0:00:00.0 Kurt Baker: Do you want to get a fresh perspective on purchase and sales acquisitions? Do you understand the significance and value of handed down craftsmanship and niche manufacturing in the United States? Richard Balka, President and CEO of The Home Rubber Company is here to aid you in gaining appreciation for Trenton based businesses that remained for a long time, as well as English major entrepreneurs. Today he’ll make you nostalgic as you travel down memory lane and see Trenton’s long standing businesses. Richard, I want to thank you very much for coming on. I know you went and did a chamber event where you told us a little bit of the history of this, it was awesome, and I thought this would be great to share that. So can you tell us a little bit about the history and background of The Home Rubber Company and it’s significance to Trenton and how you got involved?
0:00:49.2 Richard Balka: Sure. First of all, thank you for having me. And so I… It’s funny, we were just talking about this offline. Through a very circuitous route, I came to Trenton, and The Home Rubber Company had been in business for three generations within a single family. I just so happened to meet a broker that was helping the third generation owner sell the business at a time when he was ready to retire, realizing that neither of his daughters had an interest in the business, nor their husbands. So, I kind of got lucky and hit a moment in time when the company was available.
0:01:41.9 Kurt Baker: Well, that’s just amazing. I know it’s been around a long time, so can you tell us a little bit about The Rubber Company and how it’s managed to continue to be successful and to stay relevant in… Obviously we have an ever-changing business environment, especially with what you’re doing. Do you wanna tell us a little bit about what you do and how has just changed a little bit over time, what you do.
0:02:00.0 Richard Balka: Sure. First of all, a little bit of history. The Home Rubber Company goes back to 1881. We are either the oldest or the second oldest continuously operating rubber factory in the country. And Trenton, New Jersey, as some of the older locals know, was the capital for all rubber manufacturing in the United States prior to the industrial revolution. And what happened during the industrial revolution is, a lot of rust belt cities lost their manufacturing businesses to southern and plain states where they could spread out their manufacturing, create more efficient properties, and in some cases automate at that time. The Home Rubber Company, because the owners had been in the Trenton area for a very long time, had roots and realized that they did not want to move the business out of the area for that reason. And recognizing that the only way for them to stay viable as a manufacturer was to become a niche manufacturer. So what happened was, as the larger companies Uniroyal and Deco and some of the other name companies that many of us have heard of, moved out of this area and began to automate and create commodity-type products, the owners of The Home Rubber Company recognized that they needed to stay in a niche and become a custom manufacturer in order to stay viable.
0:04:06.0 Kurt Baker: So, do you wanna tell us a little bit about some of the specific craftsmanship that’s involved in being in an niche? Because you’re not doing the general automation thing, your guys actually have high skills. Can you tell us a little bit about that and how that’s a differentiator between you and some of these other companies that are out there?
0:04:20.6 Richard Balka: Sure. So, we still manufacture with a great deal of touch labor. If you come in and see photographs of our factory from 142 years ago, you’ll recognize a lot of the same operations and equipment. And what this means is that our workers need to learn how to ply up layers of rubber to build a hose, how to apply wire and fabrics to that, how to mold products, and these skillsets need to be passed along from maker to maker in order to keep the continuity of the company going.
0:05:06.4 Kurt Baker: Well, that’s amazing. So you do specialty things. You wanna tell us a little about some of the types of specialties that you do and why it’s important to have skilled labor do it as opposed to running it down a manufacture like what some of these other automated systems do? Is there kind of a difference between how that works?
0:05:22.0 Richard Balka: The reality is that, what we do is generally… We say to our customers, “If you can find the product that solves your needs in someone else’s catalog, go ahead and buy it. But as soon as you need to deviate from that commodity product, from that over the counter product, then we’ll help you design it if you need us to. We’ll reverse engineer a specification if it doesn’t exist anymore.” But it can be anything from… One of the fortunate things about The Home Rubber Company is that back in the late ’80s, early ’90s, rubber companies made everything, from galoshes and rain gear, to garden hoses and fire hoses, conveyor belting and so on. And we still have all those capabilities. Examples of some of the things that we do, we make a lot of hoses for use in steel mills around the furnaces. These have to have fire resistant covers to them. The other end of the spectrum is, we make a type of bladder that goes inside of a fruit press that’s used to make ice wine…
0:06:51.6 Kurt Baker: Really?
0:06:51.7 Richard Balka: In the Niagara region and other regions similar to it, where it’s just a big rubber bladder that sits inside a mesh cage and the grapes go between the cage and the rubber. They inflate the rubber, and the pith stays in the cage, but the juice flows down underneath it.
