Thursday, February 18, 2010

The Heimer clan

"Last name?"

"Heimer."

"First name?"

"Weisen."

"Wait, so you're Mr. Weisen Heimer?"

"I am, as a matter of fact."

"I've heard about you. Kind of a joker, right?"

"Well, I suppose so. But at least I'm not a paranoid agoraphobic like my cousin John."

"Wait, are you talking about John Jacob Jingle--?"

"Yes. Sad case. Didn't take his mother's remarriage to Mr. Schmidt well. Hates that hyphenated last name. Thinks people are always calling him."

"Always?"

"Well, whenever he goes out."

Toyota dealer faces suddenly rocky road

I’m about two-thirds of the way through “Crash Course: The American Automobile Industry’s Road from Glory to Disaster” by Paul Ingrassia of The Wall Street Journal, but I have to put it down for a while because it’s too depressing. “[A] devastating and compelling narrative of the ongoing hubris and miscalculation that felled one of our country’s corporate treasures,” wrote one reviewer. And that’s mild.

Compounding the perplexity of it all is the example set by Japanese automakers. As Detroit worked hard to snatch defeat from victory, Japan slowly and steadily created a dynasty by keeping its eye on the prize: building quality cars that people wanted.

Now it’s finally Japan’s turn in the hotseat. Toyota, which in 2007 pushed the great GM aside as the world’s biggest automaker, has suddenly been hit with a series of recalls that will cost billions to remedy. Worse than the financial cost, the company has acknowledged, is the damage to its reputation for quality.

The question, as Detroit has learned the hard way, is how a company reacts when things go wrong. Here’s what Toyota President Akio Toyoda had to say at his press conference: “We will do everything in our power to regain the confidence of our customers.”

Those are certainly the right words, but will actions speak as loudly? I asked Ted Lucki.

Lucki owns Riverhead Toyota, which since its start in 1994 has become the biggest dealership on the East End, selling some 2,000 cars a year. Frankly, I expected him to dodge the call. Lots of people in tough situations do. But Lucki called right back, and that set the tone.

How’s it going? Well, it’s kind of like an illness in the family. “I’m getting a lot of phone calls,” Lucki said. “A Polish customer dropped off a kielbasa. A priest came in to pray for me. I’m not kidding.”

That family theme kept repeating. “We like to promote from within,” Lucki said. Conversely, facing the onslaught of recalls, there have been demotions within: Two salesmen who started as mechanics have been returned to the shop. “They’re a little shocked, but they realize it makes sense,” Lucki said. “We’re a family. We do what’s got to be done when the family needs it.”

What’s got to be done now is a lot of recall work. Lucki said they’re fixing about 30 cars a day, and extending hours to make it possible. “We’re retraining, regrouping, reorganizing, restaffing,” he said. Toyota is helping by funding it all and providing the necessary parts promptly.

“The difficult part will be, from a business point of view, reinstalling confidence,” Lucki said. Realizing that nourishing positive PR would help, he’s giving owners of cars in for recall work coupons for a free lunch next door at Panera Bread. If both recalls are performed, at a total of 2.5 hours, “that’s a long time to wait,” Lucki said.

This isn’t the only speedbump ever encountered by Riverhead Toyota. “The economy affected us, no question about it,” Lucki said. “Business is way off,” down an estimated 30 percent from 2008 to 2009. On the upside there’s been more service, as more people fixed cars instead of buying new. “And the clunker thing actually helped move things along,” Lucki said. They sold about 150 cars through the federal program, and it was “manna from heaven.” Since then things have been slowly improving. “Now this,” he said.

Slow and steady is the road back, as Lucki sees it. Kind of like Toyota’s path when it was first trying to find its way into an American market completely dominated by Detroit. “Toyota’s into doing it right,” Lucki said. “They think before they act.”

He guesses that the company will pull out of this skid and find traction again before too long. “I could be wrong,” Lucki said. But it’s a pretty good bet he’s right.

***

This is my last East End column for Long Island Business News. The company has decided to head into more straight news, which I’ve been asked to help supply. Thanks for your three-plus years of readership, and as always, if you have any news tips to share, please e-mail me at jdmiller49@yahoo.com.


Long Island Business News / February 17, 2010

Thursday, February 11, 2010

North Fork's LIRR riders blow the whistle

Rebels are once again rattling swords and threatening secession. The East End’s awake.

This happens every so often and then dissolves in simmering resentment. Usually it foments a brief resuscitation of the Peconic County movement, which is now probably around 50 years old and getting gray around the muzzle.

Generally the spark is financial, as in too much tax going out and not enough services coming in, but once in a while there are specific flashpoints, such as the Shoreham nuclear plant. When East Enders complained that they wouldn’t be able to escape westward in the event of a meltdown, who can forget then-Suffolk Comptroller Joe Caputo replying something to the effect of, “What’s the problem? They all have boats, don’t they?”

Some feel that kind of nurturing attitude is evident in the latest flare-up. This time it’s not Suffolk but the Metropolitan Transportation Authority playing the heavy. At issue is the MTA’s plan to shut down one Long Island Rail Road train from Brooklyn to Montauk and all service to the North Fork except for summer weekends.

Adding outrage is the timing, coming on the heels of Albany’s approval of the payroll tax to help close the MTA’s monster budget gap. “It’s taxation without transportation” was the snappy battle cry issued by Southold Supervisor Scott Russell at a recent rabble rousing in Greenport. “The East End can no longer serve as a cash cow to fund a system that mainly benefits New York City,” said County Legis. Ed Romaine. If the MTA doesn’t relent, he will call for immediate secession from the MTA and creation of a Peconic transportation authority.

