layoffs and the economy in general

I posted something about this "elsewhere". I got wind of a layoff of a specific number of employees from a specific manufacturer of car wash equipment. To me, this is very telling of the state of our industry at present and the state of our economy.

The members here on this site are more open to discussing economic topics without "flame wars" and more capable of of presenting topics without slandering one another. So I'm asking:

1.How is everyone doing?
2.What's your "opinion" (remember it's an opinion... it's ok to say what you want).
3.When do you think things will get better/worse?
4.What steps are you taking to cut back if any?
5.What can the ICA or Associations do to help (if anything).

I'll go first.

1. I'm struggling going into the summer now. The SS is down at least 30% (maybe 50% I've only owend it a year April 15th so It's hard to trend)and a new wash opened about 2 mile down the road (poor location) that is doing nothing! The tunnel is off 9% this year compared to last year (picked up the last 10 weeks from being off 15% YTD). 2007 was 12% lower from 2006 at the tunnel. However my average ticket this year is down $1.70! Facing higher taxes (property taxes didn't get paid), higher insurances and higher wages (Florida increases the min wage) has pushed my labor % from 17.3% (2006)-17.4% (2007)-21.8%(2008) comparing month to month Jan-June 14th. The decrease in the $1.70 per car this year is most like increasing my labor %.

The main problem with this was that my area was experancing growth at 12% per annuim and over the prior years I averaged 18% growth before 2007 down turn that started November 2006. The business as of 2006 was just beginning to become profitable, but now it's marginable to say the least. I can't run any leaner without going EE and that would further drop the average ticket. So... I need to gain the 15-20% back and trend growth in the area again with economic growth. Without economic recovery, stable gas prices and less market compatition.... I'm not going to survive after next year! There's an IBA opening in a few months less than I mile up the road. I offer a $3 wash temporally (until December when I will again go to the 5/$15 prepaids only) to fend off the IBA's.

2. My "opinion" is that this economy is the second worse in US history after the great depression. If we don't do a major economic recovery plan by "creating jobs" (a plan likened to the FDR NEW DEAL) then limited job creation will happen and the only job creation will continue to be in health care.

3. I don't see jobs, home sales or major market movements for almost 1 year to 18 months! Again this is my opinion. The last "recession" lasted 8 months begining March 2001 and ending November (slighly less than average). It was not identified that we were in a recession for 18 months after it ended! So the next big "shock" will occur after the election (if not an October surprise attack on IRAN drive up oil to over $200 a barrel) when oil prices surge again in mid-winter under a new President. I just don't see good thing for the next year.

4. I cut back labor, tracked all I can in cost. Gone to less costly chemicals.

5. The Associations need to get on board to promote water conservation in a big way and get driveway washers to use a professional car wash. Instead of PR and press releases about a leader in the industry using HF in his soaps that hurt this industry's image.

I have said this a million times...you are in business to make money, not save money, why use a cheaper chemical? Especially at a self serve. The hardest thing to do is get that customer pumping coins into you wash, why not give them the best experience possible, so that there is no question that they will be back when it is time to wash again. If you switch to cheap "get-by" products the only thing you will get is a lower utility bill. With that being said, a quality chemical set up right, should cost you less in the long run anyways.

Cheaper only in 2 spots in my tunnel. SS has been unchanged, Tropical bay line of Simonize. Two spots in tunnel went from lustra was (pearl) to Superor wax (which was $225 less) and it has done as good if not better getting cars dry. The other spot was pre-soak, about $275 55gal cheaper than Simoniz PRIME PAK PRESOAK with Superior and it to has done a fine job. So that $500 at the same dilution ratio without sacrificing quality. I also removed Simoniz's VISION CLEAR and added RAIN-X. Vision clear only sold at 2% or less over the past year 1/2. Rain X sales are over 10% in the 3 weeks that I have been selling it.