0:07:13.9 Kurt Baker: That’s awesome.
0:07:14.9 Richard Balka: So, it’s just… We essentially can take on almost any type of job.
0:07:21.3 Kurt Baker: Well, it sounds like it’s a very fascinating job, ’cause it sounds like every day you go to a new project, it’s gonna be just a little different. Right?
0:07:26.5 Richard Balka: Right, exactly. There’s always something new and different.
0:07:29.3 Kurt Baker: And that’s why I guess this skillset is so important. So, you guys decided to stay in Trenton, I know like the Northeast is known for having, as you mentioned, losing manufacturing out of the area. But we still have a lot of manufacturing in the United States, but I think a lot of people don’t realize that. So, what do you think is happening as far as, why did you stay in Trenton and how are you adding to the local economy by the fact that you have decided to stay here, and you and other industries have decided to stay here?
0:07:56.0 Richard Balka: Well, first of all, let’s talk about why we stayed in Trenton. There’s a couple of reasons and chief among them, I give credit to the former owner of the company and to the city, county, and state of New Jersey. The former owner had the opportunity to sell the business to a Florida based company that had planned on just taking the customer list and a few pieces of equipment. And because of the Stokes family dedication to the area, they chose to hold onto the business and find another buyer which turned out to be me. I’m originally a Philly guy.
0:08:41.5 Kurt Baker: Okay.
0:08:43.0 Richard Balka: When I got into this project, got in touch with the local economic development folks who, within a very short period of time, put together a group with the city, the county and back in the days of true community lending, they put us in touch with CoreStates Bank.
0:09:11.6 Kurt Baker: Oh, sure.
0:09:13.3 Richard Balka: And we were able to put that together. But there’s a couple reasons to stay where we are. One is that, I bought this business in 1996, just at the beginning of globalization. And fast forward a couple of years and all these companies that had started out in Trenton and other rust belt cities wound up going over… They went from here to Akron, Ohio and places like that. And then they wound up taking a lot of their manufacturing overseas. And just as you hear today, if an American manufacturer wants to be competitive, they have to be in a niche. Fortunately for us, that niche had been created back in generation two of The Home Rubber ownership when, after the industrial revolution, they recognized that they weren’t going to compete against the commodity manufacturers. So, things came full circle when a lot of manufacturing went to the Middle East and the far East, but we were already in our niche, so we were very fortunate in that respect.
0:10:24.0 Kurt Baker: Well, it’s good that you stayed here. So how do you think your impact has helped the local economy by keeping this. Because Trenton used to be known for manufacturing, and now it’s a relatively small, compared to what it used to be, I guess. Right?
0:10:35.0 Richard Balka: Right, sure.
0:10:35.7 Kurt Baker: Right.
0:10:38.8 Richard Balka: So, obviously, because we’re not automated, we count on a great deal of touch labor. We employ about 40 employees right now. We would like to expand that if the [chuckle] economy would give us some help finding good qualified people, but that’s another story altogether. But most of our employees walk to work, so they’re definitely local folks, and the company’s been around for a long time and has been lived on, and fed the Trenton manufacturing reputation for all of those years.
0:11:21.9 Kurt Baker: That’s just awesome. We’re gonna take a quick break. You’re listening to Master Your Finances. We’ll be right back.
0:11:27.3 Kurt Baker: All right, welcome back. You’re listening to Master Your Finances. I’m here with Richard Balka and we’re talking about manufacturing in Trenton and The Home Rubber Company and how they’ve been here since, I guess what? 1881. Right?
0:11:40.3 Richard Balka: Correct.
0:11:40.9 Kurt Baker: That’s awesome. [laughter] That’s just amazing, I can’t even think… That’s just almost an incomprehensible amount. That’s just… It was a very different country back in 1881. [laughter]
0:11:49.4 Richard Balka: We were recognized by the city of Trenton along with some other over 75 and over a 100-year-old companies. I think we were only beaten out by one pork roll company, and God bless them.
0:12:01.7 Kurt Baker: It’s hard to beat a Jersey pork roll, right? [laughter]
0:12:04.9 Richard Balka: Exactly.
0:12:06.0 Kurt Baker: So, yeah, speaking of that, since you’ve got a couple other entrepreneurial businesses in Trenton, how do you guys… Like, do you guys communicate or work together or is there any conversations about how to keep things going in Trenton and how to… I mean, because you guys are similar as far as your age goes. Did you guys ever talk to each other about this kind of stuff? Like staying in Trenton and trying to help Trenton out and that stuff?
