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The New Economic Indicator: Brake Pads
Lewis Schiff over at Inc.com had a recent conversation with Jack Stack, the father of “open book management” and the chief executive behind SRC Holdings, the industrial conglomerate based in Springfield, Missouri.
I asked Jack if he was able to tell, from his sales volume, whether the economy was headed up or down?
“Up,” he responds.
“How can you be so sure?” I say.
“Brake pads. We’re selling lots of brake pads for trucks. When trucks are wearing down brake pads faster, it means the trucks are being driven more. More trucks on the road means more goods being sold.”
Who knew?
Photo by flickr.com.
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Angela Shupe on August 5th, 2010 5:39 pm
Interesting theory. When I last spoke to my dad about this topic he told me that things are still unreliable. Companies going out of business, some without notice. He even told me about a company that went out of business while their truckers were at various locations, leaving them stranded. While there is work and deliveries being made, it still isn’t near the way it was in the boom times. When things were good he could request a specific state or to be home on weekends and get it. Now he has to go where they want him and might not be home for weeks at a time.
On the up? Maybe but I doubt brake purchases can tell us whether things are going back to normal or if they’re still just trying to pick up work where they can.
Simon Kemnew on January 23rd, 2011 5:05 pm
Really thought provoking. I’m not sure it would be wise to rely wholly on a single indicator like this, but as one of several key indicators it sure is a good idea. It seems to make sense. If you could build in that it was break pads due to wear and tear, and not EXPANSION of sales, especially gained from other customers, from superior marketing etc etc, while the actual economy was shrinking. Break pads seems to have some advantages over measuring oil sales.
Well done, good item!
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