll see what's next. So I guess the big issue is what happens in January

[00:37:38] as these parties will be talking throughout the holidays evidently and see what we come up with.

[00:37:45] Scott, any takes on any other takes from your, you mentioned manufacturers, reps, distributors and

[00:37:52] manufacturers, any other key takes that you saw or anything unique that came from the feedback

[00:37:57] you got from your network? Again, I think the last take was again the ability to communicate

[00:38:04] where we're at. And I think that again, the folks who communicated with me

[00:38:09] had not just a strategy to source as many products and create and bring into this country as many

[00:38:16] products or provide for their, if they were distributors, provide to their customers as many

[00:38:19] products as possible. They also, you could tell really had a specific communication plan,

[00:38:26] but they were not going to let anybody guess what was going to happen. It's possible

[00:38:32] and I think that's a huge asset to any company. They obviously were like, this is what we're going

[00:38:39] to do this week and the next day and next week or however long this takes. And I was really

[00:38:45] impressed by the fact that there was going to be, they were going to take guessing out of the

[00:38:49] equation. And that I think is really essential to their success. That's awesome. And you

[00:39:00] jump off on this topic. A lot of couple things at the end is we live in a world where we can

[00:39:06] communicate and to have any ambiguity in the supply chain discussion, there's information

[00:39:14] we don't know yet, but to look across the supply chain and not be able to communicate

[00:39:21] efficiently and transparently is, it's just unexplained this day and age. So I did

[00:39:28] with Chief Revenue Officer of NAW, popped the note up that Eric Hoplin from NAW is again on

[00:39:37] Fox News this morning walking through what all of this means and what's next. So if you

[00:39:48] Dan Chuberth posted that, Maria Bartiroma on business this morning and about what we might be

[00:39:56] seeing next between now and January. It's coming up. Any of the thoughts, Thomas? Got on this?

[00:40:04] No, I think we've done it.

[00:40:10] I'm interested to see

[00:40:14] if Kevin, you're breaking up in your, is Kevin frozen for you, Scott as well?

[00:40:19] Yeah, he's frozen a little bit for me too.

[00:40:23] But I think the big thing we'll have to see what happens in January.

[00:40:27] And I think part of that could be a function of who our administration is come January. So

[00:40:32] it'll be, at this point it's up in the air, but anyway, should play out with some interesting

[00:40:38] stuff. All right, Kevin, I think you're moving again, Seth. Maybe not.

[00:40:46] Well, Scott, thanks for being with us. Hopefully you guys can hear me.

[00:40:50] You able to hear me? Yeah. Good. Scott, thanks so much. I've been coming with this last minute.

[00:40:55] We're going to get you on the DACA to join us again soon for a full show.

[00:41:02] And I don't know if you're going to be in Chicago for any of the upcoming

[00:41:06] electrical buying group meetings in next month. But if you are, let's make sure to connect during

[00:41:12] that time. I will be there the end of October, definitely. Very good. Very good. Let's make

[00:41:19] sure we break some bread or spend a few minutes together. You got it. Thanks, you guys for

[00:41:24] having me. I really do appreciate it. Thanks, Scott. Good. Bye. Hey, Tom, let's kind of

[00:41:32] throw the newsletter back up. Let's look at a couple articles and we'll call it a day. How's

[00:41:35] that? Yeah, as Bob said, I think there's a solar flare here in Boulder that is making you look a little

[00:41:43] like. My apologies. Yeah. My apologies. So, well, this kind of just as we remember, we talk about

[00:41:50] each week, we talked about breakdown of the economy and the supply chain. We spent a whole

[00:41:54] part of today's show talking about the supply chain, which I think was of real value to us.

[00:42:00] We had some info about manufacturing contracts in September. A good article there from Industrial

[00:42:06] Supply. There was some good news to the economy this morning though, Tom, with the jobs reports

[00:42:11] and unemployment. Did you get a chance to read that? How about your stakes?

[00:42:18] Well, I mean, it's like I said, you can't trust these statistics, I don't think. But

[00:42:24] yeah, but certainly the job report was much better than expected. They also revised prior

[00:42:33] reports to be higher than what they were significantly. I think it was 72,000 jobs.

[00:42:42] You know, I mean, I don't know what to think, right? You've heard a lot in the last week about

[00:42:46] with Powell talking about, well, we're going to look at the data. We're going to make our

[00:42:51] decisions, as Bob said, they'll just adjust the report down again next month. Yeah, exactly. I

[00:42:56] think it's like, hey, how do I turn the dial based on what I want to hear? What I want to hear given

[00:43:02] anyway. So that's why I don't know what to think about it. But if you were to look at the data

[00:43:07] and there is one more jobs report that comes out in November before the next Fed meeting.