0:12:25.9 Richard Balka: Unfortunately, not as much as I would’ve liked to.
0:12:28.7 Kurt Baker: Okay.
0:12:29.3 Richard Balka: And I mentioned to you that I’m a Philly guy. The reality is, we do very little business very locally. We sell all over the country, we actually also export to Mexico and China, which is kind of neat, but…
0:12:44.1 Kurt Baker: That is neat.
0:12:45.2 Richard Balka: Because I’m not an indigenous Trentonian, although I was once married to one, I just have not taken advantage of some of the local networking that I might have done. But I have met the owner of Switlik Parachutes, among others. And I think those of us that are still here certainly feel a sense of commitment, and attachment. And in other cases, rely on a workforce that was born and bred and trained here to fulfill our missions.
0:13:32.1 Kurt Baker: Well, that’s awesome. Now, you’re also an English major. You wanna tell us how maybe that’s helped in your career? ‘Cause this is very different than what you went to school for. How do you think that might have impacted how well you’re doing today?
0:13:44.1 Richard Balka: I think that the answer to that lies in a level of lack of direction during my college years that… [laughter]
0:13:54.8 Kurt Baker: All right.
0:13:58.0 Richard Balka: I went to a very broad based liberal arts college in the Midwest. And the thing I enjoyed most was reading and writing and analyzing. And I believed what the career counselors kept telling me, that if you have a liberal arts education, you can master anything. Ironically, I got out of college, I wasn’t one of those guys who gave a lot of thought to what I would do once I got out. But when I did graduate, I, using some family contacts, went and interviewed… Actually talked to the head of a very large chemical company in the Philadelphia area. And he said, “Oh great, I’m looking for people that aren’t just engineers, ’cause we have to diversify our group here.” And he organized to have me interview with two of his engineers. And I sat down in front of them and they kind of stared at me and they said, “I understand you’re an English major, but what can you do for us? We’re a chemical company.” And I said, “Well, I am fully prepared to become an expert in any area that I need to be.” And they looked at me and they said, “No.”
0:15:35.5 Kurt Baker: No? [laughter] Okay.
0:15:36.8 Richard Balka: So I had I think one other interview like that, and then I said, “Well, this isn’t gonna work out, I better go make my own career.” And at that point, after a brief stint as a bartender, I started developing real estate in the Philadelphia area. And one thing led to another.
0:16:02.0 Kurt Baker: Well, I’ll have to say, just from telling your storytelling, it sounds like communication’s been a huge key to this whole thing, right? Because your ability to communicate, and I think that’s a strong indicator of how well people do. Just, being a bartender, I bet you got good tips, right? [laughter]
0:16:17.4 Richard Balka: Actually…
0:16:18.3 Kurt Baker: And negotiating real estate, right?
0:16:20.0 Richard Balka: Right.
0:16:20.1 Kurt Baker: This is all communication.
0:16:21.4 Richard Balka: We were talking about this offline a little bit before the program, but some of my during college and post-college jobs, one was selling dictionaries door-to-door.
0:16:35.2 Kurt Baker: Right.
0:16:35.6 Richard Balka: And that was pure cold calling. We would walk up and down a business district of… It could be anywhere, we would be dropped off in the morning and picked up sometime late in the afternoon. And I could tell you a story about doing that on the Admiral Wilson Boulevard in Camden. But it’s learning how to talk to people, to talk your way in the door. You learn objection answers when somebody counters you. And then bartending, I actually met people as a… When I was a 20 something bartender that… Who were lawyers and business people in the area that I still keep in contact with today. But overall to your point about communication, you learn to talk with people, you learn to listen to people, you learn to read people, these are all important skills. And whether you’re negotiating or selling or… Just being poised enough to ask for help when you need it, I think these are all parts of the communication skillset.
0:17:53.9 Kurt Baker: Well, I think you just pointed out something really important for young entrepreneurs. I know this is something I struggled with, is asking for help from others. ‘Cause I think when you start off you’re like, “I need to learn how to do everything.”
0:18:03.9 Richard Balka: Right.
0:18:04.3 Kurt Baker: And, correct me if I’m wrong, but the thing I’ve learned now is I need to know enough to know how to direct somebody else to do something in another area. But I don’t need to be the expert. [laughter]
0:18:12.8 Richard Balka: Right. Or I need…
0:18:14.1 Kurt Baker: Nor do I have the time.