As long as the weather is nice we have been busy here in NH. We do see slower volume on the cloudy, drizzly days, dont get me wrong. But for me I think consistency is key in this business. I never speed my conveyor up on high volume days, my chem never changes only to improve, evrything is the same, everyday of the week, my crew has been the same for 6 plus years. We now offer an express interior on slow days $19.99 with out a wash(vac-window-wipedown inside) This has been a great band-aid for slow volume days. Seeing we were flex-serve for 10years which we are ext only for less then a year now. People have taken on the express inside. Had the vac, bought a tent and shed have made $25,000 sinee April 1. My ticket is down 25 cents so people are spending a little less at my place too. my car count is steady freddy with all the other years only since march though. we got hosed with 21 days off due to smow and rain for jan and feb. my car count right now is 407 since 730 this morning and our new IBA is at only 51 but it's only a few months in judging by past weeks numbers the IBA should do about 100-110 for today

When times are tough - never provide cheaper chemicals. Some operators in an effort to save money cut back on chemicals in a SS. Are'nt we selling time and quality. Cheaper chemicals give you less of both. If a customer has
a few bucks to spare then he surely wants to get his money's worth. Too much soap is OK if it cleans. It looks great and if it cleans well and takes onger to rinse off then it better for us and customer will be back. I added a supervisor on the side of the full serve to personally inspect and talk to every customer. I want the customer to see him and to know that this person is looking closely for anything amiss or less than a perfect car. You don't get this from an IBA. There can't be any loose ends in this economy or anything less than the best quality of car wash. Our cars all have clean wheels (not just 90% clean), the best soap and drying agent is applied; I want the car to have a shine, all of the jams are wiped out, all customers are offered air freshener - N/C, we personally greet each customer, and they are thanked one on one by a supervisor before they leave.
Do any thing less then you are steering your customer to the competition.

with all due respect.. A new deal like FDR?. First of all, democrats and their union lackies would never go for that. Secondly, this assumes that government is the solution. In fact government is almost never the solution.

You want more economic growth and lower energy prices, then the governemnt has to stop spending money like a drunken sailor on shore leave and get the budget balanced. Do that and you would see energy prices come down 20-25% as the dollar would increase in value and bring the price of oil down with it. The other trhing government could do is get out of the way of the oil companies and let them develop oil shale in the west, drill in ANWR and off the coasts and lift the nmoratorium on drilling in the gulf. Also, while our energy usage has doubled in the last 30 years, no new refineries have been built. This is economics 101. Tight supply and high demand leads to higher prices. Its that simple. Oil is used in every facet of our economy, not simply for fuel. Hell, China is drilling off the coast of Cuba but we can't drill for it off our coasts. The with food prices higher than ever, we pass a $300 billion dollar farm bill? Talk about payolla. Lets's subsidize ethanol which gets farmers to stop producing other crops in favor of corn for ethanol production. This causes the costs of grains, dairy and meat to rise dramatically. It costs more to produce than gasoline, cannot mixed with gas to send through pipelines to market and gets less fuel economy than gas. Oh and since we're trying biofuels, lets put a 55 cent a gallon tariff on ethanol imports from Brazil

My God, only government could create this cluster&^#*.

1.We have a full service wash not so very far from you, Doug. our full serv washes are down from 2006 17%, but up from 2007 3%.

2. My "opinion" is that the economy in this area is in a tremendous slump right now. As you mentioned, the housing market has really dropped, and that is hurting us a lot. We have been here 28 years, and this is not the worst we have seen. I think the weather has also played some part in this. May was dry this year, and we washed some cars. In March of '06 we had only .22 inches of rain.

3. I do not expect the economy to improve for at least a year,maybe longer.

4. I added an express exterior lane which is doing very well. Like you, I have also been very closely watching expenses.

5. I don't think the ICA or the other regional associations will do anything on this.

I should probably add one more thing. And I have no idea whether this applies in your case or in anyone elses. But for us, most of the measures we have taken to get through times like this, were things that we actually did during the good times, such as eliminating debt, building a cash reserve, improving efficiency with equipment purchases,etc.

Bill (Chiefs)

CHINA is NOT DRILLING OFF THE COAST OF FLORIDA! Dick Cheney retracted that statement. See the statement by my Senator Mel Martinez (R). I would really appreciate it if the right wing would stop lying and scaring everyone!

http://www.myrtlebeachonline.com/164/story/483948.html.

WASHINGTON | As Congress has debated energy policy over the past several days, an unusual argument keeps surfacing in support of drilling off the U.S. coastline and in Alaska's Arctic National Wildlife Refuge.

Why, ask some Republicans, should the United States be thwarted from drilling in its own territory when just 50 miles off the Florida coastline the Chinese government is drilling for oil under Cuban leases?

Yet no one can prove that the Chinese are drilling anywhere off Cuba's shoreline. The China-Cuba connection is "akin to urban legend," said Sen. Mel Martinez, a Republican from Florida who opposes drilling off the coast of his state but who backs exploration in ANWR.

