Small-business owners showed neither excitement nor anxiety over the state of the economy in May, according to the National Federation of Independent Business (NFIB). Their outlook, as measured by the NFIB Small Business Optimism Index, edged up four-tenths of a point from April to 97.2 (1986=100). The good news is that the NFIB says that there is no recession signal—its Index has been consistent in anticipating the approach of recessions throughout the organization's 34-year history. NFIB's data also provides specialty-equipment companies, many of which are small businesses themselves, a benchmark to compare the activity of their own business to others in the country.

Job openings fell and are expected to nudge unemployment up, but unfilled positions remain high. Job-creation plans, although strong, were flat. Reports of price hikes eased, but continue higher than desired. Capital-spending plans, such as actual outlays, were unchanged from the previous month.

On the labor front, employment gains were solid but not spectacular—about 50,000 fewer workers were hired per month in May 2007 than in May 2006. "This year's May employment gains were as expected," said NFIB Chief Economist William Dunkelberg. "The NFIB survey has anticipated solid gains all year."

Nearly one-fourth of owners, 24%, reported unfilled job openings, down two points from April, but historically strong. Twelve percent said the availability of qualified labor was their top business problem, unchanged since February.

Over the next three months, one-fourth plan to create new jobs, up one point, and 6% plan workforce reductions, up two points, yielding a seasonally adjusted net 13% of owners planning to create new jobs, historically strong and unchanged from April. Fifty-four percent reported hiring or trying to hire new workers, though 78% of those reported "few or no qualified applicants" for their positions. Job-creation plans were positive in all industry groups.

Capital spending in May was flat. Plans to make outlays in the coming months remained weak, unchanged from April's 29% of owners. Profit gains have not triggered a boom in spending. Reported capital outlays over the past six months held firm at 60%. Nearly half (45%) reported spending on new equipment, 24% acquired vehicles, 17% bought fixtures and furniture and 13% improved or expanded their facilities. Five percent acquired new buildings or land for expansion.

An unchanged and rather weak 12% said now is a good time to expand facilities. A net-negative 3% expect conditions to improve over the next six months, up five points from April and typical of readings at later stages of an expansion. A net 16% expect higher real sales, up two points, and a positive sign for growth. Overall, expectations for economic growth are soft, but better. "Growth will continue," said Dunkelberg, "but the increase in GDP will be closer to 2% than 3%."

There were signs of inventory investment. A net 2% of owners reported a gain in inventory stocks, seasonally adjusted, four points higher than April. A seasonally adjusted, net-negative 6% reported stocks too low, a three-point drop from April. Dunkelberg noted, "The build in inventories was apparently unexpected and unwelcome."

Twenty-eight percent of those surveyed reported higher sales, and 31% had lower sales, producing a seasonally adjusted net 1% of all firms with higher sales in the most recent three-month period, compared to the prior three months, down three points from April.

Of the 21% reporting higher earnings, nearly two-thirds (65%) cited stronger sales, and 5% each cited lower materials costs and higher selling prices. For the 40% reporting lower earnings, two-fifths cited weaker sales, 8% blamed higher labor costs, 10% cited higher materials costs and 5% each pointed to higher insurance costs, lower selling prices and regulatory costs.

Unadjusted, 29% reported raising average selling prices, up one point, and 12% reported lowering them, down one point. The number of firms with earnings improvements gained in May, but the number of those reporting higher worker compensation rose three points to 29%. Only 16% managed to raise average selling prices. "Labor compensation will be pressuring profit margins all year," the NFIB economist said.

"The good news is that prices appear to be leveling off," Dunkelberg said. "The net percent of those reporting higher-average selling prices, seasonally adjusted, fell but only by two points to 16%, not enough to get real inflation down to the level the Fed would like."

Source: Sharp, Melissa. (June 12, 2007). "SBET: Small Business Chugs Along: No Signs of Recession." The National Federation of Independent Businesses. Retrieved June 20, 2007 from www.nfib.com. 

Dealerships around the nation are receiving a growing number of Alternative Fuel Automobiles (AFA), claims a survey by R.L. Polk & Co. The continual rise in these vehicle configurations might signal a widespread acceptance of hybrids, diesels and other forms of energy.
   
