March 5, 2008

CEO's Comments - What is going on with Gas Prices??

Gasoline prices just rose to record highs this week. Even after adjusting for inflation, the current price of gasoline is higher than it was during the oil embargo in the 1970’s. Oil, which gasoline is made out of, has increased in price by 74% over the last year. So what is causing these surging prices?There are a number of factors that are all causing the price of gasoline to increase:
• The demand for oil continues to increase while the supply of oil has not. China and India are using more oil as their economies expand, but many experts feel that oil production has peaked and will begin to decline in the near future.
• Venezuela, a major oil exporter to the United States, just sent 10 tank battalions to its border with Columbia. Uncertainty in oil producing countries usually results in an increase in the price of oil.
• The U.S. dollar has declined to record lows against many currencies. When the U.S. currency is weak it takes more dollars to buy a barrel of oil.
• The refineries that produce gasoline out of oil go through scheduled maintenance periods in the spring and fall. The refineries produce less gasoline during these periods and these shortages tend to increase the price of gasoline.

Some of these factors may correct themselves over time, but the long term outlook for oil and gasoline prices is not good. Our country must learn to conserve fuel in order to limit our demand while also increasing our investment in alternative energy sources. If we do not find ways to reduce our demand for oil the increasing cost will continue to be a burden on all of us.

Dean Dorcas, CEO

February 26, 2008

CEO's Comments - Unemployment Statistics for January

The unemployment rate for the Seattle/Bellevue/Everett area increased slightly from 3.6% to 3.7% last month. This is still an indication of a very strong job market in the Puget Sound region. The unemployment figures for Washington State dropped slightly from 4.6% in December to 4.5% last month. The record low for Washington State was 4.4% back in March 2007. The national unemployment rate recovered from the .2% spike in December and dropped from 5.0% to 4.9% last month. Although the unemployment figures remain strong there has been a recent increase in the length of time it is taking jobseekers to find a job. That increase has some economists concerned that the job market may be at a turning point.

Dean Dorcas, CEO

January 28, 2008

CEO's Comments - What should I do with the tax rebate check from the government Stimulus Plan?

It looks like the Federal government is on the verge of approving a massive spending program that will issue issues checks to most Americans who earned more than $3000 last year. Each qualifying family would receive a check equal to $600 per adult and $300 per child. The President’s goal is for the people who receive these checks to quickly spend them in order to stimulate the economy and keep the country from slipping into a recession. But is this a good plan and should we all really run out and spend these checks?

The main cause of the economic problems facing our country is over consumption. Historically the American consumer has spent 67% of the country’s economic activity, but that number has increased to nearly 72% in recent years. That increase has come as a result of increased debt – from credit cards, auto loans and refinancing home mortgages. In fact, the national savings rate has dropped into negative territory and is at its lowest level since the Great Depression. A negative savings rate means that Americans spent all their disposable income, the amount left over after paying taxes, and dipped into their past savings to finance their purchases. This over consumption has led to an $800 Billion trade deficit. In order to get back to a balanced and healthy economy the savings rate needs to increase significantly and consumption needs to drop.

So does it really make sense for our government to borrow $150 Billion dollars from foreign countries so we can buy more goods from China? Unfortunately the answer is No. There are a lot of fundamental problems with our financial system but continuing the consumption binge that we have been on is not the long term solution. In the end I think this will only make the inevitable correction worse. My recommendation is that anyone who receives these checks from the government uses the money to pay down any existing credit card debt that they have and then put the rest into a Rainy Day Fund. This approach will help limit the pain involved in the inevitable correction that our economy must go through.

Dean Dorcas, CEO

January 18, 2007

CEO's Comments - What is the long term Outlook for Warehouse Jobs in Seattle and Tacoma?

The economy in the Puget Sound has held up very well compared to the rest of the country. While the national unemployment rate jumped a whopping 3 tenths of a percent last month, the local unemployment rate actually went down again. So the short term outlook is still positive. But there are some significant changes underway that could slow the future growth of warehouse jobs in Washington State.

The American consumer has been living off of debt over the last decade. In fact, the U.S. has to borrow $800 Billion a year from other countries to pay for all of the goods and oil that we consume. With the implosion of the real estate market and the sharp decline in the US dollar this has already started to change. A return to a more sustainable lifestyle will result in fewer products being imported from Asia. This will reduce the need for warehouse workers to handle this freight.