"China is not drilling in Cuba's Gulf of Mexico waters, period," said Jorge Pinon, an energy fellow with the Center for Hemispheric Policy at the University of Miami and an expert in oil exploration in the Gulf of Mexico. Martinez cited Pinon's research when he took to the Senate floor Wednesday to set the record straight.

Even so, the Chinese-drilling-in-Cuba legend has gained momentum and has been swept up in Republican arguments to open up more U.S. territory to domestic production.

Vice President Dick Cheney, in a speech Wednesday to the U.S. Chamber of Commerce, picked up the refrain. Cheney quoted a column by George Will, who wrote last week that "drilling is under way 60 miles off Florida. The drilling is being done by China, in cooperation with Cuba, which is drilling closer to South Florida than U.S. companies are."

In his speech, Cheney described the Chinese as being "in cooperation with the Cuban government. Even the communists have figured out that a good answer to higher prices means more supply."

"But Congress says no to drilling in ANWR, no to drilling on the East Coast, no to drilling on the West Coast," Cheney added.

The office of House Minority Leader John Boehner defended the GOP drilling claims. "A 2006 New York Times story highlights lease agreements negotiated between Cuba and China and the fact that China was planning to drill in the Florida Strait off the coast of Cuba," said spokesman Michael Steel.

The China-Cuba connection also appeared in an editorial Monday in Investor's Business Daily, which wrote that "the U.S. Congress has voted consistently to keep 85 percent of America's offshore oil and gas off-limits, while China and Cuba drill 60 miles from Key West, Fla."

And on Tuesday, Rep. George Radanovich, R-Calif., wrote in the Modesto Bee that "China, thanks to a lease issued by Cuba, is drilling for oil just 50 miles off Florida's coast."

A spokesman for Radanovich said Wednesday that the congressman had read about a Cuban lease to Chinese interests in the 2006 Times article.

China's Sinopec oil company does have an agreement with the Cuban government, but it's to develop onshore resources west of Havana, Pinon said. The Chinese have done some seismic testing, he said, but no drilling, and nothing offshore.

And Bill, I said my "opinion" is we need a NEW DEAL like plan that creates jobs, not gives me, a business owner more tax breaks to create jobs (unless that's part of the NEW DEAL) by creating infrastructure. The levees of Iowa that failed yesterday were 50 years old, bridges in Minnisota falling down, rail lines aging, Rivers overflowing and dykes failing, dams, roads. Something like the TVA, the WPA the national highway system... we need new airline safety systems as our air trafic control is outdated and delays in the air is costing million of gallons of fuel wastage! Smart reconstruction that puts people to work HERE IN THE US that will spend money at OUR CAR WASHES! But this is only my opinion... I'm sure you have yours? Tax cut on the rich? Tax breaks on corporations, more free trade? Those thing seemd to work so well didn't they?

benscarwash, I don't want to get "political" here, but after reading your posts, perhaps you should get a few facts by googling "china drilling oil"/ There you will find hundreds of articles about China's drilling activities as well as the Cheney office retraction (the whole story). Personally, I don't see avoiding Jimmy Carter's second term regardless of whom gets elected. Those of us who lived through that period remember the gas lines, rationing, double-digit inflation, and the expansion of welfare to include free food stamps. That period of time ushered in the "misery index". On the brighter side, I believe the misery of Carter ushered in the boom era for carwashing in the 80's. How long has it been since we have seen carwash equipment manufacturers competing, writing orders on the show floor? Remember the tables on the show floor crowded with guys writing orders and taking checks? I believe those days will return after the upcoming "correction".

Bill, absolute comments about a farm bill will get you nowwhere. In all businesses there are input costs, guess what farmers use to plant, fertilize, harvest, water, etc with, energy. Since you have the energy plan figured out I guess you can lower these costs for them. You should learn to talk in % margins since ALL input costs for ALL businesses have gone up, everyone may be getting more for their product but it is also costing more to produce. I am not saying a farm bill was the answer, the government has shoved ethanol on us and with no protection for livestock producers, who by the way have no control over the price they recieve for their product. Their input costs have more than doubled in the last year and the market price has not kept up. Now lets move on-

1. We are up for the year at both stores-however in the last two months one store has continued to be up but the other has done the same as last year. Overall we are up about 46% for the year, a lot better than some I am hearing on here.