The number of AFAs on our roads today totals 11 million, with 434,000 being sold in the first quarter of 2007—a 27% increase over last year's account for this period. E85-capable vehicles jumped 40% from 159,882 to 266,859. Hybrid vehicles also climbed during the period, bumping 31% from 51,285 to 74,056. Clean diesel technology continues to be touted as an upcoming solution to our energy demands, yet sales declined slightly from 108,100 to 93,012.


   
Dave McCurdy, president and CEO of the Alliance of Automobile Manufacturers, rationalized the shift by saying, "gas prices, consumer incentives and the increasing number of AFA models available to consumers all play a role in the rising popularity of these vehicles." The buzz of global warming, national fuel independence and celebrity endorsements have helped create awareness of AFAs. Nevertheless, the acceptance can only expand with a supported infrastructure. McCurdy adds, "however, while interest in AFAs continues to grow, we still need more gas stations to offer biofuels such as ethanol and biodiesel." 
   
The offerings of AFAs have met the increase in demand. Currently, 60 models are available with even more choices in development including hybrid-electric, clean diesel, ethanol capable, biodiesel, hydrogen and pure electric. Modern vehicles will need advanced fuel preparation and processing. The study examined consumer opinion in regard to energy and found popular opinion advocated government funding for research and development in alternative fuels. More than 170,000 fueling stations exist in the United States, yet only 1,221 offers E85. Consumers may be willing to purchase AFAs, but if they are incapable of accessing the proper fuel, they might consider other alternatives. In fact, more than 74% of American consumers are familiar with AFAs, but the deciding factor was the availability of fuels.

Source: "Record number of alternative fuel automotives rolled off dealer lots in first quarter." June 7, 2007. Aftermarket Business. www.aftermarketbusiness.com.

Google and Pacific Gas and Electric (PG&E), the utility serving Northern California, recently displayed its six Toyota Prius and Ford Escape hybrids that partly run on electricity provided by the power grid in order to achieve up to 75 mpg, according to a recent article by The New York Times. One of these vehicles was also modified to give back power to the power company while the vehicle is not in use. The conversions were led by Google's philanthropic foundation, Google.org, which plans to give away $10 million to accelerate the development of battery technology, plug-in hybrids and vehicles capable of returning stored energy to the grid.

The hybrids were given additional batteries that are capable of being recharged when plugged in, but the technology is currently not ready for commercialization because the batteries are not yet durable enough, according to the article. Google is using batteries from A123Systems of Watertown, Massachusetts, a company that sells an aftermarket kit to convert the Prius to a plug-in vehicle. The Prius that is capable of returning electricity to the power grid does so by means of wireless signal sent from PG&E while the car is parked and plugged in to determine its state of charge. It can then recharge the batteries or draw out power.

Plug-in hybrids lower emissions of carbon dioxide and smog-causing gases because they can travel three to four miles on just one kilowatt-hour of electricity. If the electricity used to power these hybrids is produced using natural gas, less than a quarter-pound of carbon dioxide is emitted each mile. In comparison, a vehicle that gets 20 miles per gallon on unleaded gas emits about a pound of carbon dioxide each mile.

The New York Times article also noted that Google's demonstration of its plug-in hybrid conversions is a great way to make the connection between young consumers and this technology—providing an image that hybrids are reliable and affordable.

Source: Barringer, Felicity. (June 19, 2007). "Google and Utility to Test Hybrids That Sell Back Power." The New York Times. Retrieved June 20, 2007 from www.nytimes.com.

Toyota recently released details of its new Valvematic variable-valve timing technology for improving the efficiency and performance of its gasoline internal-combustion engines, according to a recent WardsAuto.com article. In addition to employing elements of its existing VVT-i (Variable Valve Timing-intelligent) technology, Valvematic uses a new mechanism to control the volume of air entering the engine by precisely metering the opening/closing of the intake valves.

