WEBVTT - Fed Fully Focused on February Jobs 0:00:01.280 --> 0:00:05.640 This is Bloomberg business Week Inside from the reporters and 0:00:05.840 --> 0:00:09.400 editors who bring you America's most trusted business magazine, plus 0:00:09.480 --> 0:00:13.640 global business finance and tech news. The Bloomberg Business Week 0:00:13.680 --> 0:00:18.640 Podcast with Carol Messer and Tim Stenebec from Bloomberg Radio. 0:00:20.480 --> 0:00:23.400 All right, everybody, we did get a couple of reads 0:00:23.400 --> 0:00:26.040 on the labor market today. You know that layoffs announced 0:00:26.040 --> 0:00:29.240 by US employers quintupled in February from a year earlier, 0:00:29.400 --> 0:00:31.080 and we're the largest at the start of any year 0:00:31.120 --> 0:00:34.320 since oh nine, led by tech companies. That was from Challenger, 0:00:34.360 --> 0:00:36.320 Gray and Christmas and then Mike. We had a separate 0:00:36.360 --> 0:00:39.680 report that showed applications for unemployment benefits last week up 0:00:39.680 --> 0:00:42.880 to the highest since December, driven by spikes in California 0:00:42.920 --> 0:00:46.680 and New York, so suggesting maybe some softening in what 0:00:46.840 --> 0:00:49.159 is still though a tight labor market. Yeah, I mean 0:00:49.680 --> 0:00:53.000 historically though, two hundred and eleven thousand jobs claims in 0:00:53.040 --> 0:00:55.320 a week still pretty low. I mean, it is an uptick. 0:00:55.440 --> 0:00:59.240 It was more than expected. All of the other data, 0:01:00.200 --> 0:01:03.640 you know, the job's growth, the jolts, job openings, all 0:01:03.640 --> 0:01:06.640 that really pretty red hot. So something has to be 0:01:06.680 --> 0:01:08.760 the first to show the cracks and want to keep 0:01:08.800 --> 0:01:10.440 an eye on those jobless claims because they are the 0:01:10.440 --> 0:01:12.160 only thing we get every week, the only sort of 0:01:12.400 --> 0:01:15.480 you know, high frequency number that we can watch in 0:01:15.520 --> 0:01:18.320 real time. Right, yeah, yeah, So I think it is 0:01:18.319 --> 0:01:20.800 an interesting development that they've picked up a little bit 0:01:20.840 --> 0:01:22.240 off the loads. All right, Well, we have two great 0:01:22.280 --> 0:01:24.720 voices to really go through it and pass through it 0:01:24.760 --> 0:01:28.080 and give us a heads up on tomorrow's monthly jobs report. 0:01:28.200 --> 0:01:31.600 Julia Pollock is chief economist at ZIP Recruiter, and she 0:01:31.760 --> 0:01:34.759 joins us via zoom from Los Angeles. They've also done 0:01:34.800 --> 0:01:38.760 a survey of recently fired workers along with us. Also 0:01:38.800 --> 0:01:41.839 with US is Bloomberg News International Economics and Policy correspondent 0:01:41.880 --> 0:01:43.920 Mike McKee. He's on the phone in New York City. Mike, 0:01:43.959 --> 0:01:45.959 I do want to start with you, and we've been 0:01:46.040 --> 0:01:49.280 kicking around some of the data, certainly with our TV colleagues, 0:01:49.320 --> 0:01:51.320 but just first up, walk us through the data and 0:01:51.360 --> 0:01:56.360 will perhaps indicates something new on the US labor market. Well, 0:01:56.400 --> 0:01:58.760 it's start since you brought it up with the challenger 0:01:59.000 --> 0:02:01.520 rain Christmas Layoup notices they don't get a lot of 0:02:01.560 --> 0:02:06.760 attention from economists because they're basically just notices, and in 0:02:06.800 --> 0:02:10.600 many cases the companies don't follow through or the layoffs 0:02:10.600 --> 0:02:15.280 are really through attrition. And also they count wherever somebody 0:02:15.560 --> 0:02:18.120 is working, so many of the jobs that get into 0:02:18.160 --> 0:02:21.200 that number are overseas, so it doesn't really count a 0:02:21.200 --> 0:02:23.840 whole lot other than maybe in a general direction. The 0:02:23.960 --> 0:02:27.320 JAVAST claims today were kind of a problem because it 0:02:27.360 --> 0:02:31.079 turns out that when New York City, well New York 0:02:31.120 --> 0:02:34.600 State schools go on spring break or any other break 0:02:34.760 --> 0:02:38.760 than the school employees are eligible to file for javas's claims, 0:02:39.240 --> 0:02:43.280 and that's what