Wawa vs Washington: What Romney really meant
Private equity put to the test
Wawa vs Washington: What Romney really meant
Joseph N. DiStefano
GOP Presidential candidate Mitt Romney's visit to an upper Bucks County Wawa last week was noted by Pennsylvania media for the last-minute switch that took place after ex-Gov. Ed Rendell showed up with a mob of Democrats at the original site. (See summaries and links to Inquirer and national coverage from PoliticsPA.)
National media paid more attention to Romney's Wawa message, summed this way by Josh Barro of Bloomberg LP: "The federal government should be as efficient as Wawa, he said, which allows you to order your hoagie through a touchscreen kiosk instead of talking to an employee."
Presidential candidates don't get out much to order their own sandwiches. And yes, it's easy to laugh, Barro noted.
But there's a larger story here: Wawa's investment in electronic ordering, he says, calls to mind Romney's old employer, Bain Capital, where he was paid tens of millions to extract billions from old companies by cutting costs and boosting profits:
"What Romney praised Wawa for doing is pretty Bain-esque: It found a way to replace low-skill workers with machines.
"And Wawa is a great example of why innovations like that are good for the public. Improved efficiency (including doing the same tasks with fewer workers) doesn’t just mean increased profits; it also means lower prices and/or higher quality for consumers."
Is this what America needs right now -- fewer low-skilled jobs?
That's not what some states think, Barro notes: "In the last decade, gas station operators in Maryland have complained that Wawa and Sheetz (a similar chain) were undercutting them on price. Instead of cutting their own prices or finding ways to be more competitive, they got the state to enact a law setting a minimum statewide gas price, based on a fixed markup over wholesale prices. This forced Wawa to raise its prices. Wawa had also been giving out free coffee to people who bought gas. Maryland lawmakers helpfully made that practice illegal, too.
"Wawa’s competitors complained that Wawa and Sheetz were selling gas as a loss leader for profitable convenience store products that its competitors don’t carry, such as hoagies you can order at a kiosk. It’s easy to see why other gas retailers would hate that. But it’s hard to see what the harm is to consumers.
"Meanwhile, Wawa’s effect on low-wage workers is not what it appears at first glance. Wawa’s innovations reduce the number of employees needed to sell a sandwich. But they might increase sales so much that total employment at Wawa rises. Or it might mean that consumers take the money they save at Wawa and spend it elsewhere, creating jobs in other sectors. Even if we can identify specific jobs lost to automation, that doesn’t mean there was a net job loss...
"Romney tends to defend his private equity record by pointing out all the people who now work at firms he was involved in creating, like Staples and Bright Horizons. What he should really emphasize is that Bain created enterprises that make things we want -- and that it shut down enterprises that were inefficient, so that economic resources could be better allocated to places where they created more value."
Value -- for whom? Owners? Customers? Workers, actual and potential? Small bsuinesses competing with the big chain? That's the Romney and Bain question: Who benefits from what kind of investment? That's more important than wondering about what kind of man, given Wawa's options, picks a meatball "sub" with pickles.
When Wawa automates, they are not doing it in isolation. The consumer is being drafted to be the service provider, hence the term self service. When Acme and CVS and so many other retailers have self check out scanning stations, we do the work, not just the new machine. When we go online to pay a bill, we get the money immediately out of our account and into the vendor's. Without a stamp, envelope. All of this labor saving, time saving, money saving is putting more into the profits of corporate America, not more money for me to spend somewhere else. Everywhere else is just the same or soon will be another mobile app! And these year after year corporate efficiencies to save labor and money has increased overall economic productivity without any overall benefit to the public in shorter workdays or workweeks. We produce 10 times as much as we did a 100 years ago when we went to the 40 hour work week but with even more productivity we are still locked into the the industrial factory assembly line model of work. We should have had a 3 day work week by now, but don't instead, we have 50 MILLION unemployed and part time workers and full timers working like animals overtime. This is not the promise of progress but a corporate takeover of our lives. We don't owe the economy the bulk of our life when only a small fraction of our time is needed to man the economic machine that keeps producing more than we need or could ever hope to use up in a lifetime. We need the same pay and benefits and a shorter work week, to be shared with those that need jobs. What we don't need are more Bain capital ponzi schemes that create money pumps that re-direct all of the wealth of productivity gains into the hands of only 1% of the citizens!!! Fewer billionaires = growing middle class!!- What wawa touch screen does is good for all.
What Romney did in Bain is load profitable company with loans using the good name of the company and then walked away with money. Vulture capitalism is not investment is business; it is robbery by white collar crooks— Seed - ... Self checkout so I can save 10 minutes of waiting in line is feeding the corporate machine? Saving the hassle and expense of a stamp with online billing is the downfall of the middle class? When you order a sandwhich at a WaWa touchscreen, does not a real person still make said sandwhich? You forgot about the internet, with all of its evil quick information at your fingertips. Entire industries have fallen due to online sales; oh, wait, they didn't. The poor movie industry has collapsed due to online piracy; oh wait, it's only making record profits this year.
