"PLCB Modernization" means "PLCB higher prices"

Another installment in our ongoing series of revelations about why "modernization" is a scam.

We always hear about how the "PLCB Modernization" plans will make so much more for the state! But what they won't tell you is that they all work by taking more money out of your pocket. Here is one of sneaky little things they want to do that will cost you more. You don't see much about this item, as the PLCB has buried it pretty well. Well-hidden or not, it is one of their many ideas that will cost you, the consumer.
 

Because it's the PLCB way!

In the liquor industry there are specials that are offered called SPAs  or Special Purchase Allowances. By current law these SPAs have to be passed on to the consumer (that's you!), which is why you see  those sale tags on the shelves. The PLCB isn't making any less, as none of that reduction comes out of their pocket; they are just passing on the SPA.

However, the PLCB doesn't want to do that anymore. In sworn testimony, the PLCB said "With flexible pricing, the Board would be in a position to retain, and ultimately remit to the Commonwealth, some of the savings afforded by the Board's suppliers" In plain English? 'We aren't satisfied with making the exact same amount on sale items, we want to make more and have the citizens save less.' (I did a post last year about "flexible or variable pricing" if you want to review that.) In a worst case scenario, which is without a doubt what the PLCB will do, they could get an SBA, adjust the pricing upward and pocket 80-90% of the savings that were supposed to be yours.

Now, in the free market, a store will leverage those SPAs by not only using the reduction in their cost but by also cutting their margin to lower the price even further in order to attract customers away from other businesses. That is why sale prices elsewhere are more of a bargain than the sale prices in PA. The PLCB doesn't want to do that, though, because they need more money to cover their ever-expanding operating costs.

In 82 years, we have never seen anything done to change the liquor code to save you money. Benefiting the consumer is not what the Almighty Liquor Code is for, after all, unless it's about free drinks while playing slots. They have no problem with that.

It is time to END IT, not mend it. Get the state out of the alcohol business and into regulation where it belongs.






For parts 1-4 of this series see :
Part I,
Part II
Part III
Part IV 

Modernization won't do what the consumer wants. Part IV

Let's look at another failed concept by the PLCB. Although they won't admit it is a failure, when nothing you want comes out of a program it is a failure. Here we have the epitome of customer convenience in the eyes of the PLCB.  Read and then wonder why they ever thought it would work.

Two years ago, in October 2012, the PLCB came up with an eight year plan called "Convenience 2020." This plan was to put a "One Stop Shop" inside a grocery store that already had twisted themselves around to comply with the PLCB regs and then had to overpay to get an "R" license in order to sell beer.  A match made in heaven, since the stores already hate the PLCB for making them go through the added expense and effort of what is a relatively easy process elsewhere.


Is the PLCB, since they "interpret" the liquor code to whatever they feel like on any given day, going to somehow put the liquor and the beer in the same area since the age requirements for purchasing are the same? Of course not! This is the PLCB: convenience is a foreign concept to them. They only go through the motions, because otherwise they would have been privatized decades ago.

In this Pennsylvania nightmare you get your cart, shop for groceries and then make a choice. You can either pay for your groceries and take them out to your car and then come back for your beer; or buy your beer first, and then go shop for and buy groceries...at a different set of registers. BUT WAIT! You forgot the wine. Now you can go get the wine first because your cart won't fit in the liquor store, pay for it there, then go grocery shopping pay for those, take everything to the car and then come back for beer (or buy the beer pay for it at the beer register and then pay for the groceries). And just think: if it's a hot day, you can leave the wine in the car and have it get heated up just like in the PLCB's trailers!

The epitome of convenience! You get to pay at three different registers inside the same store.


And they wonder why it isn't working out.


Idiots.

Only 10% of a PLCB managers score is product knowledge. That explains a lot.

Consider this: only 10% (approximately) of the score on the civil service test required to be promoted to management in the PLCB has to do with product knowledge. Hard to believe, but it's fact. [see below for the reference] Since the majority of folks who work in Harrisburg for the PLCB come from the ranks, that means that most have never been responsible to know what they sell.

Imagine if that was the case for your shoe salesman. “Well, it is the color you asked for, and it looks like it will fit, but since you can’t try it here at the Pennsylvania Shoe Control Office (PASCO, "Monopolizing Your Shoe Choices since 1934!"), you’ll just have to believe me. You can return it if there is something wrong, but not just because you don’t like it or if you think it doesn’t match the requirements you gave me. The state absolves us of any responsibility for that."

In that light, I figured that since the people in charge never had to know much about the product the tests they come up with would reflect that fact. To that end I made up what I think is the level of complexity shown on the PLCB Managers test. See how well you can do.