happened last week, so they had We 0:02:43.320 --> 0:02:46.360 had a one week spike there that was largely caused 0:02:46.440 --> 0:02:50.359 by school workers who are now back at work, So 0:02:50.520 --> 0:02:54.200 it doesn't appear that jobless claims really moved at all. 0:02:54.960 --> 0:02:58.840 The biggest question is our Jolts starting to tell us anything, 0:02:59.080 --> 0:03:02.799 because there's been a lot of questions about whether or 0:03:02.840 --> 0:03:05.200 not we were going to see a slowdown in construction 0:03:05.320 --> 0:03:09.520 hiring because the business has started to dry up with 0:03:10.200 --> 0:03:14.520 higher mortgage rates, and yesterday the Jolts numbers shown us 0:03:15.120 --> 0:03:19.720 biggest decline in construction job openings in the history of 0:03:19.760 --> 0:03:22.440 that series. I realize I'm setting you up for your 0:03:22.480 --> 0:03:26.360 next guest, for your other guests. But we've also saw 0:03:26.480 --> 0:03:30.200 a loss of construction jobs in the ADP numbers. So 0:03:30.880 --> 0:03:35.000 if you're looking for a crack in the labor markets armament, 0:03:35.120 --> 0:03:39.120 it may be in the job openings side. All right, 0:03:39.160 --> 0:03:43.880 So let's bring in Julia Pollack, chief economists and ZIP recruiter. So, Julia, 0:03:43.960 --> 0:03:45.480 you heard what Mike had to say. You guys are 0:03:45.480 --> 0:03:47.800 doing your own research. You did a survey of recently 0:03:47.880 --> 0:03:50.040 laid off workers, with a lot of construction workers in 0:03:50.080 --> 0:03:54.760 that data. Yes, it was a nationally representative survey, and 0:03:55.360 --> 0:03:59.280 we do see that there are several industries where layoffs 0:03:59.280 --> 0:04:03.160 are sort of proportionate right now compared to the share 0:04:03.200 --> 0:04:06.960 of people employed in those industries. Still, mainly they're focused 0:04:07.000 --> 0:04:10.760 in tech and finance, and also in transportation and warehousing 0:04:10.800 --> 0:04:14.200 because consumers are shifting back to services from goods. But 0:04:14.360 --> 0:04:18.320 construction is definitely the area to watch in our marketplace. 0:04:18.360 --> 0:04:21.640 Construction job postings have fallen prey dramatically in the jolt 0:04:21.680 --> 0:04:24.479 Stata yesterday they fell forty nine percent in one month. 0:04:24.880 --> 0:04:27.880 And then we know historically that wait, your job postings 0:04:27.880 --> 0:04:30.600 are down forty nine percent in one month no, no no, no, no. 0:04:31.440 --> 0:04:34.520 The government data of the adults data yesterday showed that 0:04:34.640 --> 0:04:38.200 construction job openings went forty nine percent in one month. 0:04:38.680 --> 0:04:40.960 So it's the key industry to watch. We've all been 0:04:41.000 --> 0:04:44.239 talking about tech. It's a small portion of the labor market, 0:04:44.839 --> 0:04:48.200 not that significant when it comes to macro impacts, but 0:04:48.360 --> 0:04:51.640 construction is large. It's volatile, and we know that in 0:04:51.720 --> 0:04:54.880 recessions and in housing slowdowns in particular, it can shed 0:04:55.080 --> 0:04:57.479 millions of jobs. You know, Julie, I wanted to ask 0:04:57.480 --> 0:04:59.680 you about those tech layoffs because they always make the 0:04:59.720 --> 0:05:02.480 head lines. You know, eight thousand jobs here, ten thousand 0:05:02.560 --> 0:05:05.880 jobs there. It seems like something that should move the 0:05:05.920 --> 0:05:10.000 needle on numbers like unemployment or jobless claims. I get 0:05:10.000 --> 0:05:12.520 your point that it's a small segment, but I also 0:05:12.560 --> 0:05:15.080 wonder are those people just able to find a new 0:05:15.200 --> 0:05:18.239 job pretty quickly. I mean, after all, what company isn't 0:05:18.279 --> 0:05:21.800 a tech company these days and looking for programmers and 0:05:22.360 --> 0:05:25.800 tech savvy people even if they're not technically a tech company, 0:05:25.839 --> 0:05:28.400 you know what I mean, right, So they have sort 0:05:28.440 --> 0:05:30.400 of been a net neutral when you look at employment 0:05:30.480 --> 0:05:34.200 levels in tech related industries, there has been no decline 