The second major issue is the change in how freight is coming into our country. The ports of Seattle and Tacoma are facing some stiff competition, and the outlook isn’t positive. The increase in the cost of oil has made it more attractive for companies to move their product that is bound for the East Coast by ship rather than rail or truck. The amount of freight that runs through the Panama Canal instead of going through West Coast ports has increased from 11% to 40% over the last six years. This trend will increase even further when Panama finishes the expansion of the Canal that is already under way. For the freight that does land on the West Coast, we are starting to face competition from new ports in Canada and Mexico. These ports don’t have to deal with the rail congestion that we deal with in the Puget Sound. Unfortunately fewer containers through the Ports of Tacoma and Seattle will have a direct impact on the number of warehouse jobs in our area.

I am confident that there will always be a need for warehouse workers who are productive, reliable and have a positive attitude. Therefore these three traits will be especially important for people to focus on if the container volume flattens or drops off over the next several years.

Dean Dorcas, CEO

December 14, 2007

CEO's Comments - An Effective Way to Help our Community Fight Hunger

As business activity slows down for the Christmas holiday I wanted to take the opportunity to share information about one of my favorite non-profit organizations. A few years ago I had the honor of serving on the Board of Directors for the Food Lifeline. The Food Lifeline is an agency that is dedicated to ending hunger in Western Washington. They provide a large portion of the food that is distributed through 300 emergency feeding programs including food banks, hot meal programs and shelters in our area. Last year they provided over 17 million meals to hungry people in Western Washington.

I was first attracted to this organization because of the efficient way that they are able to help out those in need. As a business owner who needs to constantly focus on efficiency in order to stay in business, I was impressed with how much value the Food Lifeline was able to provide for each dollar they received in donations. In fact, they are able to provide 9 meals for every $1 they receive. This is possible because they usually do not have to buy the food; they receive that for free from the government, farmers, restaurants and grocery stores. The donated money is used to provide transportation to get the food from the donor to the food bank. I was really surprised when I first learned that food wasn’t the constraint; it was really a lack of adequate transportation and logistics.

Since IMS focuses on providing warehouse jobs, I enjoyed the times that I got to tour their distribution center. This is the hub where all of the food comes in from the various donors and gets divided up to be sent out to all of the different feeding programs. I was very impressed with the professionalism and competency of all of the staff at the Food Lifeline. It is definitely a well run organization that is full of staff members who really care about the people they are dedicated to serving.

I would encourage anyone who has a heart for helping people battling hunger to join me in supporting this wonderful organization. Even a small donation can have a major impact. Their website is www.foodlifeline.org.

I wish all of our employees and customers a Merry Christmas and a wonderful holiday season.

Dean Dorcas, CEO

November 28, 2007

CEO's Comments - Are we headed for a recession?

There is a lot of uncertainty in the financial markets right now. Over the last few years the banks have loaned over a trillion dollars to homeowners who bought houses that many of them couldn’t afford. These loans used an adjustable interest rate that started out very low but then reset after a couple of years. The assumption that many people made was that they would be able to refinance their mortgage before the rate increase kicked in and therefore avoid paying the big jump in their interest payments. That plan worked great as long as housing prices were going up, but the 4% drop in housing prices over the last year has eliminated refinancing as a solution in many cases. Since a large number of people cannot afford the higher mortgage payments they are falling behind on their mortgages. This is leading to a sharp increase in foreclosures.

When a bank forecloses on a home there are many people who are hurt by the situation. The homeowner obviously is hurt. The neighbors are also impacted because the increase in vacant homes can reduce the value of their homes as well. The banks and the investors who owned the mortgage are seriously impacted because the value of their investment has been reduced significantly. In fact, the major banks have already acknowledged almost $50 Billion dollars in losses, and some analysts think that the true value of their loss will be many times higher than that. Big losses for the banks can have a big impact on the economy because of a thing called “fractional banking”. $1 of bank equity can be used to provide at least $10 of loans. So if the banks end up losing $100 billion in equity that could reduce the amount of loans available to businesses and consumers by over $1 trillion. A strong contraction in available credit could certainly send the economy into a recession.