0:18:14.9 Richard Balka: Right. Or I need to know where to go to start that network trajectory toward the person who ultimately can help me.
0:18:24.0 Kurt Baker: Yeah. And the network, I think that was huge too. You talked about how you developed a network. And I assume you’re probably still developing your network today.
0:18:30.1 Richard Balka: Sure.
0:18:30.5 Kurt Baker: I’m assuming that’s how you continue to grow the sales, especially when you’re dealing with a niche. If you’re making bladders for one company and these are all specialty products, so how do they… They must be referring you, so that must be an interesting dynamic when you’re dealing with something very nichey. So if I have a very nichey product that I’m buying from you, who am I referring to? I mean, how are we helping you with clients and how is that referral source building? Whereas if I was buying the same thing, I was gonna go, “Oh, he needs one of those too.”
0:18:57.8 Richard Balka: Right.
0:18:58.2 Kurt Baker: In your case, nobody needs what I need. They’ll need something a little different.
0:19:02.4 Richard Balka: Right. And the sales challenge for us. And by the way, you’re never gonna get a guy working in a steel mill referring you to the local ice wine maker, but the reality is we sell predominantly through distribution around the country. There are associations that these guys work with. They do refer business back and forth, but the challenge of our sales initiative is, because we’re not needed on a regular basis, we have to stay point of mind for any of our customers for when those custom products come up, and that’s been our biggest sales challenge and always will. If you’re a commodity manufacturer, you’re regularly in contact with your biggest customers and seeing purchase orders every day and that sort of thing, we certainly have customers that are like that, but we also have customers that we hear from once every three years. But when the advantage of having been around since 1881 is that a reputation for being a problem solver exists out there, and so somebody leaves one company and goes to another company and they remember, “Hey, we used to buy this from Home Rubber,” or they pick up a phone and call someone that they know in the industry and they say, “Hey, you know, try Home Rubber, they can do this.”
0:20:46.0 Kurt Baker: That’s just awesome. So, what do you see some distinct products that you make? I know you talked about a little bit about this, what other things do you guys like problem-solving, manufacture there?
0:20:57.2 Richard Balka: Okay. We’ll try to go from the sublime to the ridiculous.
0:21:00.6 Kurt Baker: Okay.
0:21:01.9 Richard Balka: We’ve made some 6-inch thick bumpers that are stops for trains at the end of the rail line. We have made a tugboat bumper that was about 2800 pounds.
0:21:21.8 Kurt Baker: Wow.
0:21:22.0 Richard Balka: It was basically an incredibly large piece of rubber tubing with about a 4-inch thick wall that got wrapped around the front of a tugboat to act as a bumper. We’ve made for people that collect antique cars and fire trucks and things like that, we’ve made the hoses because the way we make them is the way they were made when the fire trucks were first built. So they have what’s known as a fabric or a wrap impression on the outside diameter of them. We make, if I can say this on the radio, what we define as the piss hose, which was an incredibly flexible hose that was used on the urinals of trains. [laughter]
0:22:15.3 Kurt Baker: Interesting. I never knew there was such a thing.
0:22:19.5 Richard Balka: And one of the products that we make… Well, the things that we export, and we didn’t get into this, but a couple of years ago, I bought another company called the Ivanhoe Rubber Company back in 2008. Ivanhoe is also a niche manufacturer and sells uncured rubber to companies that mold and extrude with it. And Ivanhoe among other things, makes the rubber that is used for the plugs and sockets of wire harnesses for the space shuttle.
0:22:58.2 Kurt Baker: Oh, wow.
0:22:58.2 Richard Balka: The rockets, missile systems, and pretty much every airplane you’ve been on since you’ve been on any.
0:23:07.7 Kurt Baker: Okay. [laughter]
0:23:08.4 Richard Balka: So it’s a little bit of anything that comes up.
0:23:11.8 Kurt Baker: That’s really cool. We’re gonna take another quick break. You’re listening to Master Your Finances.
0:23:19.0 Kurt Baker: Welcome back, you’re listening to Master Your Finances. I’m here with Richard Balka and we’re talking about lots of different interesting things from urinals on the train to bumpers on tugboats to… I had no idea how many things you were involved… And then there’s the shuttle, and I have not been on the shuttle, but…
0:23:37.0 Richard Balka: I was gonna say before you got to that, my wife has often told me that I crossed the line in some of the things that I say.
0:23:44.1 Kurt Baker: Okay. Alright.