0:05:34.480 --> 0:05:37.760 yet in the national data which suggests that tech workers 0:05:37.800 --> 0:05:40.360 are finding jobs in other tech companies. In our laid 0:05:40.400 --> 0:05:42.680 off workers are the majority of people laid off in 0:05:42.720 --> 0:05:46.560 tech found new jobs quickly in about seven weeks, and 0:05:46.600 --> 0:05:48.880 most of them did find jobs in other tech companies, 0:05:48.920 --> 0:05:52.080 about seventy three percent or so. So they are finding 0:05:52.120 --> 0:05:54.360 new jobs within tech, and then those who aren't finding 0:05:54.360 --> 0:05:58.160 new jobs within tech are moving into fintech and retail 0:05:58.240 --> 0:06:01.120 and health insurance companies. Every single part if the US 0:06:01.160 --> 0:06:04.880 economy is increasingly having a tech department larger than most 0:06:04.880 --> 0:06:07.720 tech companies. So Mike, come on back in here, because 0:06:07.760 --> 0:06:10.239 as I'm listening to Julie, I'm thinking about tomorrow's report, 0:06:10.240 --> 0:06:12.320 and I know a lot of focuses on wage inflation. 0:06:12.360 --> 0:06:14.200 This is something that's certainly the FED is watching. But 0:06:15.160 --> 0:06:18.400 walk us through. I mean, if we get another hot print, 0:06:18.680 --> 0:06:21.640 what more than five hundred thousand jobs created the month before, 0:06:22.279 --> 0:06:24.839 I mean, is it one and done with? In terms 0:06:24.880 --> 0:06:29.039 of a FED being much more aggressive at that March meeting, Well, 0:06:29.120 --> 0:06:31.200 forget anything like we got the month before. Then it 0:06:31.279 --> 0:06:33.760 pretty much locked the FED into maybe doing fifty basis 0:06:33.839 --> 0:06:37.200 points at the March twenty second meeting. We'll still be 0:06:37.240 --> 0:06:40.400 watching very closely for what happens with the CPI report 0:06:40.480 --> 0:06:45.840 next week. But right now, the consensus is for two 0:06:45.920 --> 0:06:50.080 hundred and twenty five thousand jobs, and that may be overstated. 0:06:50.240 --> 0:06:54.719 We'll see because of what we've just been talking about here. 0:06:55.279 --> 0:06:58.200 If we get anything south of two hundred thousand, it 0:06:58.200 --> 0:07:02.040 probably keeps the FED on course for twenty five because 0:07:02.040 --> 0:07:04.320 it would at least put us back to trend, back 0:07:04.320 --> 0:07:08.800 to kind of where we were going before the January numbers. 0:07:08.800 --> 0:07:12.600 And we know there were statistical issues and weather issues 0:07:12.640 --> 0:07:16.880 with those numbers that maybe a one off. That's the question, 0:07:17.000 --> 0:07:19.800 was it one off? Do we revert back tomorrow or 0:07:20.960 --> 0:07:24.440 is there's something out there we're not understanding. Mike, you 0:07:24.480 --> 0:07:27.240 look at the jobs market, I mean all economic data obviously, 0:07:27.320 --> 0:07:29.440 but the jobs market from so many different angles. I'm 0:07:29.480 --> 0:07:31.000 just wondering, as you listen to Julia, do you have 0:07:31.040 --> 0:07:36.200 a question for her? Well, I guess besides the construction 0:07:36.240 --> 0:07:41.960 workers going down, there is there any sign that we're 0:07:42.000 --> 0:07:46.280 seeing large number of layoffs across a lot of different 0:07:46.280 --> 0:07:50.880 industries that would be cyclically sensitive sensitive to interest rates 0:07:50.960 --> 0:07:56.000 being this high. So the main action, Mike, right now, 0:07:56.080 --> 0:07:58.080 I think is not on the layoff front, but on 0:07:58.160 --> 0:08:01.760 pullbacks and hiring and those of us on the front 0:08:01.800 --> 0:08:07.120 lines of the labor market. Indeed LinkedIn zip Recruiter. We 0:08:07.200 --> 0:08:10.480 have seen a similar trend in our data. In the 0:08:10.560 --> 0:08:15.480 last few months. Job postings online across the US Web 0:08:15.520 --> 0:08:19.440 across thousands of websites have fallen steadily since June. There's 0:08:19.440 --> 0:08:22.240 still above pretty pandemic levels, but the direction is very 0:08:22.320 --> 0:08:24.920 very clear, and there's a broad based pullback. There are 0:08:24.960 --> 0:08:30.240 three industries where they're still growing, transportation, leisure, hospitality