This development, Toyota says, improves performance by allowing the engine to operate without the use of a conventional throttle valve, or "butterfly." Benefits of the new technology include up to 10% gains in engine efficiency and power output, as well as reduced carbon-dioxide emissions and improved vehicle acceleration.

Toyota says a 2.0L four cylinder will be the first engine to feature Valvematic, with the first applications reportedly including the new Toyota Allion and Premio sedans, which go on sale in Japan this winter, slotting in between the Corolla and Camry.

Meanwhile, Honda is also working on advanced valvetrain systems and plans to release the next generation of its VTEC (Variable Valve Timing Electronic Control) technology in 2009 in an Accord-class vehicle. Honda currently is demonstrating the system on a 2.4L four cylinder, which it says is getting approximately 13% better fuel economy than its existing i-VTEC engines.

Although Toyota plans to continue refining its hybrid-electric powertrain technology, the automaker says Valvematic will add to its environmental-preservation efforts as it moves to revamp its entire IC engine and transmission lineup by 2010.

Source: Sutton, Mike. (June 20, 2007). "Toyota Introduces Throttle-Less Valve Control." WardsAuto.com. Retrieved June 20, 2007, from www.wardsauto.com.

How do you get your customers to buy more? Successful jobbers and retailers have discovered how to do just that when they offer their customers the Car Care One card. Designed to help sell more products, it also offers help with raising your average sales price per customer. This is a program you can’t afford to miss.

How to Participate:
During the webinar, you'll be able to interact and ask questions through the computer or over the phone. Simply follow these steps:

• View the presentation during the webinar by clicking here the day of the webinar.
• Connect to the audio portion of the webinar by calling toll-free 866-637-2754, pin 1542.
• The PowerPoint presentation will be available as a PDF file at a later time.

The U.S. Senate continues to debate legislation (HR 6) to increase vehicle fuel economy as of press time. The vote count for a SEMA-supported "Levin Amendment" is still too close to call. SEMA has contacted undecided Senators urging their support.

The Levin Amendment would increase the Corporate Average Fuel Economy (CAFE) standards for cars and light trucks to 36 miles per gallon by 2022 for cars and 30 miles per gallon by 2025 for light trucks. SEMA believes these are tough but realistic numbers that push the limits of technology. In contrast, the current language in the Senate bill would increase CAFE by 4% a year through 2030—an unrealistic mandate.

The Levin Amendment would also maintain the critical distinction between cars and light trucks, thereby preserving the option afforded by pickups, minivans and SUVs for cargo room, performance, towing and hauling capacity. The current Senate bill would combine the CAFE standards for passenger cars and light trucks, thereby threatening future sales of light trucks and SUVs. SEMA believes the Levin Amendment is the best approach for preserving jobs, sales and customer choice to purchase the most appropriate vehicles (and specialty equipment to accessorize the vehicle).

SEMA will report on actions taken by the Senate in the next issue of SEMA eNews. Questions? Contact Stuart Gosswein at stuartg@sema.org.

Members of the Light-Truck Accessory Alliance (TORA) are not only setting the fundraising pace in the Council Cup-Cash for Kids charity golf tournament, but they're also talking up a good game. The golf tourney, to be held in the morning and afternoon on the day of the SEMA Installation Banquet & Gala Fundraiser, has drawn participation from most SEMA councils, but none are putting their money—and self-deprecatory humor—on the line more than the TORA.

Filler for eNews

As part of SEMA's member benefits for jobbers/retailers, the association's monthly SEMA News magazine has a jobber/retailer column. The department, titled "Retail Review," is a critique of various retail stores from around the country. The monthly column gives jobber/retailers ideas on various topics, from product displays and signage to lighting and foot traffic. To see a previous "Retail Review" click here.

SEMA members: Interested in having your store featured in the "Retail Review" section of SEMA News? Please e-mail 7–10 high-resolution photos (300-dpi JPEGs), along with your name, company name, address, phone, photos, e-mail and website (if applicable) to editors@sema.org. Please use the words "Store Layout" on the e-mail subject line.

If you would prefer to send your submission via standard mail please send it to:

Attn: Store Layouts
SEMA News
1575 S. Valley Vista Dr.
Diamond Bar, CA 91765