0:23:44.2 Richard Balka: So apologize if I offended anybody with my… I’ll call it honesty.
0:23:50.9 Kurt Baker: It sounds like you’re just a Philly guy to me. Is what it sounds like to me. [laughter]
0:23:55.2 Richard Balka: Exactly.
0:23:55.6 Kurt Baker: No. It’s awesome. So I know as in any company had to deal with the last couple of years when we had the shut down or during the pandemic, how did a company like yours, which was really… You were kinda tied in a whole supply chain issue, you didn’t have materials, you didn’t have employees, how did you manage that whole process and what adjustments did you make and what kinds of things did you learn through that process?
0:24:19.1 Richard Balka: Well, the first thing I learned was how grateful I was to be declared an essential business. My wife works from home as an attorney, and the thought of the two of us trying to work out of the same house for any period of time was really disconcerting. And truth be told, I have never liked working from home, I have to be out and around people. And so when we were going through the list and the government’s announcements of what businesses were considered essential, my wife and I were both ecstatic and obviously pleased. But it was interesting because, like many businesses, we took extra steps cleaning, we rotated our office staff who was working from home and who wasn’t. We got better at the IT stuff that had to go on.
0:25:26.9 Richard Balka: But there were also stresses for, even though it was where I wanted to be, and that I wanted to obviously continue operating, there were stressors around coming to work every day, worrying about whether or not, somebody in the factory would get sick. What would that mean? You know, I heard horror stories from other, business owners who spent thousands, 20, $30,000 cleaning their factories because after somebody got sick, because nobody at that point really at understood what was creating all this. But we… You know, our guys came in every day, oddly enough, nobody in the factory, ever contracted COVID, that we were aware of. And the office staff who was rotating in and out of there, we actually did have a few people that that got it.
0:26:28.9 Richard Balka: But I give a lot of credit not only to our guys for continuing to come in, but not being cowered by it, continuing to work through it and so on. As far as the supply chain issues, we were very fortunate when, again, to being a US manufacturer, where a lot of the supply chain issues came from manufacturing overseas, not being able to get their product to the US. We saw an uptick in business and, I’m not suggesting, and this is a whole other soap box, that the US can ever onshore all of the manufacturing we need to keep our country, where it is from an economic standpoint. But, a lot of businesses ran into real problems, and those of us that were able to get raw materials in and get product out the door, were very fortunate.
0:27:44.9 Richard Balka: We really didn’t see significant supply chain issues until really toward the end of the pandemic. And I’m not sure why that was. I think, if I had to guess, it’s a combination of multiple factors, some being the fact that goods were in such supply that some of the commodity raw materials that we count on coming from the far East were not valued enough to make it onto the ships that were getting here. Some of the issues were coming from factories overseas, retooling, shutting down shifts and so on. And what happened was, early on in January of, I guess it was 20, we saw a huge dip in orders as most people did, because everyone was sort of stepping back and going home and whatever. But over the next couple of months we saw demand spike. And then what we have seen, and for those people in my industry that I talked to, they’re saying the same thing, as prices kept rising so rapidly, customers started buying more and more goods with… And trying to lock in before those price increases hurt them. And the spiral was that increased demand. And so that is one of the things that’s led to the inflationary period that we’re in now. But it was a rollercoaster.
0:29:34.9 Kurt Baker: Wow. Yeah. That’s eased up a little bit lately. Right? That cycle, hasn’t it softened a little? How are you seeing it?
0:29:39.4 Richard Balka: It has softened a little. We’re seeing both, overseas freight and domestic freight coming down a little bit. I’m actually not amazed, but upset by how many calls we get every day from logistics companies trying to get our business that you couldn’t even get on the phone 18, 20 months ago.
0:30:05.4 Kurt Baker: Right.
0:30:07.1 Richard Balka: But it’s funny because just today I saw, one of our raw material suppliers, chemical-based products, I got a letter today saying, we are reducing the price of such and such. We haven’t seen a ton of it, but little bits here and there, I think. No one is bringing the price or the cost down as much as they took them up.
0:30:36.2 Kurt Baker: Not to 2019.
0:30:36.3 Richard Balka: Right, right.
0:30:38.6 Richard Balka: But we’ll see how that works out.
0:30:40.1 Kurt Baker: Yeah. No, so that’s interesting. So how did you manage, like the employees through this whole process? Sounds like everybody kept working. And so…
0:30:46.9 Richard Balka: We kept it going. We, like many businesses, took advantage of the COVID funding that was available from the government.