at healthcare, 0:08:30.600 --> 0:08:34.880 restaurants and airlines actually experienced a bit of a turning 0:08:34.920 --> 0:08:39.040 point in the middle of February with customer data at 0:08:39.040 --> 0:08:42.960 customer levels surpassing twenty nineteen levels for the first time 0:08:43.080 --> 0:08:47.000 in months since the pandemic. So there are parts of 0:08:47.000 --> 0:08:49.440 the economy that are still doing well, but outside of 0:08:49.440 --> 0:08:53.640 sort of personal care, transport, and restaurants, we're seeing a 0:08:53.720 --> 0:08:57.040 pretty serious pullback, and that tracks what we've seen in 0:08:57.080 --> 0:08:59.440 the GDP reports too. In twenty twenty two, we had 0:08:59.440 --> 0:09:02.040 a real growth fload and we had an outright decline 0:09:02.040 --> 0:09:05.000 in business investment in response to high interest rates. These 0:09:05.120 --> 0:09:08.839 high five hundred plus jobs report numbers are only going 0:09:08.880 --> 0:09:12.160 to be sustainable if businesses resume investments in new locations, 0:09:12.280 --> 0:09:15.280 new technology, new functions. If they're not doing that, they've 0:09:15.320 --> 0:09:18.040 just been a higher to replace turnover, and we could 0:09:18.120 --> 0:09:22.880 see overall employment levels fall as the FED is projected. Julie, 0:09:22.960 --> 0:09:25.320 the other big piece of the puzzle that's so important, 0:09:25.559 --> 0:09:28.640 important for the FED especially is that wage growth. You know, 0:09:28.679 --> 0:09:33.240 I'm looking at our estimates for tomorrow. Consensus estimate is 0:09:33.240 --> 0:09:35.920 actually that average hourly earnings ticked up a little bit 0:09:36.559 --> 0:09:39.320 from four point four percent of four point seven percent 0:09:39.400 --> 0:09:42.360 year over year. I understand that you guys are actually 0:09:42.360 --> 0:09:44.760 expecting a little bit lower than that. Could you talk 0:09:44.760 --> 0:09:47.319 to us briefly about why that is? And Jess got 0:09:47.320 --> 0:09:50.720 about thirty seconds to yeah, okay, So the lad market 0:09:50.760 --> 0:09:53.320 is still very tight. Wage growth pressures are still high. 0:09:53.400 --> 0:09:55.480 The FED wants to see wage growth of around three 0:09:55.520 --> 0:09:59.520 point five percent. That would be consistent with two percent inflation, 0:09:59.600 --> 0:10:02.959 right sent for inflation one point five percent for productivity growth. 0:10:03.520 --> 0:10:05.920 We're still far away from that. Even if we are 0:10:05.960 --> 0:10:09.320 seeing a moderate slowdown in wage growth, pressure largely driven 0:10:09.360 --> 0:10:11.439 by job seeker sentiment, by the fact that workers are 0:10:11.480 --> 0:10:14.880 worried about these layoffs and worried about losing job security. 0:10:15.000 --> 0:10:18.280 Mike saved you fifteen seconds. Are we seeing economists rotted 0:10:18.400 --> 0:10:20.880 up or down their estimates for the jobs report tomorrow 0:10:20.920 --> 0:10:24.440 just quickly? They really haven't moved a whole lot. We 0:10:24.440 --> 0:10:27.440 were a little lower league. We came up from about 0:10:27.800 --> 0:10:30.840 two fifteen to two twenty five, but that's within the 0:10:31.200 --> 0:10:35.600 statistical noise level. Whisper number was two forty seven on 0:10:35.640 --> 0:10:38.640 Wall Street this afternoon. We'll see if it holds through tomorrow, 0:10:38.720 --> 0:10:40.600 all right, or kind of on our on our pins 0:10:40.600 --> 0:10:43.400 and needles here waiting for tomorrow's monthly jobs report. Yeah, 0:10:43.440 --> 0:10:46.120 I love a good whisper number, don't we all have 0:10:46.280 --> 0:10:48.960 to say? Like this? Though? Exactly? Julia Pollock, she's chief 0:10:48.920 --> 0:10:51.559 economists at zip Recruiter via zoom in La and of 0:10:51.600 --> 0:10:54.679 course our own Bloomberg News International Economics and Policy correspondent 0:10:54.760 --> 0:10:56.480 Mike McKee on the phone in New York City, is 0:10:56.480 --> 0:10:58.800 going to be all over that eight thirty am Wall 0:10:58.800 --> 0:11:04.559 Street time number two tomorrow. This is Bloomberg Business Week 0:11:04.600 --> 0:11:07.839 Inside from the reporters and editors