Home Field Disadvantage

16 11 2010

As mentioned on these pages before, stuff that doesn’t work well for me will be tolerated for maybe a couple bad experiences before I move on to something else.  When something starts to go haywire, you don’t want to be around me and you certainly don’t want your children around me.  Probably the worst thing to go haywire is a computer because I know I can’t take my frustration out on the computer since that will obviously make things worse, so the vocabulary gets a little extra spicy.

Back in about 1983, I was shopping for my first car.  Growing up in rural America farm country, 90% of vehicles on the road were made by the big three, now known as the big one and the incompetent and crappy two.  One of the vehicles I test drove among the several Detroit models was a Honda Accord.  This was back when they were the size of today’s Civic Coupe.  I remember it to this day.  It was like the first decent micro or import beer I tested, although I can’t remember what that was if you know what I mean.

The Accord was unlike anything I had driven before.  The suspension was firm and it handled crisply.  It accelerated very well for a car with a small engine.  It was a quite ride.  But it cost $2,000 more than my second choice at the time, a 1983 Ford Mustang so I bought that.  What a piece of junk.  This was a car that was transformed from the 70s muscle car to a wimpy plasticized rattlebox.  It always had some sort of natural frequency in the drive train that vibrated such that the rearview mirror gave me a blurred vision of where I had been.  I took Wrigley’s chewing gum wrappers and rolled them up to stuff behind the chincy dashboard cutout with a cheesy faux wood pattern to keep it from buzzing from the vibration.

Today I have very high expectations for any vehicle I own.  I bought the Acura RSX new seven and a half years ago and piled about 100,000 miles on thus far.  The only things I’ve replaced is oil, filters, tires, wiper blades, a battery, and windshield fluid.  There have been no mechanical or electrical problems but last week the engine light came on and I thought maybe my “luck” was up.  No problem.  I think it was gas-cap issue.

I have no allegiance to buying “American” stuff.  I’m an open-market competition advocate.  It’s my money and I’m going to buy what I think is the best value, including John Deere yard and garden equipment.  It’s expensive.  People have told me this or that brand is just as good.  Sure.  You go right ahead and buy your heap of lightweight, rattly sheet metal, belt-shredding, piece of crap.

In some distant precincts, or maybe its just certain buyers, there seems to be a strong home turf advantage for hiring EE consultants.  Alien firms are virtually locked out of the market.  In some cases we’ve been on projects where we needed to use local engineering firms because they know the market, technologies, and how to handle the vastly different conditions.  Paahleeeese!  Does the first law of thermodynamics not apply on planet Z?  Does water not freeze at 32F?  Do the customers have two heads?  If so just tell us which one to talk to.  We’ll adapt to anything.

There may also be perception that if you have to get on a plane that you can’t be responsive, and that travel time and expense may cost a fortune.  Responsiveness may be an issue on the other side of the ocean seven time zones away, but not in the continental U.S.  Travel expense is also probably an overhyped disadvantage.  It takes more time to drive within some service territories to distant end users than it does to fly some places.  It takes no more time or money to fly to the coasts than it does to fly to Ohio or Missouri.  Actually, flying to coastal destinations is typically cheaper than flying a couple states away because there is far more competition.

In some cases however, there is a need to have a Johnnie on the spot and we make it so, or make it clear in a proposal that we will make it so.  The latter doesn’t seem to work.

Programs that lock out alien firms are doing their ratepayers no favors.  They lock out innovation, new ideas and possibly more efficient and effective ways of doing things.  When we bid on local jobs, we take nothing for granted.  I feel we deserve nothing for merely being one of the closest firms.  Once hired regardless of where, it is our mission to have the client so pleased they wished they’d never have to go out for bids again.

In other cases, I think buyers may have something like Stockholm Syndrome and they become sympathetic to their consultant’s predictably unreliable and tardy work.  This is probably universal and not just for EE work but other consulting and even other businesses entirely.  But hey, the consultant is cheap and the buyer knows what they are getting: crap.  But there are no surprises or disappointments because expectations are lower than Brett Favre’s salvage value.

Tidbits

This just in: USA Today reports that $300 million spent on just over 600,000 appliances ($500 per appliance!!!) is achieving $27.5 million in annual energy savings.  Doing the math, that’s about an 11 year “payback” on program investment.  To put this in perspective, a rule of thumb for EE programs run by utilities is total program cost to savings ratio (“payback”) is 1.5.  Yes, the decimal point is in the right place.  Do we need further reason to lock the federal government out of EE?