Also backlashing has been William Schoolman, president of Hampton Luxury Liner, who recently wrote a $7,000 check to cover his MTA tax and then filed a complaint challenging the law’s constitutionality. It’s illegal on a number of counts, he contends, but on a personal level it’s “particularly outrageous” because it forces him into the unpleasant position of subsidizing his competition, as he wrote in a recent commentary for Long Island Business News.

This is a sad turn in many ways, but especially for the North Fork, which has had a long love affair with the LIRR, dating back to that joyful July 27, 1844, when an all-day celebration marked the opening of the Main Line to Greenport. That put the North Fork on the agricultural and economic map, and forged an emotional bond that would be severely tattered by this cutback.

But you can’t run a railroad on sentiment. The MTA faces a $400 million budget gap. Deficits have been run up “across the MTA family,” authority spokesman Aaron Donovan told me the other day. Cutbacks are planned “across the region, from the East End of Long Island to Rockland County. New York City is getting the most because that’s where the most service is.”

Of the LIRR cutbacks, the greatest impact is seen in the move from four peak trains to two on the Babylon branch, according to documents supplied by Donovan. There it’s projected that 1,100 passengers would be affected daily and $1.05 million would be saved in 2011. Second greatest would be the Greenport cutback, saving $991,000 but affecting only 190 passengers on weekdays and 160 on weekends.

Parsing those numbers, is it fair to say that the North Fork is the LIRR’s least profitable run? That’s kind of beside the point, MTA and LIRR spokesmen told me. All mass transit runs at a deficit. In the case of the LIRR, fares make up only 44 percent of the cost of the service, the rest coming from government subsidies. So the question isn’t so much revenue as it is ridership, and there the North Fork isn’t big. In 2008, for instance, those 160 weekend passengers meant 960 empty seats.

But still, it’s been a longtime and dedicated ridership, and those riders and their representatives deserve a chance to weigh in on the issue. In an unfortunate example of tone deafness, the MTA scheduled no hearings on the East End, “the latest slap in a long list of slaps in the face,” groused William Lindsay, presiding officer of the Suffolk Legislature.

The hearing is now slated for Monday, March 8, at County Center in Riverhead.


Long Island Business News / Feb. 11, 2010

Friday, February 5, 2010

Watching rentals for signs of life

Are we officially into Recovery yet? The answer may come as quickly as next weekend.

That’s President’s Day weekend, which is a holy day of another sort on the East End: the traditional kickoff of the summer rental season. If you’re thirsty for economic tea leaves, you could do worse than reading these.

“President’s Day weekend is when people really start looking, but last year it didn’t really happen,” Karli Kittine of Corcoran Group Real Estate in Southampton told me this week. “It started much later.”

That’s an indicator. In the wintry grip of the financial crisis, summer people were nervous, like skittish antelopes. Not only did they come late to the watering hole, they came for briefer sips.

“It was still a decent season but [activity started] closer to Memorial Day,” Kittine said. Also, there tended to be more short-term rentals and fewer for the full season.

There’s another force at work and it has to do with plumage. “I think people don’t want to be showy” in this bleak climate, Kittine said, (noting with a laugh that, for herself, that’s not an issue). “Instead of $150,000 for the full season, they might do $50,000 for August through Labor Day. But be a little more conscious about it.”

Laura Holson mentioned that trend in her recent New York Times column.

“Now,” she wrote, “after a year of self-imposed austerity and in what is shaping up as a spectacular bonus season, the Wall Street crowd is shaking off what one luxury retailer called its ‘frugal fatigue.’ Unlike earlier spending sprees, however, the consumption will be a lot less conspicuous.”

That’s widely expected to spark a boost in sales and rentals out east, but an interesting spin might be a continued move toward the North Fork, where lots more living can be had if renters are willing to make do with a little less glam.

Back in the Hamptons, as indicators go, the high-end rental market isn’t much of a bellwether, according to Judi Desiderio, president and chief executive of Town and Country Real Estate. Speaking of the rarefied realm of oceanfront rentals, she said, “You can count them on one hand, so they’re going to go.” More telling is activity in lower price ranges “If you have a four- or five-bedroom north of the highway in the woods with a pool, unless it’s priced right and dressed beautifully, it might not get rented.”

Thus, it’s still a buyers’ market, Desiderio said, and canny renters can use that to their advantage. They know that many owners “would prefer to have a real person in [a house] than leave it vacant,” she said, “so they can negotiate a couple weeks on either side [of a short-term rental] for not much money.”

Desiderio did a study on renters and buyers a few years ago, finding that about 70 percent come from New York City and as many as 25 percent from abroad, mainly Europe. In years past that foreign infusion seemed the least predictable, but now it’s the Gotham escapees who are getting hard to prejudge, as they deal with so many influences, including, of course, post-traumatic stress from the market plunge. There are all the Wall Streeters who lost their jobs and bonuses. More subtle will be the behavior of those financiers who didn’t lose their jobs and bonuses but are wrestling with the fear of seeming ostentatious. The coming weekend “will be a good indicator of what’s going on the city,” Desiderio said.

If the recovery is, in fact, afoot, it’s likely that a lot of the rental picture will be in focus by the end of President’s Day weekend or at least the weekend after, when “close to 50 percent” of the deals traditionally have been done, according to Desiderio. Does she anticipate fireworks?

“I’ve been monotoring the market for close to 30 years,” she said. “Truth be told, a trend started in August. Momentum is building. It’s a good market, not great. Nowhere near the top or bottom.”

So we’re stuck in limbo?

“No, it’s healthy,” she said. “It’s still a buyers’ market, but we’re not seeing the market come down. A floor’s been established and it’s holding strong.”


Long Island Business News / February 4, 2010