[00:43:12] So, you know, if that report is higher again, right, significantly, or if they decide it's

[00:43:19] going to go down, I think that's going to determine a lot of what's going to happen at the next Fed

[00:43:24] meeting. But yeah, anyway, I mean, you know, you could say there's our politics behind,

[00:43:33] you know, but again, there's I think this would I think this would be the last job report

[00:43:39] possibly before the election. I think if the elections on the fifth and I think

[00:43:43] you're right, it would be one more before the election, I believe.

[00:43:49] We have to look that up. I don't I don't see the jobs report substantially impacting

[00:43:56] voters at this stage of the game. I don't think it's a job report. I just think it's

[00:44:02] quote unquote shows a healthy economy. Yeah, right? Which is what it's trying to point to.

[00:44:07] So yeah. And I think it's interesting, right? That we're

[00:44:12] I don't know a lot of conspiracy theory potential with some of these things as the

[00:44:17] end of timing of them is as they come together. But we'll have to see watching the pundits this

[00:44:22] morning on on CNBC at least talked that they talked to three or four different economists.

[00:44:29] And then the opinions of their their economics team that they have there was

[00:44:36] only one person said no more cuts. Everybody else said at least one more cut this year,

[00:44:42] but but 250 basis points versus 500. So we'll see what we'll see what comes out of that.

[00:44:50] Go from there. So some good news out of the industrial distribution big 50 list has been

[00:44:57] released. So if you are interested in seeing who the top 50 are in in distribution room,

[00:45:06] an overall growth standpoint revenues product categories so forth, check out industrial

[00:45:11] distribution dot com. Tom, it's probably time for us to kind of wind down today. But in our

[00:45:16] e-commerce and marketing section, we've got a handful of good articles each week we publish

[00:45:21] the newsletter with the technology and cybersecurity in the segment. And then we also talk about sales

[00:45:27] and M&A and all good articles that we posted this week, I think all total we've probably got

[00:45:33] 15 great articles in the newsletter or so this week. Yeah, no, I agree. And there's

[00:45:39] there's some there's some here that I think you know the solution selling one interestingly enough

[00:45:44] was quite good. It's really talking about, you know, solution selling right as

[00:45:49] selling a solution. But as it says here, the biggest challenges we have in sales is recognizing

[00:45:56] is the customer recognizing the problem having them you know the customer being able to define

[00:46:01] their problem understand their problem and take action about it. So it's kind of like going back

[00:46:07] in the sales process and saying how do you create that demand that actually gets somebody

[00:46:11] to understand the problem and the opportunity that's there? So I thought this was a good

[00:46:15] article on that. I can't help you if you don't want to be helped. Yeah, right? We're

[00:46:20] don't understand the problem. Good. Good. There's some good tips in there on conversations and

[00:46:25] communication. And then in a people and leadership segment, we had a couple articles about

[00:46:31] generative AI one relating to having policies within an organization and then another one

[00:46:37] about training within an organization. So we've added that earlier this year are

[00:46:42] people in leadership segments. So those are some good articles. So Tom, let's start our

[00:46:47] wind down for the day here. I really appreciate everybody being with us. I'm sorry about my

[00:46:54] hiccups with my solar flare is Bob. I would know we're leaving early because you've got a

[00:47:00] year at a conference and plus you've got to go deal with that solar flare. So

[00:47:04] well, and I've got to get to this conference and get a flight home home next week and then

[00:47:09] three straight weeks on the road of four different buying group and trade association

[00:47:16] events in three weeks. So a lot of movement going on, but good times out there. Look forward to

[00:47:21] seeing a lot of industry folks over the next few weeks. So as we wind down the quick reminder,

[00:47:26] what we reviewed today and talked about was just a what was probably the first time we've

[00:47:32] done this where we spent most of the show on a single topic. But the supply chain issue

[00:47:37] is getting more and more complex all the time. So we appreciate everybody that was with us today.

[00:47:41] Certainly Scott joining us. We do this every week. We review our newsletter around the horn

[00:47:46] and wholesale distribution. If you don't get that newsletter and you would like to

[00:47:50] feel free to reach out to us at hello at Leedsmarktech.com. We'll get that out to you.

[00:47:57] We do every week and you also go to the website for the show www.aroundthehornpod.com

[00:48:06] and see past episodes there. And we'll look forward to people joining us again in the future.

[00:48:12] We think again Scott, we appreciate our editor and producer of the show,

[00:48:17] John Taylor, that takes care of things each week. And obviously we couldn't do this

[00:48:21] without the support of Leedsmark Technologies. So Tom, that's it for me. I'll

[00:48:28] check in with you on my way to the airport later. How's that?

[00:48:31] All right, sounds good. Thanks everyone. Have a good weekend.

[00:48:33] Thanks everyone. Have a great weekend.

[00:48:40] We hope you enjoyed today's episode and our guests. Each week we try our best to dig into the topics

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