2. I guess I put my "opinion" up top-to finish this can be, or is, a tough time for almost everyone and the answer will not be completly solved by a "D" or an "R"

3. I do not see things getting better for 12-18 months. Living costs have gone up too fast and wages need time to catch up. Some jobs will be lost in order to pay the remainder a higher wage and some industries that can not react to price increases as quickly will raise their prices to pay higher wages. Look to next year for the gap to close up a little and for everyone to adjust their budgets.

4. I haven't done anything to cut back really at this point-sometimes these tough times become an excuse to review your entire business. I did this last year and reduced my insurance, credit card fees, bank fees etc to save money. I did review my chemicals and found I was pretty happy where I was.

5. I am not sure what the associations can do besides offer advise to operators and DO NOT jump to extremes in any direction that would increase our operating costs. I just looked at solar panels-I could get my cash investment back over the next 30 years and then start making a return on that investment. "Going Green" may be for some but not all and making an issue out of it in front of the public may hurt some that can not "go green". Associations should have the information and be a resource not push it to the front.

So is this post about the economy or the politics of the Carter era and China drilling for oil?

Running away and figuring out how to deal with the loss of volume is destructive, just like lowering prices. If the first thought is to move to cheaper chemicals, then really look at what you're doing.
Right now the consumer is looking for quality and big brands for their money. If you change your qulaity by going cheaper, you'll change your volume by putting out a worse vehicle.
Right now is the time to ENGAGE your customer and give them THE BEST quality of service you can. These are the same consumers that are being hit by the rising cost of everything and continue to spend on the appearance of their vehicle.
Make sure that everyone on the wash property is capable of providing outstanding service and making sure they do the best job possible every time.
Are you incentivising your sales people to really work on top package sales or express detail? If not, lock the doors and sell the property to Walgreens.
In times of great challenges come great opportunities, don't worry about what everyone else is doing, focus on what you're doing! Do it right and you'll succeed!

I agree you should never go with "cheap" (cheap implying low quality)chemicals! I do believe there is a difference in cheap and lower cost (which can be a great value for your money) chemicals though. With many of the big brand name companies you are paying for the signage, advertising, hats, shirts and whatever else that they provide (which is never "free"). This overhead that increases the cost does not mean the chemical is better. There are many companies out there that do not do all the give aways creating lower overhead and allowing them to give just as good of a product for a much lower price.

My wash was down slightly this past Winter, mainly due to weather I think. We just got way too much snow all darn winter!!!

I'm still fairly new, so my trends are short for carwashing and therefore not too relevant to this discussion.

My detail shop is up considerably over last year. Given gas prices and the economy, this surprises me, but in a good way! I raised my detail prices this year so this portion of my business is helping me a great deal.

I'm an eternal optimist, have learned to live on less, and am getting better at streamlining my operation. I price shop for insurance, accounting and interest rates. I ran a detail shop only for many years, through some tough times and did fine.

I use my Wife for bookkeeping and we continuously discuss finances, income and ways to save while earning more.

My wash is modest and my lifestyle is modest. I do not live above my means. I drive a 97 Saab for which I paid $500 and my Wife has the nice car; a 99 Saab Wagon w/132k miles.

I know there will be a market correction ahead but do not know when.

I use only the help I need and spend alot of time detailing myself and working the wash.

This is great stuff guys, I am learning more and more with every post :)
BUT dont forget there are differences from region to region. Here in Wichita Kansas, unemployment is very low, realestate is hot or at least very warm, we never had a bubble. And dont forget we have the aircraft manufacturers building corporate jets so fast it would make your heads spin.
They are calling it the Boom area of the country >??????
You can buy a nice home for $150,000.00 in a nice area. You can apply for one of the 1500 new Cessna Aircraft Jobs averaging $70,000.00 anually.
You can also have a nice 6 bay SS Car Wash on a major street for a good price,,call me hehe.
No ,,every thing is not cozy comfee but there are places left in the good old USA that are not falling apart.............yet.........:)
But dont forget our Government has just awarded the biggest military contract in history to the French :) ouch that hurts.
I cannt relate this to the car waah yet as I have only had it for a FEW MONTHS, we are increasing sales monthly so we are going in the right direction but when you start out with sales at $27.00 for the first week, you got very little direction left to go but UP :) We are now at $2000 per month and hope to double that with in the year..... So keep the post comeing so I can learn more to make Car Wash prosperous :)

Damn Allen I wanna be your neighbor!