who bring you America's 0:11:07.880 --> 0:11:12.440 most trusted business magazine, plus global business, finance and tech news. 0:11:12.640 --> 0:11:16.760 The Bloomberg Business Week Podcast with Carol Messer and Tim 0:11:16.800 --> 0:11:21.679 Stenebec from Bloomberg Radio. All right, we did also want 0:11:21.720 --> 0:11:24.200 to get a check on the auto sector. All of 0:11:24.240 --> 0:11:27.400 these conversations, all of these earnings reports help us to 0:11:27.480 --> 0:11:30.360 give us more clarity about the economic outlook. Right now, 0:11:30.400 --> 0:11:32.400 we have with us, and back with us the CEO 0:11:32.440 --> 0:11:35.719 of the online seller of the aftermarket autoparts company. We're 0:11:35.720 --> 0:11:39.520 talking about carparks dot Com. David Mignon joining us via 0:11:39.600 --> 0:11:42.400 zoom from Torrens, California. David, nice to have you here 0:11:42.400 --> 0:11:46.439 with Mike Reagan and myself. Welcome back. Your stock rallied 0:11:46.520 --> 0:11:50.679 yesterday following earnings Tuesday night, fourth quarter revenue beat. Tell 0:11:50.760 --> 0:11:53.319 us about the quarter, tell us about the outlook. Tell 0:11:53.400 --> 0:11:56.200 us about the environment, the business environment. Are you thinking 0:11:56.280 --> 0:12:00.000 recession or not? Thanks for having Yeah, I'll tell you 0:12:00.040 --> 0:12:01.880 even more than the quarter. I'll tell you about the year. 0:12:02.520 --> 0:12:04.760 We know we've been in business for twenty five years, 0:12:04.760 --> 0:12:06.880 and twenty twenty two was a record year for us, 0:12:07.000 --> 0:12:09.800 both the top line and the bottom line. Our sales 0:12:09.840 --> 0:12:12.960 were up fourteen percent to six hundred and sixty one million. 0:12:13.160 --> 0:12:16.280 Our adjusted IBADAO was up more than fifty percent, and 0:12:16.400 --> 0:12:19.400 today as we sit, we're free cash flow positive, we're growing, 0:12:19.640 --> 0:12:22.160 and we're virtually debt free. Now. As far as the 0:12:22.160 --> 0:12:24.240 second part of the question, in terms of the economy, 0:12:24.520 --> 0:12:28.560 what we're seeing is that inflation is everywhere and the 0:12:28.600 --> 0:12:31.960 customer is still spending. However, what I'm feeling is that 0:12:32.000 --> 0:12:34.360 they're a lot more discipline as to where they spend, 0:12:34.520 --> 0:12:37.640 how much they spend, and when they spend. Yeah, So 0:12:37.640 --> 0:12:39.760 what does that signal to, David? You know, I'm trying 0:12:39.800 --> 0:12:42.400 to wrap my head around where a company like yours 0:12:42.400 --> 0:12:45.560 fits into the economic climate. You know, on one hand, 0:12:45.600 --> 0:12:49.360 you would think, like any business, sales would slow down. 0:12:49.400 --> 0:12:51.480 But on the other hand, is it actually a little 0:12:51.480 --> 0:12:55.840 bit resilient to an economic slowdown because people maybe will 0:12:56.000 --> 0:13:00.400 repair their car rather than buying a new one. Yeah. Point, 0:13:00.440 --> 0:13:03.120 And historically we see that our business and our company 0:13:03.320 --> 0:13:07.559 is you know, it's inflation. If inflation and recession resilient, 0:13:07.840 --> 0:13:10.199 you know, we sell a need and not a want. Now, 0:13:10.240 --> 0:13:13.000 the last three years have been an economic boom in 0:13:13.080 --> 0:13:16.080 terms of spending because of all the artificial dollars flowing 0:13:16.080 --> 0:13:18.560 into the system. But what we're seeing today, and at 0:13:18.640 --> 0:13:21.280 least for us at Carparts dot Com is an opportunity 0:13:21.320 --> 0:13:23.839 to double down on the customer. Like I said, because 0:13:23.920 --> 0:13:26.960 the customer is still very discipline as to where they spend. 0:13:27.240 --> 0:13:29.680 We have to focus on the value that we deliver 0:13:29.760 --> 0:13:31.920 to the customer. So for me, the last three years 0:13:31.920 --> 0:13:34.559 have been about availability and trying to figure out a 0:13:34.600 --> 0:13:36.800 way to connect the dot between the supply and the demand. 