Karl Rove steps in it, soils Universal Forest Products

January 8, 2011
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Did Universal Forest Products go “hat-in-hand” to the Obama administration asking for a favor? Is Peter Secchia’s company really chummy with the Obama administration?

Karl Rove seemed to be suggesting that in his Wall Street Journal column last week.

In “ObamaCare Rewards Friends, Punishes Enemies — The administration waives allies through the health law’s onerous restrictions,” Rove wrote that one of the “pernicious effects of ObamaCare” will be “the spectacle of employers going hat-in-hand to the Department of Health and Human Services for waivers from some of the law's more onerous provisions.”

HHS began granting waivers in September to companies that provided workers with "mini-med" coverage. By December, 222 such waivers had already been granted, wrote Rove, “for companies including AMF Bowling and Universal Forest Product (sic), as well as 43 union organizations …”

Rove said the Obama administration “is using waivers to reward friends. On the flip side, business executives will be discouraged from contributing to the president's opponents …”

Yikes! Out went a letter later the same day from UFPI CEO Michael B. Glenn to the Wall Street Journal. UFPI has opposed Obama’s health care legislation from the start, he said.

“To see our company characterized as participating in a quid pro quo deal with the administration in Karl Rove’s opinion piece on ObamaCare waivers was quite a surprise. And completely inaccurate,” wrote Glenn.

UFPI sought and got a waiver, but only for its flex plan — “a small element” of its overall health care benefit package. The flex plan provides employees with $250 for unreimbursed medical, dental and vision expenses, and UFPI didn’t want them to lose that under the new health care legislation — which is “ill-conceived” and “careless legislation,” according to Glenn.

So there, Karl Rove!

Gas pains — and vice versa

Everybody wants to know where the price of crude oil — and thus gasoline — is headed this year, especially the Michigan Petroleum Association/Michigan Association of Convenience Stores.


Hoppen

“The cheaper gas is, the better it is for us,” said Craig Hoppen, current chair of the MPA/MACS, and president of J&H Oil on Chicago Drive in Wyoming.

J&H owns 35 convenience stores (J&H Family Stores) in West Michigan but also wholesales gasoline to other gas stations throughout a large chunk of the Lower Peninsula and into Indiana. J&H has about 550 employees and annual sales of about $300 million.

As crude oil goes up in price, “the cost of business goes up drastically” for the gas retailers, said Hoppen. Those are inventory costs and the cost of receiveables. The use of credit cards costs the retailer about six cents on a gallon of gas selling for $3. That’s taken out of the $3 before the retailer gets it. Hoppen said credit card fees paid by the retailers are a “runaway freight train” that “have taken the profit out of the gas business,” but there’s no question of not accepting credit cards — “not when about 80 percent of business is done on plastic.”

Mark Griffin, president of the MPA/MACS, said that “most of the time, gasoline is a loss leader” for convenience stores. He said last week that the break-even price of a gallon of gas was $3.17, but it was selling at an average price of $3.03 in Lansing that day.

“We would much rather see the price of gasoline go down than up,” he said, because the higher it goes, the less money it leaves in the customers’ pockets to be spent inside the store on “pop, candy, cigarettes — the things that we make money on,” said Griffin.

Why the price of crude oil goes up isn’t just a matter of supply and demand, according to both Hoppen and Griffin. The exchange rate of the dollar is a major factor, because crude oil is traded worldwide on prices pegged to the U.S. dollar. When the value of the dollar drops, the price of crude goes up — and vice versa.

Another factor, they said, is speculation — a word that may have sinister connotations to some people. But in reality, crude oil is a commodity, and all commodities are subject to trading based on speculation.

“When people get concerned about investing in equities,” said Griffin, the commodities market tends to get more attention from investors — and vice versa.

Anybody who can put their finger on the price of gasoline six months from now is “a pretty darn good reader of a crystal ball,” said Dave Scigliano, COO and vice president of supply at Crystal Flash Energy in Grand Rapids, which has 35,000 customers across the state.

He studies charts used by commodities traders when crude oil is being bought and sold. As for six months from now, the price of crude might be up to $100 or $105. Then again, it might stay close to where it is today, just under $90. He suggested that if it goes below $86 or $87 per barrel, it has a good chance of going down further — closer to $80 and perhaps even into the $70s.

Like Hoppen and Griffin, Scigliano said it is “certainly” fluctuations in the value of the U.S. dollar that is driving the price of crude, as well as supply and demand.

Nothing but the truth

The Christian Brothers Automotive Corp. isn’t related to monks or to the brandy. It’s a Texas-based auto repair franchise planning to open a shop in the Grand Rapids area.

The firm’s claim to fame is that its 70 repair shops, mostly in the south, are owned by “born-again Christians, abiding by the utmost ethical and honest business practices.”

Its business model clearly targets women. Its repair shop waiting rooms are said to have “hardwood floors, leather couches, artwork and decorative lighting — what sounds like a cozy family room or lobby in a posh hotel.”

According to a press release, “Christian Brothers Automotive Corporation has created a ‘positive culture shock’ in the marketplace, particularly among women who are used to the dirty, dingy image of auto shops and questionable practices.”

“Historically, the automotive repair industry has been plagued by negative perceptions, and women are traditionally more hesitant about the car service experience because of the dishonesty often associated with the industry,” said Mark Carr, CBAC founder and CEO.

Is Christian Brothers on to something? Is auto repair due for a serious makeover?

“I do think it’s a concern for women,” said Dianna Palmer. She and her husband, Bill, operate Palmer Service Inc., an auto repair shop on Remembrance Road in Walker that marked its 25th anniversary in 2010.

Dianna, who runs the office and does the books, said female customers keep coming back “because they feel like (Bill) listens to them and he is honest with them.”

She said it is important that auto repair shops not make women “feel stupid, like they don’t know what’s going on. Bill always told me a woman will know her car better than any man, because she’s the one driving by herself, or she is the one transporting her children,” and she knows what the car is supposed to sound like when it is running properly.

Are most repair shops pretty honest? “No. I don’t feel that way,” she said. “There are people out there who will cheat people, unfortunately. I think they target women, and I think older people, too. Things have changed with cars now — computers, they’re complicated. I think they just take advantage of that.”

Incidentally, the public relations rep who contacted the Business Journal on behalf of Christian Brothers Automotive noted that the company’s COO, Lew Ten Have, is originally from Grand Rapids. He attended Hope College, “where he was captain of the football team,” then graduate school at MSU, “and is very proud to bring Christian Brothers Automotive to the area.”

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