Benton Crane

Last fall Ford Motor Co. sent some recruiters to BYU where I was in my senior year. One of the positions they were looking to fill was Financial Analyst. I have no experience or training in finance, but I figured my background in economics coupled with my passion for the automotive industry might make up the difference.

I applied for the position and was selected for an on campus interview. It was my first real job interview so I was pretty nervous. It must have gone at least okay because they invited me to Dearborn, Michigan for their recruitment fair (I can’t remember its official name). I was to be 1 of approximately 150 candidates looking to fill a number of different positions.

Upon arrival in Detroit my driver was waiting, sign in hand, for me at the bottom of the escalators–just like the movies! He took me to the Hilton Hotel across the street from Ford Headquarters. The following day was packed with great meals; rigorous interviews; a tour of the F150 final assembly line; and most importantly, Ford’s proving grounds, The Dearborn Development Center.

As a side note, I was introduced to Motor Trend when I was about 12 years old. I read every issue from cover to cover and even saved them all in a big Rubbermaid tub. I told people my dream job would be Motor Trend driver/writer. As I entered Ford’s proving grounds and saw all the next generation vehicles clad in camouflage, I really felt like that dream was about to be filled. Look at this fact list and imagine these things unfolding before my wide, dreamy eyes.

Dearborn Proving Ground facts:

• 360 acres in Dearborn, Mich., with approximately 25 miles of test roads
• First test track is laid in 1938 around Ford Airport runways. It is actively used as an airport until June 1947.
• Tracks include two oval tracks at 2.8 miles around, a straightaway nearly 1 mile long, a Ride and Handling track 1.1 miles around, two hills with 11 percent to 30 percent grades, a wet skidpad and a variety of test surfaces for development of steering, brakes, NVH, ride and handling, powertrain and durability.
• Test vehicles drive approximately 2 million miles per year.
• Grounds include four wind tunnels, cold test rooms, Automotive Safety Center and Crash Barrier, Product Review Center and two vehicle service garages and offices
• Approximately 800 employees
• Gas station supplies specialty fuels for powertrain calibration and emissions certification.

source:

Here’s a Satellite Image:

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Shelby GT500

While the tour of the facility was exciting, it just wouldn’t have meant much without some driving. I got three separate rides. The first was a rather boring circuit in a Fusion (I drove). The next was more exciting–a professional driver took me around a more thrilling circuit in an Edge. Finally, I got a helmet and a seat next to a professional driver in a Shelby GT500. The ride he took me on simply cannot be repeated anywhere but on a track. I’m certain that any description I write won’t do it justice. Instead, check out this clip from Fifth Gear. It’s very similar to what I experienced.

In the end I wasn’t offered a job but I think I will always classify that weekend as an experience of a lifetime.

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About ten years ago, as I was learning the field of automotive repair, I watched as GM toyed with the EV1 followed shortly by Toyota and Honda’s hybrids. I was fascinated by the changing automotive horizon. Some industry buzz inspired me to write my term paper on hydrogen fuel cell vehicles (I wish I still had a copy). Seeing EV1’s limitations and viewing hybrids as nothing more than a stepping stone, I was convinced that hydrogen would eventually replace gasoline as the world’s principle automotive fuel. I think I was wrong.

To understand the debate between electric cars vs. hydrogen fuel cell cars, it is important to understand that both cars are eventually driven by electric motors. The difference comes in the way the electric energy is stored. In electric cars the energy is stored in batteries. In hydrogen fuel cell cars the energy is stored in the from of hydrogen gas which is passed through a fuel cell to convert it to electricity.

So essentially, the real debate is between batteries and hydrogen fuel cells. And what I never could have foreseen ten years ago was what hand-held devices would do to battery technology during the upcoming decade. Battery technology has surged in the last ten years and left me believing that batteries are a better way to store electric energy than hydrogen (at least for another decade or so).

My reasoning is simple: it takes electricity to charge a battery or to produce hydrogen*. The developed world already has a very mature eleetric infrastructure but almost no hydrogen infrastructure. As long as that infrastructure is missing, hydrogen will never be as cost effective as batteries.