0:30:56.6 Kurt Baker: Right.
0:30:56.8 Richard Balka: We didn’t lay anyone off, particularly in the factory. We, you know, what we didn’t do was travel for sales, which is something that we were used to doing. And that probably created the biggest change for us. But that being said, again, the advantage of being a company with 142-year-old reputation is that we found in the past we can stay off the road for periods of time without being hurt too much. And so, our guys stepped up and got everything done that needed to get done.
0:31:38.7 Kurt Baker: So after going through that, the pandemic period, has anything changed from a business perspective? I mean, do you… I don’t know. Do you travel, still travel less and maybe do more Zoom calls? I mean, has anything like shifted a little bit? Because we all learned a little bit during the process. Some things were positive.
0:31:52.9 Richard Balka: Right.
0:31:53.3 Kurt Baker: So anything you added to it that maybe was a positive from this whole episode?
0:31:57.0 Richard Balka: Well, certainly the technology of Zoom meetings and so on has improved life dramatically. The reality is I’m in a transition where I’m actually looking for a new sales manager. And I will leave it up to that individual when they’re hired, how much travel we’re going to do, whether we sell through direct sales versus reps around the country and so on. But definitely companies, our distributor customers, they didn’t want us to show up any more than we didn’t want our guys getting on airplanes.
0:32:38.4 Kurt Baker: Right.
0:32:38.9 Richard Balka: And so everybody in the industry learned to work a different way. And that’s not changing any time soon.
0:32:47.1 Kurt Baker: Well, that’s good. So anything else from the pandemic period that you want to talk about that we figured out?
0:32:53.9 Richard Balka: I think we just about covered it.
0:32:55.4 Kurt Baker: All right.
0:32:56.0 Richard Balka: Other than learning to wash our hands 42 times a day, which…
0:33:00.5 Kurt Baker: And hopefully people continue to.
0:33:00.9 Richard Balka: Exactly.
0:33:01.5 Kurt Baker: Particularly, I was amazed how many people didn’t wash their hands beforehand.
0:33:04.3 Kurt Baker: Unfortunately, some of them are going back to that. So yeah, definitely wanna, sanitary is really an important part of that. So now what about the impact of US manufacturing base. Now they talk about, like, I realize that we can’t bring all manufacturer back to the United States because it is a world economy, but what about the focus of bringing at least certain critical infrastructures back to like, if we have a shutdown like this, at least, well, maybe we can make masks or maybe we can make these, you know, some basic components. But maybe some drugs that are necessary.
0:33:34.8 Richard Balka: It’s funny you mentioned masks. The one last piece on the pandemic is there was a local group across the river in Morrisville, Pennsylvania that was that was sewing cloth masks when masks weren’t available. And of course, all of the sewing stores ran out of the white stretchy elasticy stuff.
0:33:56.4 Kurt Baker: Right.
0:33:56.9 Richard Balka: And I don’t know how she found me, but we started making essentially rubber bands that they could use in place that’s elastic.
0:34:05.7 Kurt Baker: If it has rubber in the name, you can make it. Right?
0:34:08.2 Richard Balka: Exactly.
0:34:09.4 Richard Balka: But anyway, to your point, it’s a struggle because there are things we don’t want to make here.
0:34:19.4 Kurt Baker: Right.
0:34:20.0 Richard Balka: We don’t want… We have areas like Louisiana, the Gulf region, where we’ve pushed a lot of the chemical manufacturing that other areas didn’t want and shouldn’t have had in their backyards because it was too close to residential areas. And the irony of manufacturing back when all of the older companies started was that the most efficient place to locate your big manufacturing facility was along a waterway. And of course, dumping into those waterways and we know all the problems that that’s caused. There’s certainly… To your point, there are certainly products that we need to be able to either make here or a mass here.
0:35:16.8 Kurt Baker: Mm-hmm.
0:35:17.4 Richard Balka: And, do we need to be able to make masks? I can’t answer that.
0:35:21.7 Kurt Baker: Right.
0:35:22.0 Richard Balka: If we can stock…
0:35:22.6 Kurt Baker: Just an example.
0:35:23.4 Richard Balka: Right. If we can stockpile them…
0:35:25.3 Kurt Baker: Right.
0:35:25.7 Richard Balka: We need to be able to maintain our food supply. Certainly we need to be able to… As we’re seeing with chips and computer, we certainly need to be able to protect ourselves from… If they’re that prevalent in all of the things that we use to function on a daily basis. No question about it.