So are we headed for a recession? No one knows for sure, but I am not optimistic. Luckily the demand from companies needing people to work in warehouse jobs is still strong, especially in the Pacific Northwest. But employers are becoming more demanding and their tolerance for workers with poor attitudes or attendance issues is decreasing rapidly. My recommendation for anyone seeking a job in the warehouse or distribution industry is to make sure that your attitude, productivity and attendance are as good as they can be. Employees with these attributes will continue to be sought after by employers, especially by IMS and our customers.

Dean Dorcas, CEO

November 7, 2007

CEO's Comments - Rewarding Productivity

Most people like to be rewarded for doing a good job. Unfortunately most of the warehouse jobs in the United States pay a flat wage regardless of job performance. If your performance is below average you risk being let go, but if you far exceed the average worker your pay rate might not be any higher. This creates a disincentive for a person to really excel in the workplace. IMS has spent the last ten years implementing and managing incentive programs in many of our customer locations. Not all of our jobsites offer incentive programs, but those that do have definitely seen an increase in overall productivity. These incentive programs offer the same base wage as other similar jobs in the market, but they also give employees an opportunity to get paid more if their productivity is higher.

Some of our bonus programs reward employees as a team. These team-based systems not only increase an employee’s take home pay, they also make the work environment more enjoyable because everyone is working together to achieve a goal. We also run individual incentive programs, what we call Pay-for-Performance, at some of our operations. Although this type of system is very hard to track and manage, the results can be amazing. Some of our top employees under this type of incentive program are making twice the average wage in our company. These men and women are focused on their goals and they have learned how to work smart and efficiently.

Having seen the impact from well designed incentive systems in dozens of different locations I am a firm believer in the benefit that they bring to the workplace. Not only do they increase the pay earned by employees and help companies keep their costs under control, they also improve the culture because it makes it easier for people to be recognized and rewarded for a job well done.

Dean Dorcas, CEO

October 25, 2007

CEO's Comment - Weathering the Subprime Meltdown

The newspapers are full of articles about the downturn in the housing market that was caused by the subprime mortgage meltdown. Many of our employees are wondering how the housing crunch will impact warehouse jobs in the Seattle area. Although housing prices in the Northwest have not dropped like they have in other parts of the country the number of new homes being built has fallen significantly. Many of the people who were working in construction are now looking for other types of employment, and warehouse jobs are a good option. This will increase the number of workers looking for these types of jobs. We have enjoyed a strong demand for warehouse jobs during the last few years but we have started to notice a subtle shift in the labor market. Although the Puget Sound economy is still strong, those warehouse jobs related to home construction or home remodeling will be directly impacted by this downturn. Even positions that are not directly related to the housing industry can still be impacted by the housing crisis in other parts of the country because many of the goods shipped through the warehouses in Washington are destined for consumers in those areas. As they cut back on their purchases the amount of goods that flow through our area will decrease. This in turn will reduce the number of people needed to process those orders and handle that freight. So the number of openings in warehouse jobs in Seattle and Tacoma remains near an all time high, but that demand could be affected by the downturn in the housing market. Employees who are able to consistently demonstrate a strong work ethic, positive attitude and reliable attendance should be able to weather this situation and will continue to find the jobs they are looking for.

Dean Dorcas, CEO

October 1, 2007

100 Fastest Growing companies in Washington State

In an awards ceremony on October 18th at Qwest Field, IMS was recognized as 44th out of 100 of the Fastest Growing companies in Washington State by the Puget Sound Business Journal. This is the second time that IMS has received this prestigious award. In 1999 the company was recognized as the 24th fastest growing company in the state. It is unusual for a company that has been in business for over a decade to make the list of fastest growing companies and we are proud of all the effort of our staff and field employees that went into supporting that growth.

Wages and Productivity are skyrocketing

Wages and Productivity are skyrocketing under new incentive program! The average pay rate for the 160 IMS crew members working at a large distribution center in Sumner has increased to $12.13/hr. The top crews are consistently making well over $16.00/hr. Employees on Day, Swing and Weekend shifts are paid a base wage plus weekly bonuses based on the productivity of their two-person team and their individual attendance.