— verve -
"And Wawa is a great example of why innovations like that are good for the public. Improved efficiency (including doing the same tasks with fewer workers) doesn’t just mean increased profits; it also means lower prices and/or higher quality for consumers
Sorry,but ,as much as I admire Wawa for their logistical brillaince ,the quality is not there . I ,like many in the region ,go to Wawa frequently,and have been doing so for decades . But when I think of the words quality and hoagie,Wawa just does not cut it. The hoagie rolls at Wawa are just terrible,and if you ask me it's like the emperor's new clothes
— Jim v - What is most disgusting about this entire story is that the state of Maryland artifically manipulated the free market by dictating a minimum price of gasoline...because Wawa and Sheetz were successful at selling gasoline to consumers less expensively. As usual, the government gets involved in the free market and the consumer loses...again & always. Absolutely disgusting. If WaWa & Sheetz are willing to sell gasoline ot consumers for less money, than they should be permitted to do so!!!
And Romney is 100% correct...the government should be run as efficiently as a WaWa. It is NOT the role of government to provide direct employment, it IS the role of government to provide basic service at the LOWEST possible cost to taxpayers. Can you imagine WaWa being as successful if all their effeciencies were replaced with union labor with artificially inflated compensation packages??? Of course not. That is ridiculous. Heck, none of us would be able to afford a Shorti and Wawa would be down to like 12 stores.
Our country is barreling straight on towards a finacial cliff from which there will be no return. America needs a leader who has the vision, ability, experience and guts to balance the federal checkbook. Wouldn't it be nice if if the profit % for the federal finances were to match that of Wawa??? On this, Romney is 100% correct.— kelprod2 - But you keep going back....— jimmymack
- wawa's food (especially the hoagies) have really gone downhill over the last 4 years. i just won't buy them anymore— the_chief
- I'm a little confused. I use a touchscreen to order my sandwich, but someone still must make it...the touchscreen doesn't actually do much except speed my order time. Those same four employees are still back there putting too much lettuce on my hoagie...how does that eliminate jobs? All that does, in my mind, is to shorten my wait time!— Steffi1
- Selective outrage. If Romney spoke highly of the internet would liberal bloggers demonize him because he likes the automation of the internet? This selective outrage is like the Occupiers ranting about big companies and foreign labor while sipping their Starbucks lattes and updating their Facebook statuses on their Apple products.— AvoidSundanceVacations
- The key difference is that Wawa's kiosks didn't cut jobs, most Wawas now have more people behind the deli counter than they had before kiosks, because they are able to focus on making the sandwhiches. They used the cost savings and efficiency to grow long term.
Romney's Bain capital was never about growth, it was about pumping up companies in the short term by firing people, using accounting tricks, and hiding debt, then selling high before the companies drove off the cliff. Cutting the bottom line might be good short term policy, but if you never reinvest the savings, you cannot grow. And that is the key problem with the Republican economic/tax strategy. They want to cut cut cut, but have no plans to grow using the savings from the cuts. It's not just about spending less, it's about spending smarter, in a country the desperately needs to spend MORE on critical infrastructure.— Pelti - More workers because the Super Wawa is a larger store.— twg
- I was so intent on giving my opinion about how terible the Wawa hoagie rolls are ,I forgot to comment on the political side . Romney is just a better choice . The demonizing bs about Bain is just a desperate measure to counter the fact that he has a much better chance of putting people back to work than potus. Obama simply does not the skills gained by experience in the private sector and he has surrounded himself with too many leftists . Any good leader leads ,Obama is devisive .It makes me sad when people put everything in racial tones ,that is ,if you are for the republican party,that makes you a racist .This is reverse racism— Jim v
- another liberal assessment. If you don't like the way a business operates then don't patronize them. This is a free Economy. stop making excuses for capitalism. It works because you have a choice of who you want to deal with. The companies that don't satisfy customers go out of business. Very simple ECON 101— rduexpress
- I, too got a kick out of a guy who has eaten at thousands of public events in the past 5 years ordering a meatball sandwich. Then, he goes on about the touch screen like George the first did about the bar code reader at JC Penny's back in '92, finally, his advance people knew that Wawa and Sheetz both sold sandwiches in PA, but didn't know that their areas don't overlap. So, he asks the crowd in Bucks if the get their hoagies at WaWas or Sheetz. WaWa, Mitts, not WaWas. And they are asking for subs at the Sheetz.— TomH1
- Hey ... kelpod ... The dairy plant is union at WAWA and so are their drivers Teamster local 63. Your idol Romney is a loser he made his fortune stealing from his destruction of good companies, he hid in Paris during Vietnam like most of the right wing punks today, this guy talks out of both sides of his mouth and cannot answer a simple question.— angrywhtguy