1. Rye whiskey is made from

A. Corn
B. Malted Barley
C. Rye
D. Bourbon
E. None of the above

2. Red wine comes from:

A. Republican states
B. France
C. California
D. Red grapes

3.  Bourbon can only be made

A. In Kentucky
B. In Tennessee
C. In the U.S.
D. In a distillery

4. If you bought a bottle that has 10 year old whiskey in it and kept it for 20 years how old would the whiskey be?
A. 10 yrs old
B. 20 yrs old
C. 30 yrs old
D. None of the Above
E. 2 weeks on Close-out at 55% discount

5. What temperature should the metal trailer be in order to store wine the PLCB way?

A. 80 degrees
B. 90 degrees
C. 100 degrees
D. Unknown, these temperatures are not recorded

6.  Wine should be served at:

A. Room temperature
B. Slightly chilled
C. Whatever temperature the cooler is in the store.

7. How much wine and liquor should be stacked along the front windows in the sun?
A. As much as will fit.
B. Whatever I feel like
C. Only brands that pay for it
D. None of the above

8. Liquor of a given type should be placed on the shelf and grouped by producer/manufacturer/distillery and not by price because:
A. That is how Harrisburg wants it.
B. People only buy their favorite brand.
C. It's not important.
D. Both A and C.

9. Why is Wild Turkey American Honey in the Liqueur section and Jack Daniel’s Tennessee Honey in the bourbon section? They both say liqueur on the label.
A. That is how Harrisburg wants it.
B. People only buy their favorite brand
C. It's not important.
D. Both A and C.

10. Are 11 orange flavored vodkas enough?
A. That is how Harrisburg wants it.
B. People only buy their favorite brand
C. It's not important.
D. Both A and C.


So if product knowledge is such a small part of the job...just what do the store managers do?
They don't order product: Harrisburg does.
They don't hire and fire: Harrisburg does.
They don't lay out the store: Harrisburg does.
They don't control when they are open: Harrisburg does.
They don't control product placement: Harrisburg does.
They don't control pricing: Harrisburg does.
They don't have to pay attention to industry trends - but then Harrisburg doesn't either.
They don't have to keep abreast of the competition - but then Harrisburg doesn't either.
And they don't schedule or make deliveries.

You would think not doing so much of what private store managers do would give them lots of time to be on top of product knowledge. I'm just sayin'...



* Here's the information on management testing. Oddly, the link is no longer working because the page is gone. However, I saved a copy and below is the relevant part.

TESTING

This test will be administered on a computer.  Information about computerized testing is available online at www.scsc.state.pa.us OR in paper form at any State Civil Service Commission office. 

You will have a maximum of 2 1/2 hours to complete the test which will cover the following subject areas:

	Number of Questions by Job Title
Subject Areas	Liquor Store Clerk 2, Liquor Store Manager 1	Liquor Store Manager 2 and 3, Liquor Store General Managers
Customer Service	15	15
Product Knowledge	10	10
Policy and Procedure	25	25
Recordkeeping	15	15
Basic Supervision/Management	25	25
Advanced Supervision/Management	0	15
	___	___
Total	90	105

The PLCB responds to the Smackdown.

The PLCB response to the Smackdown?  I don't know but I can see it...

A meeting in the $40,000 PLCB drinking lounge they have set up in Harrisburg. The big screens are showing the Travel Channel, and soft music is playing. The question: what to do about the cheeky ad Total Wine ran directly comparing prices with the State Fine Store Wine and State Good Store Spirits Shoppes; and not too good a comparison for the drones in old Harrisburg. Ideas are not developing, but then someone gets a rush of blood to the brain.

"Hey, let's allow this rum to be put on special. We'll make up some cool tags and let everybody know we can put bottom shelf liquor on special too." No one has any better ideas, so the mighty marketing muscle of the PLCB lurches into action.

The next week, the sale is on, but the one brainy manager in the system (who runs the store in Snow Shoe, open three days a week for customer convenience) spots something amiss. "There is something that doesn't look right with these tags. It did pass the Art Department, The Printers, the Marketing Department, The Store Operations Director, and then was approved by the Board though, so I guess it is OK.

"But I thought that a liter was a third more than a 750ml. I guess I was taught wrong in school if all those smart people agree it's actually 25% more. Wait, isn't 'then' used to indicate time of some kind, and it's 'than' that's used for comparative purposes? Naw, they couldn't have two mistakes on one tag; nobody is that incompetent, not even in Harrisburg! Well, nobody will notice anyway. If our guys didn't catch it, then (or is it than?) the public won't either. What do they know about math and grammar compared to the folks in charge of the PLCB!"

Yup. It's a classic. Pure PLCB.

No wonder the PLCB doesn't like selling liters anywhere other than at their so-called "outlet" stores. The math makes their brains hurt!

(P.S. Total Wine sells the 1.75L at a lower cost per oz  even with the PLCB "sale")

Modernization won’t do what the consumer wants – Part III

Today we are going to look at another part of  the PLCB's plan for “modernization,” called getting "the right people.” That's what point #9 of the Executive Summary of "Proposed Statutory Amendments of the PLCB" calls it; have a look:

9) Changes to Staffing and Human Resource Management:

• Restrictions imposed by the Civil Service Act and the Administrative Code impair the PLCB’s ability to effectively manage its workforce 

• Allowing the PLCB to make employment decisions outside of Civil Service, and giving the PLCB the authority to classify or reclassify its own positions and set the compensation of all employees will give the agency the autonomy and independence needed to place the right people in the right positions at the right rates of pay. 