0:13:37.040 --> 0:13:39.679 But today it's more about what value can we deliver 0:13:39.760 --> 0:13:41.760 to the customer and how can we be there for 0:13:41.800 --> 0:13:44.439 them in times of needs? You know, Carol, it's funny 0:13:44.480 --> 0:13:45.800 is we talk to day, but I'm reminded I have 0:13:45.800 --> 0:13:48.360 a busted taillight on my Toyota Highlander. I think we'll 0:13:48.400 --> 0:13:50.960 have to talk after you can't I know a place 0:13:53.320 --> 0:13:57.120 quality direct to consumer, factory to warehouse warehouse? Do you 0:13:57.440 --> 0:14:02.000 Carparts dot Com? And I'll give you the VIP pricing? No, no, no, 0:14:02.080 --> 0:14:04.600 I can't. I can't accept that, But I do want 0:14:04.600 --> 0:14:07.640 to ask about those those warehouses. You know, a lot 0:14:07.760 --> 0:14:13.120 of suppliers have struggled to match inventory with demand over 0:14:13.920 --> 0:14:16.360 you know, the last three years, with the pandemic, the 0:14:16.360 --> 0:14:20.440 supply chain disruptions. How is the inventory situation with CARP 0:14:20.800 --> 0:14:23.240 Carparts dot Com are you back to sort of a 0:14:23.360 --> 0:14:28.360 normal supplying demand relationship? Are you ever supplied undersupplied? You know, 0:14:28.480 --> 0:14:30.560 is it a depend on what parts you're talking about. 0:14:30.720 --> 0:14:33.120 What's the sort of big picture there as far as 0:14:33.160 --> 0:14:36.880 inventories with car parts. So you're absolutely right. The last 0:14:36.880 --> 0:14:39.360 couple of years have been around you know, longer lead 0:14:39.400 --> 0:14:43.240 times and the need to carry additional inventory to fulfill 0:14:43.280 --> 0:14:45.600 the demand. And so if you look at our inventory 0:14:45.680 --> 0:14:49.240 position last year, we significantly flexed up in a lot 0:14:49.280 --> 0:14:51.400 of parts. Now today, to your point, we're in a 0:14:51.520 --> 0:14:54.960 much more normalized kind of inventory position. And you know, 0:14:55.000 --> 0:14:57.000 as of the end of last year, we sat at 0:14:57.080 --> 0:14:58.920 you know, about one hundred and thirty eight million dollars 0:14:58.960 --> 0:15:01.640 worth of inventor and that's the right level for the 0:15:01.640 --> 0:15:04.520 current environment for us. So ultimately, what we do is 0:15:04.520 --> 0:15:06.680 we try to focus on carrying the right parts close 0:15:06.720 --> 0:15:09.320 to the customers so that we can deliver that value 0:15:09.480 --> 0:15:12.040 as quickly as possible. So you guys are ahead of 0:15:12.280 --> 0:15:16.080 pre pandemic levels at this point. We are ahead of 0:15:16.080 --> 0:15:19.680 pre pandemic levels because our business has grown so pre pandemic. Actually, 0:15:19.680 --> 0:15:22.760 pre twenty nineteen, our business was sitting at around less 0:15:22.800 --> 0:15:25.400 than three hundred million dollars in sales, and like I said, 0:15:25.440 --> 0:15:28.240 twenty twenty two was six hundred and sixty millions. So 0:15:28.440 --> 0:15:30.880 we're a different company. We've opened a lot of buildings. 0:15:31.120 --> 0:15:33.080 You know, the last year was very exciting for us. 0:15:33.200 --> 0:15:35.800 We've delivered record results and so we're in a good 0:15:35.840 --> 0:15:38.200 spot today. So not pulling back in any way in 0:15:38.280 --> 0:15:42.360 terms of spending, expansion, none of it. So what we're 0:15:42.400 --> 0:15:44.640 doing is trying to be a little more intentional as 0:15:44.640 --> 0:15:46.600 to where we spend the money. And so there's a 0:15:46.600 --> 0:15:49.600 couple of areas where we're kind of taking away some 0:15:49.640 --> 0:15:51.960 of the spend in terms of that discretionary spend and 0:15:52.120 --> 0:15:55.680 reinvesting those dollars into customer centric initiatives. So its intentional 0:15:55.720 --> 0:15:58.720 the same as being cautious a little bit. It's cautious, 0:15:58.760 --> 0:16:02.680 it's aggressive mindset, but it's a defense playbook. David, what 0:16:02.800 --> 0:16:05.560 keeps you up at night? You know? I think what 0:16:05.680 --> 0:16:07.640 keeps me up at night today is how do we 0:16:07.800 --> 0:16:10.720 become the number one destination for our customer? You Know, 0:16:10.760 --> 0:16:12.800 the way I think about our industry is there's three 0:16:12.880 --> 0:16:16.720 hundred billion dollars of parts being sold in the United 0:16:16.760 --> 0:16:19.360 States and only four percent of that or five percent 0:16:19.400 --> 0:16:22.000 of that are online? How do we make it ten percent? 