In 1971, the unemployment and inflation rates in the United States reached 6.1% and 5.84% respectively. For our nation’s 37th president Richard Nixon, those numbers were only part of the problem.
The Civil Rights protests of the early and mid-60’s morphed into the anti-war protests of the 1970’s without missing a beat.
Nixon understood that combined, these issues would sink his chances of being re-elected in 1972.
With his Operation Menu expanding the killing in Vietnam across the border into Cambodia, Nixon had little interest in helping his re-election chances by ending the unpopular war in Vietnam.
Action on the nation’s race-related issues would also wait. Richard Nixon was a hate-filled man who believed in a hierarchy of races with whites at the top and African-Americans towards the bottom.
It’s THE Economy Stupid!
By executive order, Richard Nixon bold actions to revive the struggling economy. To combat inflation, he froze wages and prices for 90-days. Then to stabilize the dollar, he placed a 10% tariff on every item imported into the United States.
And Nixon was just warming up!
The boldest action in the series of economic measures which history refers to as “THE Nixon Shock” saved for last!
In an effort to keep Americans insulated from the effects of international financial crises which were common at the time, Nixon ordered his Secretary of the Treasury John Connolly to suspend the ability of foreign nations to convert their dollars into gold and thus removing the United States from the gold standard.
Those combined actions were Nixon’s strategy to calm the American people and return them to prosperity.
Which worked!
Nixon announced these actions on Sunday August 15th in 1971. When the stock market opened the following on Monday, the Dow Jones industrial average went up 33 points! Which was the record at the time for the largest single-day gain in THE Dow’s history.
Considerable achievement for a stock market which would go from 1967 to 1972 without even once, closing at a record high.
Nixon’s actions unleashed the American economy and some argue fueled decades of remarkable growth.
Back to Paint
By 1972 the economy was hitting on all cylinders. With GDP growth for the year at 6.4%, Ben Belcher, the CEO of Benjamin Moore & Co. and great-grandson of the eponymous founder, would have little to worry about as the growing economy would fuel demand for paint.
Until October of 1973 when the oil producing countries of the Arab world cut-off the flow of oil to the United States. An action taken in response to American support for Israel in the current Arab-Israeli war. Wars sadly, which were common at the time.
The action by the OPEC nations causing a period of product shortages and inflation for paint manufacturers and their paint dealers brethren.
In the history of paint manufacturers and independent paint dealer, that period of shortages and its resulting price increases, is among the most difficult they have shared.
Back to THE Future
Despite the nomenclature, resins for the modern-day low and zero-voc water-based paints are mostly, petroleum based.
Which many people may have only learned when recent storms in Texas temporarily shuttering 40% of the nation’s petroleum refining capabilities, causing shortages for paint.
Or at-least the resins which almost all paints are made from.
From what I’m hearing, I‘m expecting the current crisis in the supply of resins to last three-months. Half of the length of the crisis caused by the 1973 oil embargo.
But those three months may be very challenging.
As a dealer I was never bothered by price increases. They’re profitable for you! But shortages of products during the busy spring months, is no joke!
Dealers looking to help themselves should channel their inner Richard Nixon and look for opportunities to take bold actions during this crisis.
Many buying opportunities of course are already lost. Some manufacturers are not accepting new customers as they struggle to keep up with their existing demand. But some manufacturers do in-fact have product to sell and those opportunities should be sought out by dealers looking to get through this challenging time.
Being bold in this crisis may mean dealers finding themselves owning more paint or owning different paints, than they are normally comfortable with. It’s more than just ok to take those chances in this environment. It’s suggested! A new line or even just a new product or two may be a nice insurance policy if shortages from your regular sources of supply become unbearable.
And with prices rising, which they will continue to due in the coming months, your excess inventory will only increase in value.