• The PLCB currently pays the Civil Service Commission approximately $1 million dollars per year to administer examinations for store employees.

• Appropriate employment, classification, and salary policies would be put in place to provide necessary controls and structure to the Board’s decisions.

So...to get the “right people,” they want to set different rates of pay. Obviously, it has to be a higher rate to get those people, otherwise those people would be here now. Equally obvious is that the PLCB believes that they can’t train or teach the people they have now, and currently don’t have knowledgeable staff that could fill the positions that the “right people” would fill. (They've had 80 years to work on it, but they're only admitting that failure now.)

Since these “right people” currently won’t work for the PLCB because the salary -- even though it's at the highest end of retail compensation in America -- doesn’t match their needs, who is going to pay for the increase? You know who: us, the wine buyers, the taxpayers, because we are the ones who have to cover the increased pension obligations that these “right people” will incur since they are being paid more. The PLCB portion of the pension deficit is $550 million and expected to go to $600 million by the end of this year. But that isn’t enough. All that extra money the PLCB says they will be making; some of it will have to go to pay for these “right people” and their benefits. How much will be left over for the General Fund? Anything significant?

The only benefits to this scheme are really to the PLCB and the people who work for them. We consumers still won’t get the convenience and selection found in other states even if our “right people” are wearing world class aprons.

Privatization IS Modernization.  Contact your legislators and tell them so.

Where the PLCB Money Goes: Then and Now

Let's have a look at what the PLCB has done with its money -- our money -- since the new millennium has started.

Fewer stores, more employees: In July 2000 there were 692 stores with 2,869 full time workers and 1,072 part-time workers In December 2013 there are 604 stores with 3,080 full time workers and 1,417 part-time workers. Stores decreased by 14.6% and employees increased by 13.5%.

Higher gross, lower margin: In 2000 the PLCB had record sales of $1,083,330,579 and record operating income of $89,868,893 or 8.30% of sales. In 2013 the PLCB had record sales of $2,171,946,398 and record operating income of $151,877,723 or 6.99% of sales a decrease of 18.6% in operating income for every dollar spent in sales compared to 2000. (Hardly surprising, given the increase in overhead represented by the previous point.)

Cost overruns: In 2000 the Auditor General found the PLCB incurred $408,000 in additional costs due to problems in Its implementation of a new computerized Warehouse Management System. In 2010 the Auditor General reported the PLCB incurred excess costs of $500,000 due to problems with the new inventory system (on top of being over budget). The inventory system was contracted for $25.8 million and as of June 2010 has cost $66.6 million, or 158% over budget.

More for ads, less for education: In 2000 the PLCB contributed 0.76% of gross from sales to drug and alcohol education.  In 2013, the biggest year they ever had, they donated only 0.66%, up from the 0.53% in 2012 (also a "record year").  The PLCB doesn’t release how much they spend on advertising, but what they have released indicates they spend 30-40% more on advertising than education.

More booze, less enforcement: In 2000, the PLCB gave 7.39% of gross from sales to enforcement of the liquor code.  In 2013, the PLCB only did 6.19%, a shortage that works out to over $5 million less for enforcement. So even though the number of licensed establishments increased and the population increased, there was less liquor code enforcement. State stores still aren't checked at all for compliance.

More embarrassment, less arresting? In 1992 the Auditor General reported that: "Policing bootlegging and illegal importation of liquor without payment of Pennsylvania taxes should be the primary mission of the liquor law enforcement personnel."  In 2013 there were 2 reported cases of “bootleggers” caught. It could be that the more support for privatization there is, the less border enforcement takes place...since that would highlight the huge problem of people who purchase out of state. It might have something to do with the $5 million the BLCE doesn’t get since they were no longer funded at year 2000 levels too.

Same lack of relevant experience: In 2000 no member of the Board has had any experience with running an enterprise anywhere near the size of the PLCB.  That hasn’t changed at all in any year since and they still only work 21-22 days a year.

"Multiple weaknesses" in procurement: In 2000, the Auditor General reported that: “Weaknesses exist in the administration of the Pennsylvania Liquor Control Board's warehouse management system consultant contracts.”  In the 2010 Audit the Auditor General reported that: “…multiple weaknesses in the PLCB award process, including lack of documentation. As a result we could not verify the PLCB adhered to proper procurement standards or exercised proper due diligence in awarding the contract.” (Remember that one of the PLCB “modernization” plans is to have less oversight in procurement.)

The PLCB has not changed in the fourteen years since 2000...except to be a larger bureaucracy with less customer service and more problems, that spends less on its very reason for existence: control. The problems are systemic, pervasive, and totally ingrained in the PLCB's processes and workforce. They won’t be fixed until the entire system is replaced with privately-run wholesale and retail operations -- as it is in the majority of other states and countries -- and they are able to fully concentrate on regulation, compliance, and enforcement, and not sales.

Privatization is Modernization – accept nothing less.