Category: Business

Process Improvement – American Airlines

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Alexandra Marks:

Two American Airlines mechanics didn’t like having to toss out $200 drill bits once they got dull. So they rigged up some old machine parts – a vacuum-cleaner belt and a motor from a science project – and built “Thumping Ralph.” It’s essentially a drill-bit sharpener that allows them to get more use out of each bit. The savings, according to the company: as much as $300,000 a year.

And it was a group of pilots who realized that they could taxi just as safely with one engine as with two. That was instituted as policy has helped cut American’s fuel consumption even as prices have continued to rise to record levels.

From the maintenance floor to the cockpit, American Airlines is daily scouring operations to increase efficiency and find even the smallest cost savings. It’s paid off: Last week, the company announced its first profit in almost five years.

Via John Robb

Racine’s Artist Colony

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Robert Sharoff:

IF Racine, Wis., is not yet the Hamptons of the Midwest, it’s not for lack of effort.

This formerly gritty industrial city roughly 70 miles north of Chicago and 30 miles south of Milwaukee on the shores of Lake Michigan has been trying for much of the last decade to reinvent itself as an artist’s colony and tourist destination.

The efforts have included the opening of the $11 million Racine Art Museum on Main Street in 2003 and the creation of a gallery district centering on nearby Sixth Street, currently home to about a dozen galleries.

Racine Map. Madison based Gorman & Company, developer of the Mitchell Wagon Factory Lofts is mentioned in Sharoff’s article.

Racine is considering county-wide WiFi. Perhaps they’ll have it in place before we Madisonians do?

Small Town vs. Wal-Mart: Jefferson Opposition Alderman Faces Recall

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Reid Epstein:

The company left in its wake a recall effort against one alderman, a local newspaper smarting from the loss of a major advertising client and hurt feelings from people on both sides of the debate.

David Olsen, the targeted alderman, said the schism has divided the city of about 7,500 more than an 11-month strike at the local Tyson Foods plant in 2003.

Entrepreneurs: Competing with the Big Firms

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Tom Peters offers up several useful tips on competing with big organizations:

Can the small player compete in a world of Citigroups and Bank of Americas? I said it was a lark. And I more or less meant it. That is, among other things, giants— “new tech,” CRM, etc notwithstanding— will always be clumsy and impersonal relative to an “intimate local” who is really out to make a dramatic difference.

Open Source Medical Records System

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Gina Kolata:

Now, however, Medicare, which says the lack of electronic records is one of the biggest impediments to improving health care, has decided to step in. In an unprecedented move, it said it planned to announce that it would give doctors – free of charge – software to computerize their medical practices. An office with five doctors could save more than $100,000 by choosing the Medicare software rather than buying software from a private company, officials say.

Verona based Epic Systems creates and supports a medical records product along with many other health care tools. Slashdot discussion. Worldvista site.

Kimberly-Clark Plans Job Cuts/Plant Closings

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bizjournals.com:

Kimberly-Clark Corp., which has plants in Neenah and Marinette, said Friday that it will cut about 6,000 jobs and sell or close up to 20 manufacturing plants as it increases spending on certain core products and emerging markets over the next three years.

The company, based in Irving, Texas, makes such products as Kleenex tissues and Huggies diapers. Kimberly-Clark disclosed its plans as it reported that its second-quarter earnings fell to $421.8 million, or 88 cents per share, from $454.3 million, or 90 cents per share, in the comparable period last year.

K-C moved it’s headquarters from the Fox Valley to Dallas years ago. They still have a large presence in Wisconsin.

Trade & Interest Rates: China sort of Floats the Yuan

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The Wall Street Journal’s Econoblog provides a useful look at China’s decision Thursday to slightly float the Yuan (this will likely drive interest rates here higher, unless we actually start to significantly reduce our deficits):

This would imply an unraveling of the Bretton Woods 2 regime and will force the U.S. to make significant and painful adjustments to its private and public savings droughts, droughts that much more than a global savings glut explain why the U.S. external balance has been worsening over time. Then, U.S. private spending, both consumption and investment, may have to fall sharply — driven by higher U.S. interest rates and a bursting of the housing bubble — relative to U.S. output to make room for an improvement of U.S. net exports.
And how much U.S. private spending may be squeezed will depend on whether there is a meaningful structural reduction in the U.S. fiscal imbalance. Less foreign financing of the U.S. external deficits would, for unchanged fiscal balance, tend to crowd out private consumption and private investment via higher interest rates. This U.S. adjustment could be painful.

Reminds of a tale that goes something like this (paraphrasing): a butterfly flaps its wings and this ends up being a hurricane halfway around the world.

Nominee Represented CUNA in Supreme Court Case

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WASHINGTON–John G. Roberts, President George W. Bush’s nominee to the U.S. Supreme Court, has a history with credit unions: He argued the AT&T Family FCU case before the U.S. Supreme Court on Oct. 6, 1997.
At the time, Roberts was a 42-year-old partner in the law firm of Hogan & Hartson. He argued the case for the Credit Union National Association (CUNA) and the National Association of Federal Credit Unions, which intervened on behalf of the National Credit Union Administration (NCUA).
The Supreme Court eventually ruled against credit unions in the case, based on a suit brought by bankers in 1990 against NCUA over the field-of-membership expansion the agency granted AT&T Family FCU, Winston-Salem, N.C. The events culminated into the push for the Credit Union Membership Access Act (H.R. 1151), which President Clinton signed into law in August of 1998.
In 1997, after arguing the case, Roberts told CUNA News Now, “It’s always a mistake to try to predict the outcome of a case from the justices’ questions.”
He explained that there was nothing credit unions and members could do to influence the court’s decision. “The court isn’t like Congress and third parties we’ve lobbied. The court is looking at the law,” said Roberts.
CUNA General Counsel Eric Richard worked with Roberts during the AT&T case. He said the nominee is “enormously talented with an exceedingly bright legal mind.”
“CUNA and the credit union movement were privileged to have been represented by him,” said Richard. “We wish Judge Roberts all the best.”

Great Management: Southwest Grows Airline Profits

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Southwest Airlines continues to make it happen in what is obviously a very difficult market – the airline business.

But Wall Street’s focus remains on Southwest’s ability to fight off the crippling effects of high oil prices with financial contracts that have essentially locked in lower fuel prices for the airline while its competitors groan under heavier costs. Though oil prices topped $60 a barrel in the quarter, Southwest has secured financial hedges that limit 85% of its fuel costs during the year to an equivalent average oil price of $26 a barrel.

The hedging strategy saved Southwest $196 million in fuel costs during the quarter, reducing the increase in Southwest’s per-gallon jet fuel expenses to 25%, compared to twice that for its competitors. Through other cost cuts and productivity improvements, Southwest said it was able to drive down its overall unit costs in the quarter by 3.5%, to 7.81 cents per available seat-mile flown from 8.09 cents a year earlier.

“Considering soaring oil prices and the enormous operational challenges our company and industry have faced over the past four years, our operating cost performance was exceptional and better than we expected,” said Mr. Kelly. Excluding fuel, expenses per seat-mile flown fell 7.7% to 6.27 cents.

If only they flew to Madison…