0:16:22.040 --> 0:16:25.960 How do we make it fifteen percent? Like apparel, like electronics. 0:16:26.160 --> 0:16:28.040 We want to be the number one. What keeps me 0:16:28.120 --> 0:16:31.040 up at night is trying to become number one. All right, 0:16:31.040 --> 0:16:33.240 can leave it there, David, thanks so much, appreciate the time. 0:16:33.320 --> 0:16:38.400 David Meagnon, CEO Carparks dot Com via zoom in California, 0:16:38.560 --> 0:16:42.120 you're listening to the Bloomberg Business Week podcast. Catch us 0:16:42.160 --> 0:16:45.840 live weekdays from two to five pm Eastern on Bloomberg Radio. 0:16:46.000 --> 0:16:48.960 The Bloomberg Business a band you two. You can also 0:16:49.000 --> 0:16:52.920 listen live to our flagship New York station Just Say Alexa, 0:16:53.160 --> 0:16:57.760 play Bloomberg Eleve and Dirty Well, we've got a devil Jovis. 0:16:57.760 --> 0:17:00.800 At Bloomberg Business we cover stories Firsteplet's to the domestic 0:17:00.840 --> 0:17:04.879 cover and the dawn of the induction age meaning induction ranges. 0:17:04.960 --> 0:17:07.240 With that story, let's get to Bloomberg business Week editor 0:17:07.320 --> 0:17:10.520 Joel Webber and Business Week freelance contributor Aaron Gale with 0:17:10.600 --> 0:17:12.679 us via zoom from upstate New York. Chill here in 0:17:12.720 --> 0:17:16.440 our interactive Brokers studio. How do we all get talking 0:17:16.480 --> 0:17:20.160 about induction versus gas here. Joel, Well, it became all 0:17:20.560 --> 0:17:25.199 the rage earlier this year and basically, you know, this 0:17:25.400 --> 0:17:31.359 lowly kitchen appliance who lit a culture war. And it 0:17:31.480 --> 0:17:36.560 all kind of actually began with some you know, a 0:17:36.560 --> 0:17:42.560 Bloomberg News reporter getting Richard Trumka of them the Consumer 0:17:42.560 --> 0:17:46.959 Product Safety Commission to say that any options on the 0:17:47.000 --> 0:17:49.679 table in terms of regulations and products that can't be 0:17:49.720 --> 0:17:53.360 made safe can be banned. It turns out gas stoves 0:17:53.400 --> 0:17:57.080 maybe you know, not the greatest thing to be breathing 0:17:57.359 --> 0:18:01.399 all day every day. But what that really kicked off 0:18:01.440 --> 0:18:04.960 was this culture war, like like I mentioned, and there 0:18:04.960 --> 0:18:08.399 could be all kinds of like you know, push back 0:18:08.600 --> 0:18:10.639 from the left and the right over what's better. But 0:18:10.680 --> 0:18:14.000 the thing that's emerged is sort of there's actually maybe 0:18:14.040 --> 0:18:18.160 a better technology out there, which is induction. And just 0:18:18.200 --> 0:18:21.920 as we've shown how electric cars are perhaps a better technology, 0:18:22.440 --> 0:18:28.200 maybe induction is also that. The thing is that most people, 0:18:28.520 --> 0:18:30.960 you know, if you've got a viking or a wolf 0:18:31.000 --> 0:18:34.080 in the center of your kitchen, you spent pretty good 0:18:34.119 --> 0:18:37.280 chunk of change for that, and it's not something that 0:18:37.320 --> 0:18:41.040 you think of changing out so easily, right, So that 0:18:41.160 --> 0:18:43.600 led us to just be like, Okay, what how do 0:18:43.640 --> 0:18:46.280 we tell this story? And it turns out Aaron was 0:18:46.320 --> 0:18:49.679 like just the right person to do that. So Aaron 0:18:49.720 --> 0:18:51.800 talked to us about where you went and what you 0:18:51.960 --> 0:18:58.800 learned to get us inside this funny little fight. Sure. Thanks. Well, first, 0:18:58.880 --> 0:19:00.880 I just want to say, you know, whatever people think 0:19:01.000 --> 0:19:06.119 of Commissioner Trump because comments or this incredible backlash, what 0:19:06.280 --> 0:19:09.160 I've found in my reporting is that it really jumped 0:19:09.200 --> 0:19:13.840 started a public conversation that's probably long overdue we should 0:19:13.840 --> 0:19:16.400 have been having a long time ago, which is just 0:19:16.520 --> 0:19:21.160 should we be piping this explosive gas through our neighborhoods 