The spokeswoman says energy savings were only one goal of the program.  Yes.  The other was a political payout followed by a glut of used appliances and a drought of new appliance sales.

written by Jeffrey L. Ihnen, P.E., LEED AP





Black Monday Stampede

10 03 2010

July 1992: Tickets for U2’s ZooTV show at RFK stadium in Washington, DC go on sale by Ticketmaster.  The tickets are snapped up in a few hours, as fast as the phone lines could handle the traffic.  This was before anyone knew what the internet was (no Al Gore jokes).  Fortunately, a second date was announced and the roommate waited for the crack of 12:00:00 AM for a shot at the second batch, successfully.

March 1, 2010:  Federally funded rebates become available for efficient appliances in Iowa and Minnesota.  Phone lines jammed with 10 times expected volume and internet traffic at 100 times expected traffic took down the website of the contractor running Iowa’s program in the first hour, within minutes of opening.  Ultimately, Iowa’s share of the funds was gone within 8 hours.  Minnesota’s program dragged on until the next morning.  It was a Wal-Mart-style black Friday digital stampede.  Thank goodness for (don’t use Al Gore jokes) technology – I didn’t see any reported injuries or fatalities.

Some of these federally funded appliance incentives run two to ten times utility incentives.  What were they thinking?  Combined with utility incentives the total can exceed 50% of the purchase price for crying out loud.  See “Policy to Curb Carbon” (government doesn’t know how to do energy efficiency) and “Incentive or Discount” (people trained to wait for handouts to buy).  This is pretty much a giant transfer of wealth from people paying taxes to people taking the rebate checks, and I don’t begrudge the people taking the money.

Apparently the people who designed these state programs, which are actually handouts at these rates, don’t understand the market and/or supply versus demand.  Obviously they gave away too much money and taxpayers got far less than they should have for their “investment” in terms of reduced energy consumption, emissions, and sales and in some cases manufacturing here in the states.

And to top off the environmental benefits of the appliance programs, participants are to send their old appliance to the scrap heap, with self-policing enforcement.  Who’s going to do that?  They will either end up with a second refrigerator or freezer in the basement or the old stuff will show up on Craig’s list.

Recall cash for clunkers last summer.  The intent there was to offer a total of $1 billion incentives, up to $4,500 per vehicle and it was planned to run from late July through November.  Within a week or two the billion dollars was gone and congress quickly shoveled in another $2 billion.  THAT was all gone by Labor Day.

While attending the International Energy Program Evaluation Conference in Portland, OR, last fall I was engaged in a small group discussion – was cash for clunkers a free rider?  A free rider is somebody who takes an incentive for something they were going to do anyway.  This is considered to be a waste of incentive money.  That’s arguable in this clunker case because it more than likely moved the purchase date forward for buyers, but I also think it’s the wrong question to ask.  The more appropriate question is, was it cost effective?

Answering the free rider question, Edmunds estimates that of the 690,000 cars purchased through the cash for clunkers program only 125,000 were incremental.  That is, only 125,000 transactions took place that otherwise would not have.  The rest just displaced a sale that was going to happen soon anyway.  Figuring in free ridership, the taxpayer cost per vehicle was $24,000.  And then consider this: the average trade-in value of the clunkers was about $1,500, which may be worth $1,800 for sale to the next guy.  All these cars were destroyed.  That comes to $1.2 billion in destroyed working assets.  So the feds spent $3 billion to increase profits by car dealers by perhaps $125 million and destroyed $1.2 billion in assets.  Annual energy savings for these 125,000 vehicles would be roughly $120 million.  And maybe the domestic automakers lost a little less money as a result of the program.  Woohoo!

To be fair, the cash for clunkers program may have resulted in the purchase of more efficient vehicles than would otherwise be purchased.  Hardly.  The average fuel economy of cars sold through the program was 25.4 mpg.  The corporate average fuel economy for cars is 27.5 mpg and with light trucks included, it is 23.5 mpg.  In other words, these “efficient” cars were essentially average.

And the doozer of them all: free golf carts thanks to tax credits and sundry other incentives for electric / high mileage vehicles. 

These aren’t incentives.  They are gifts from frugal people to people who probably don’t need this crap.  But good for them, I say.  You have to play the game that’s put in front of you.