My volume seems to be up a little this year. I think we are giving the customer a good product with very good service. In fact I'm thinking of raising my tunnel price to $9.00. Another operator friend of mine thinks I'm a little off base with the increase, however my costs continue to increase just like the grocery stores, clothing, freight charges, etc. People expect an increase almost everywhere today. Does anyone think I'm wrong about this ? I think customers will accept an increase in this economy - I think they expect it.

Comments ?

Everything has increased in cost. You can only absorb so much before you are forced to pass it on to the consumers. We are increasing our carwash and our quick lube prices. Every carwash operator that I know works themselves to death. I know I don’t want to work seven days a week in order to barely pay the bills.

"less costly chemicals" for me also means that I went back to my Simoniz rep and look at what other products he has that would work in areas and that could reduce my cost. Like I got rid of my UV triple foam and went back to tripple ripple.

This does not sacrifice quaility. Tire cleaners to... there are big differences there also in cost.

Again... staying away from politics but with facts... CHINA IS NOT DRILLING IN THE GULF. I know it's all over the web, Fox news, little green foot balls, Red state and other places.... it's false.

CHINA IS NOT DRILLING IN THE GULF... YET!

reply by Danny 1 day ago
Damn Allen I wanna be your neighbor!
Hey I'll swap your california for my Kansas :)

We all know that the car wash business is feast or famine.
I've made over 100k editba in a month but I have also lost 70k in a month.
I believe this cliche will become more and more apparent in the near future.

In my opinion the car wash companies that are going to continue to prosper are the ones that realize we are expected to deliver a clean, shiny, dry car, quickly on every customer visit, however it's the intangibles we deliver that set us apart from the rest. Any kind of intangible you can give the customer to enhance their experience will pay off in many ways

1-Free word of mouth advertisement
2-Continued usage from existing customer with the opportunity to build a relationship in turn should equate to higher sales
3-Brand loyalt

Before you look at cutting anything you should analyze your operations.
-Are you putting out a quality product
-Do you have the right people in the right positions
-Sales opportunities

"Toto -This doesn't look like Kansas anymore"

Yes this doesn't look like Kansas anymore. But like the white witch told Dorothy and Toto "You've always had it within you to return home"

Hold on to your hats and walets folks this week.... it's going to be a wild ride!

Job reports come out this week. Expect the 6th straight month of losses (officially making the US economy in recession). Friday's losses on the DOW made it a BEAR market. Banks are looking at huge write downs coming and up to 6000 banks folding. CITIBANK looking at big trouble, Wachovia is in trouble... a takeover is about to happen. Oil hit $142 a barrel.

The economy looks bleek. Congress skipped out for the 4th!

I'm not feeling very good about things. We'll see how this week plays out. From what I'm reading, it's the worst since the great depression and slated to last 2 years.

The Dems are right on course, tanking our economy prior to the election to ensure Obama's election and a Democratically controlled Congress. Never mind this week, hold onto your hats and especially your wallets for at least the next 4 years. CHANGE is on the way, Socialism here we come!

Your are correct...Socialism is on its way. That is the way the dems want it. You have got to read a new book out by Dick Morris(a former Clinton dem.). He goes into day by day how hard our Senate and House are working...they are never there and our Country is on the verge of a Depression.

Just looked at numbers first half of 2007 vs 2008- Gross revenue off 9.4% this year. That is not bad compared to other SS guys I have talked to. I am hearing a lot of "15% off" reports. I blame it on both economy and weather we have been wetter this year vs last. I imagine net is down a little bit more because of higher utility and chemical costs, but haven't plugged everything in my spreadsheet.

I don't really expect numbers to really get better until everything (housing, gas prices, and to some extent the financial market)stabilizes, but I think there will be more optimism after the election, no matter who gets in. A wildcard for fuel prices this Fall could be the Israel/Iran thing.

10% gross is enough to push some overextended operators off the cliff. We have had one foreclosure in the area,with speculation that a few more are coming if things don't get better quickly.

CC sales have increased from 61.7% of IBA sales to 67.3%.

I'm gonna start a marketing campaign for residents new to the area to see if I can get some numbers up.

BTW, I think the 70s were much worse than it is now. My local town had unemployment well in excess of 10%. But don't worry, because we're about to elect the Jimmy Carter of our generation. He'll set things right