0:19:21.359 --> 0:19:25.200 and into our homes when there's a safer alternative that 0:19:25.359 --> 0:19:30.080 is much more popular in Europe and elsewhere. And so 0:19:31.040 --> 0:19:34.919 my thought was, you know, I realized when this began 0:19:35.119 --> 0:19:38.800 that there was this big kitchen in Bath trade show 0:19:39.080 --> 0:19:42.760 happening in Las Vegas the very week after, and so 0:19:42.800 --> 0:19:44.879 I decided to go out there and just get a 0:19:44.880 --> 0:19:48.879 feel for how the issue was playing among the industry, 0:19:49.119 --> 0:19:54.159 the appliance industry folks and also homebuilders, designers, architects and 0:19:54.240 --> 0:19:58.080 all the folks that attend that trade show. And what 0:19:58.160 --> 0:20:00.800 I found was that there was a real split. The 0:20:00.840 --> 0:20:04.280 appliance people, they all have some experience with induction, They 0:20:04.320 --> 0:20:10.240 really love it. The home builders and designers not so much. 0:20:10.280 --> 0:20:16.640 These folks really are very upset about Trumka's statement, and 0:20:17.280 --> 0:20:19.400 you know, eager to hold onto gas. But the other 0:20:19.440 --> 0:20:21.399 thing I found was that hardly any of them know 0:20:21.440 --> 0:20:24.560 what induction is. The ones that think they know what 0:20:24.600 --> 0:20:28.080 it is. Often people think they know and they actually don't. 0:20:28.080 --> 0:20:31.480 And one reason for that is because an induction cooktop 0:20:31.560 --> 0:20:36.000 looks exactly like what they call a resistance electric cooktop, 0:20:36.040 --> 0:20:39.880 which is the old fashioned kind that we've all probably 0:20:39.920 --> 0:20:45.000 had some experience. Yeah, everybody hates it's It's actually quite 0:20:45.000 --> 0:20:47.720 common in many many homes, but like, people don't love that. 0:20:48.000 --> 0:20:51.200 And so there is like a real marketing challenge for induction, 0:20:51.240 --> 0:20:53.840 which is that it looks just like something people hate. 0:20:53.880 --> 0:20:56.280 So how do you get around that? You know, Aaron, 0:20:57.080 --> 0:20:58.800 I'm going to date myself a little bit here, but 0:20:59.119 --> 0:21:01.960 I'm old enough that I was a kid the microwaves 0:21:01.960 --> 0:21:06.199 were still a novel technology. Yeah, and I remember my 0:21:06.240 --> 0:21:08.400 mom like refused to buy one for the longest time 0:21:08.440 --> 0:21:10.160 because she thought that we were all going to get 0:21:10.200 --> 0:21:13.560 cancer from microwaves, which it's kind of been settled, I 0:21:13.600 --> 0:21:16.480 guess to the benefit of the microwave makers. We all 0:21:16.480 --> 0:21:19.359 have one now anyway. But I'm wondering where where exactly 0:21:19.520 --> 0:21:22.240 is the science on guest of you know, you mentioned 0:21:22.440 --> 0:21:24.880 the risk of explosion, but it's it's more than that, right, 0:21:24.880 --> 0:21:28.640 there's a concern about the toxicity of the exhaust too. 0:21:29.520 --> 0:21:32.520 How long has the science really been sort of sounding 0:21:32.560 --> 0:21:36.119 an alarm about that, And what's the sort of consensus 0:21:36.400 --> 0:21:39.680 thinking in the community, the scientific community about what a 0:21:39.800 --> 0:21:43.199 what big of a risk it is? Yeah, well, I 0:21:43.240 --> 0:21:47.000 think there are a number of problems with gas, which 0:21:47.040 --> 0:21:49.280 people like to call natural gas, but maybe we need 0:21:49.320 --> 0:21:52.399 to get away from that a little bit because some 0:21:52.560 --> 0:21:57.080 of them, the byproducts of burning it, you know, are 0:21:57.119 --> 0:22:02.119 really quite toxic and there is a scientific, um, a 0:22:02.119 --> 0:22:04.960 lot of scientific research that shows that it can have 0:22:05.440 --> 0:22:08.200 negative impacts on our health. And you it's not really 0:22:08.280 --> 0:22:11.240 surprising when you think about it. Um, you wouldn't bring 0:22:11.280 --> 0:22:15.520 your Weber gas grill into your house and start grilling. Um. 0:22:15.560 --> 0:22:25.159 And yet we started to Sorry, but but you know, 0:22:25.320 --> 0:22:27.320 I think like we're just so used to the idea 0:22:27.400 --> 0:22:31.040