0:35:51.6 Kurt Baker: Well, I certainly appreciate, I hope those conversations are happening between industry leaders and the government at some level. But we’re gonna take another quick break. You’re listening to Master Your Finances.
0:36:00.3 Kurt Baker: Welcome back. You’re listening to Master Finance. I’m with Richard Balka and we’re talking about a long 142 year history of manufacturing, which is incredible, all the way from the very, very beginning. And now we went through the pandemic, we learned a lot through that. And you guys make all kinds of interesting things all the way from the shuttle down to the trains to the tugboats to, I think it’s just incredible that you guys are on…
0:36:23.8 Richard Balka: To mask elastic.
0:36:24.6 Kurt Baker: The mask elastic. Right. Exactly. So, pretty much rubber is, you know, put rubber in there… I never realized just how diverse a company could be about. I just assumed different people make different things, but you guys can make it all, which I think is really cool in of itself. And it’s basically 40 employees can make almost anything that’s rubber.
0:36:43.6 Richard Balka: Exactly.
0:36:44.5 Kurt Baker: That to me is amazing. Just that whole idea is amazing to me.
0:36:47.2 Richard Balka: From raw chemicals, through mixing to to finished product.
0:36:51.7 Kurt Baker: I personally find that fascinating as an engineer. I think that’s really cool. So that’s the first 142 years. So what do you see happening, maybe not 142 years out, but how about the next 10, 20, 30 years? What do you see kind of happening? ‘Cause you’re a niche, right? But you obviously have automation. We have things like AI coming out, we have all these other things happening in the world, so to speak. How do you think that’s gonna impact you as a business?
0:37:13.8 Richard Balka: Boy, you had to bring AI into it, didn’t you?
0:37:16.8 Kurt Baker: Oh, sorry.
0:37:18.7 Kurt Baker: I don’t know.
0:37:20.2 Richard Balka: Everything seemed so clear until AI came on the scene, didn’t it?
0:37:24.5 Kurt Baker: Oh, I guess, yeah, definitely.
0:37:26.0 Richard Balka: I guess, first you have to ask yourself from an economic standpoint what’s gonna happen. And I don’t know about you, but I periodically go to association events and there’s always an economist there and they always say, “The one thing that’s certain is change.”
0:37:47.2 Kurt Baker: Right. They get paid a lot of money to say that too, by the way.
0:37:49.6 Richard Balka: Right. Exactly.
0:37:50.3 Kurt Baker: It’s the same message.
0:37:55.4 Richard Balka: You know, and there’s… I’ve heard enough of them to have some takeaways that I think you can go on, cycles obviously, constantly exist in home rubbers history and the discussion around how we became a niche manufacturer, that certainly a cycle, the economic rises and falls, the highs and lows, those are the cycles we’re always gonna see, but the challenge is nobody can predict how deep or how high any of them are.
0:38:31.7 Kurt Baker: Right.
0:38:32.7 Richard Balka: Where I struggle today is that, I see a lot of people confusing the stock market with the economy. And then you hear, “Well, the stock market’s rising because of tech stocks,” or, “The stock market’s falling because of tech stocks.” I consider the home rubber company and companies within our environment to be bellwether economic indicators. Steel, concrete, construction, mining, these are food, these are where my customers and their customers live, and the reality is that when everyone’s talking about a recession over the past six, nine, 12 months, everyone in my industry was reporting record sales, record demand, and at the last trade show I went to back in… It was in early May of this year. The term you kept hearing is, as long as we don’t talk ourselves into a recession, there won’t be a problem.
0:39:56.1 Kurt Baker: Right. Right.
0:39:56.9 Richard Balka: Now, that being said, inflation is horrible, there’s no question about that, and yet I think it is the unfortunate outcropping of the necessity of keeping the economy going during COVID, while there may have been wasted and there may have been theft, and I’m sure there was. I don’t fault the government for the approach that they took there, I just think it’s gonna take a while for all of that cash in our economy to level out. Unfortunately, you get me talking and I start going in different directions at various points, but the other from my standpoint, and I think we see this more here in the Northeast than other parts of the country, the other thing that is a cycle that needs to swing back is we need, in my personal opinion, a cycle that feeds our middle class. And one of the brighter economists that I heard described this, went through a series of charts and data and so on that showed that the biggest threat to our GDP is not having a strong middle class. There’s been a cycle, I’m not good with years, but it’s probably 25, 30-year cycle of broadening the gap between the upper class, the 1% and all the buzz words that we hear. I think that that will come back to haunt us because that… I should probably stop and think my way through this. But I don’t think the economy is driven by that 1% in terms of their need for the sorts of regular demand items that generally drive our economy as a whole.