*Note: Although hydrogen as an element is wildly abundant, it is quite scarce in it gaseous H2 form. There are various ways of producing H2 gas: fossil fuels, bio waste, electrolosis (essentially the reverse of a fuel-cell–it uses electricity to turn water into H2 and O2 gas).

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The Pitch:

It’s always the same: “My friend knows this guy who made a bazillion dollars. All you have to do is [fill in the blank]. You could make a bazillion dollars too! If things go just okay, you’ll still make loads. And worst case scenario, at least you won’t lose anything.”

It blows my mind that people sell a product/position/business without ever talking about the product. What is it? Is it something I can truly believe in? Does it excite me? Is it really worth the asking price? Is it a hoax? What is the competition like? Are there better alternatives?

Summer sales and MLM companies don’t have products or competitive advantages that set them apart from their competition. Summer sales and MLM companies use business models that over-compensate a few high performers in order to attract hoards of average and under-achieving people, most of whom are under-compensated.

A Typical Summer Sales Business Model:

Here is what a typical summer sales pay scale would like (I’m not including numbers–just focus on the general trend):

Now compare that to a typical distribution of sales reps (based on how many sales each rep makes in a summer):

Notice that the vast majority of sales reps end up somewhere along the “bell” part of the curve. Superimpose that on the pay scale and you see that the company pays very little to these average and below average reps. The high performing reps lie out in the “long tail”. They are few, so the company can afford to grossly over pay them. This prepares a class of recruiters for the next year and sets the standard for all of next year’s hopefuls.

From a business’s standpoint, it’s a good model–assuming they have a large supply of new recruits each year. For a new recruit though, you better be better than average, fully committed, and hopefully even believe in what you are selling.

MLMs are Different:

Yes, MLMs have completely different business models from summer sales, but it’s still true that a few over-paid superstars are used to attract hoards of average and below-average people. That’s not a bad thing. It’s just important to understand the reality–you have to perform better than average to make good money.

Sell the Product!!

I know I can’t perform above average with a product I don’t believe in (in fact, I’m a dud if I don’t believe). So please; friends, family, and anyone else who is thinking to “recruit” me; tell me why your product is the greatest. Tell me its competitive advantages. Don’t tell me about you friend’s friend who made a bazillion dollars.

Note To my friends and family who have already approached me with proposals. This little rant was not a personal attack on anyone. I hold you all in the same high regard that I did before any proposal. I’m simply using my blog as a platform where I can take a general stance and let all three of my readers know. :~)

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I just became a father. I used to hold many sympathies for parents–they are quickly becoming empathies:

Labor and Delivery:

WOW! Mom, hats off to you and a million thanks!

Exhaustion:

I wonder how many sleepless nights I caused.

Getting peed on:

I hope I got dad a time or two.

Pure Joy:

Was I this cute?

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All search engines face a problem:

How do you label all the images on the web with descriptive terms so your image-search-engine produces highly relevant results? Do you hire people to go through one by one and describe them? Of course not!

Google set up a simple game to swindle bored internet surfers into doing it for free (I’m amazed that people actually participate). This is how Google describes it:

You’ll be randomly paired with a partner who’s online and using the feature. Over a two-minute period, you and your partner will:

• View the same set of images.
• Provide as many labels as possible to describe each image you see.
• Receive points when your label matches your partner’s label. The number of points will depend on how specific your label is.
• See more images until time runs out.

After time expires, you can explore the images you’ve seen and the websites where those images were found. And we’ll show you the points you’ve earned throughout the session.

Next time you find the image you are looking for make sure to think of that sad little internet drones who made it possible–for free!

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I just added up the receipts for our move across the country:

• Miles Driven: 2576
• Number of states: 11 (Utah, Colorado, Kansas, Missouri, Iowa, Illinois, Indiana, Ohio, Pennsylvania, Maryland, Virgina)
• Average miles per gallon in our 96′ Camry: 31.74
• Average price per gallon of gasoline: $4.04
• Gallons Burned: 81.16
• Money spent on gas: $329.03
• Money spent on toll roads: $36.25
• Location of most expensive fill-up: Parachute, CO ($4.30/gal)
• Location of least expensive fill-up: Topeka, KA ($3.89/gal)

Route:

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a. Springville, UT
b. Glenwood Springs, CO
c. Hays, KS
d. Hannibal, MO
e. Napperville, IL
f. Kirtland, OH
g. Woodbridge, VA

I learned a few interesting things along the way:

• There are road bikers who are insane enough to ride over Vail Pass (elevation 10,500 ft above sea level).
• As you cross the Continental Divide at the top of the Colorado Rockies, there is a tunnel that cuts through the mountain so you only have to clime to around 11,000 ft above sea level instead of 13,000).
• Pennsylvania has a similar tunnel through their Allegheny Mountain, but after coming from The Rockies it seemed unnecessary to drill through a mound that most westerners would consider a hill or a butte.
• Kansas Sucks
• The “Tom Sawyer Cave” really exists near Mark Twain’s home town of Hannibal, MO.
• The College Football Hall of Fame closes at 5pm (we arrived at 5:08).

Here are some pics from the journey:

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I spent 2002 and 2003 in Portugal as a Mormon missionary. At some point I remember calculating their gas price in dollars per gallon. If I remember correctly, it was around an astonishing $4.00/gal. I remember feeling grateful that I had never faced such an outrageous price back home (our prices were around $1.50/gallon).

I read a headline today about another record break in the price of oil (not exactly eye-catching news anymore). It caused me to wonder, though, “What are other countries paying?”

I started with Great Britain. As of today their average price of unleaded “petrol” is 113.7 pence/liter or 1.14£/liter. Convert that to gallons you get 4.31£/gallon, and with today’s exchange rate it comes out to $8.47/gal!

As of April 3, Japan was paying $4.96/gal. Both GB and Japan make our average of $3.79/gallon seem reasonable.

My curiosity led me to a CNN report from 2006. Although it is two years outdated, it shows the extreme disparity in gas prices throughout the world. Great Britain and many other European countries top the list (not surprising). The big shocker comes at the bottom of the list—Venezuela only pays a few cents per gallon! Apparently, there are no gas taxes, and they only consume their own oil.

Anyone want to go to Venezuela?

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I just finished my term project for my environmental economics class. I started out looking for a relationship between recent gas prices and hybrid sales. What I found was interesting. Check out the graphs below (click on them for a clearer picture).

You see that gas prices have a lot of seasonal fluctuation. I was only interested in the overall trend, so I applied what we call a “weighted moving average smoother” to the data–basically it just takes out the “noise” and leaves the overall trend (I used this smoother on all the graphs below). Here is what is looks Like:

Because nominal prices tell us nothing about the real cost of gas (doesn’t account for the changing value of the dollar or the level of wealth we enjoy), I also collected GDP data:

Using nominal gas price and GDP data, I created a relative gas price (gas price/GDP). It is interpreted as the cost of gas relative to our level of wealth:

Notice the relative cost of gas was falling all through the 1990s and for the most part increasing throughout the current decade. Now look at the ratio between car and truck sales in the U.S. during the same time period:

In 1990 there were about two cars sold for every truck. That ratio continuously fell until it finally bottomed out in late 2004 when there were more trucks being sold than cars (relative gas prices had already been increasing for 2-5 years).

Now look at the number of hybrids sold as a percentage of total vehicle sales:

Notice that hybrids took a sharp turn around the same time the car-truck trend switched directions.

My data does not allow me to control for consumer tastes and preferences or countless other factors that contribute to these trends. That aside, it appears that consumers react to shifts in relative gas price trends with about a 2-5 year lag (at least in terms of the type of vehicles we purchase).

In hind sight, I wish I had collected data for a larger time period. It would be helpful to see other shifts in relative gas prices (think 1970’s gas crisis). Did consumers react similarly? Was the lag in their reaction similar?

I collected GDP and U.S. automotive sales data from the Bureau of Economic Analysis. Gas price data came from the Energy Information Administration. And hybrid sales data came from Green Car Congress.

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Britt’s parents took us to Moab. Here are some photos from the trip.

Created with Admarket’s flickrSLiDR.

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Britt and her mom, for quite some time, have been saying they think we are having a girl. I took an opposite stance and started telling everyone it’s a boy (because I decide of course).

I was wrong. We just got the ultrasound and we’re going to have a little girl!

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