0:42:16.9 Kurt Baker: Yeah.
0:42:17.7 Richard Balka: And it’s like if you go back and look at the stores, Target and Bed Bath Beyond that are struggling now, and you hear that what their problems are is there was a whole bunch of money all at once.
0:42:33.3 Kurt Baker: Right.
0:42:34.7 Richard Balka: Right. And so everyone went out and bought a new blender, but you only need one blender every five years.
0:42:40.4 Kurt Baker: Right, Right.
0:42:41.0 Richard Balka: So, it doesn’t sustain it, but if everybody had gone out and bought a house, or if everybody had gone out, and if we got the money into the hands of people that needed it on a daily basis for food, for housing, for those sorts of things, it would continue to turn in the economy… And I’m sorry, ’cause clearly I am going off on my suit box.
0:43:11.0 Kurt Baker: No, you’re right. I mean, the middle class… It’s called the velocity of money. The middle class tends to spend money as a higher percent of what they had, was the wealthy tend to hold it, invest in it, they don’t necessarily spend it. So, like a middle class person will do what you say, they’ll buy groceries, and then that grocery person at that store makes an income and they go and spend the money, so the more…
0:43:31.6 Richard Balka: Sure.
0:43:32.4 Kurt Baker: And that’s where most of that people forget that the most of the wealth actually exists in the middle class, and the stronger the middle class is the more it supports everybody, right. Because they provide the good and the services to the 1%, and they also provide the services to those who are disadvantaged and need to help, need a hand up to help them get out of poverty. But, yeah, you’re right, and you’re right that divergence has been continuing to spread and there is some concern there, and so we have to pay attention to it. I don’t know if anybody knows the actual answer yet, but you’re right, we have to find ways to better to suit it. And it’s interesting to me is, and you see this as an employer, is it seems like we have these job openings, but they’re not filling as quickly, which is an interesting dynamic where we’re paying people more money, but they’re not necessarily running to come get the jobs either yet, which is interesting to me.
0:44:27.3 Richard Balka: Yeah, I mentioned to you during the break, I’m an NPR junkie, and recent stories around population decline.
0:44:36.8 Kurt Baker: Right.
0:44:40.6 Richard Balka: Demographic just came out, our median ages about four years older than it was the last time that the study was done. We don’t have the people to fill the jobs. So if we don’t figure out how those people are going to get here, we can’t expect the economy to grow other than through, and I’ve avoided AI this whole time, other than through this sort of automation that maybe AI would be able to pick up, but I don’t think anyone at this point believes that AI can fill the sorts of jobs that we’re struggling to fill now.
0:45:18.6 Kurt Baker: Yeah, I think that’s one of those big interesting areas that all of us is… It’s gonna happen quickly, we’re just not sure exactly what’s gonna happen.
0:45:23.9 Richard Balka: Right. And in my business, and I’ve been thinking about this, I could use AI if I didn’t wanna have people answering phones, for instance, I could use AI to design a hose, which is an engineering calculation. But I can’t use AI to build that hose. So I don’t know. We’ll see it coming.
0:45:51.4 Kurt Baker: I think initially, it’s gonna be an augmentation, like we’ll use it as as another tool.
0:45:54.9 Richard Balka: Right.
0:45:55.5 Kurt Baker: And that there’s still a person will be like that 90-10 or maybe AI will do 90%, but there’s still a person’s gonna be involved on some level, and they might handle the grunt work of helping you do the basics, but somebody still has to do the final, “Okay, okay, this is what we’re gonna do so.”
0:46:09.0 Richard Balka: Right, and guys like you and me, the middle aged white guys, will be the last adapters, and so it will all younger kids who can understand it, they’ll teach us how and we’ll just sit back and watch.
0:46:25.9 Kurt Baker: We’ll just have to watch. This has been an awesome hour, so any final words for me, that you wanna give words of advice and words of wisdom?
0:46:32.7 Richard Balka: I have no advice other than be optimistic, and look out for others, take care of other people and they’ll take care of you. And thank you, I’ve enjoyed chatting, and if anybody was willing to pay attention to any of this I hope I kept you awake.
0:46:57.0 Kurt Baker: All right. Well, thank you, Rich I appreciate you’ve been listening to Master Your Finances, please go to a www.masteryourfinances.us and subscribe there. And have a wonderful day.