This is how the billionaire laughs
Harbor Freight Tools is cheap. Ridiculously low prices, to quote the company masthead… there were tree pruners to be had for $15. They had a deluxe model with extending arms for those hard to reach branches, $19.95. No cheapskate, me, I got the deluxe. There were also 105 piece tool sets to be had to be had for $37.95, but I restrained myself.
The pruner, or lopper as it is sometimes known, is a fairly simple device, utilizing the torque of long handles to create force at the blade point. Useful for branches less than an inch in diameter. I had a lopper from the Depot which lasted me about five years, until I left it out in the rain and the blades got dull. There are no moving parts, just a hinge, and crucially, some sort of stay which keeps the handles from fully closing so you don’t smack your knuckles together.
My first clue this was not to be like my old pruners, the tensioner on one side gave out after I twisted on it a little vigorously, making one handle slide out twice as long as the other, unless it was pointed upward at all times. In under a month it joined my war chest of duct tape modified tools made in China.
So yesterday, I’m up on the roof, dealing with the bougainvillea when -sh*tf**kc**kdamnwhore!- I went knuckle bone to knuckle bone, full force, snipping a branch. The stay bolt preventing the handles from closing had refused to stay, fell out, to be accurate, and was now hibernating in a heap of feral cat feces and dried bougainvillea leaves fifteen feet below. Pressing on, grunting, bruising my knuckles with Homer Simpson-esque alacrity, I marveled at how it was possible a tool could disintegrate in one’s hands while being used for the purpose it was made, when the handle, the good one, disengaged from the shears. Just like that, I was holding a partial lopper in one hand, and a metal rod in the other like a prank victim on hidden camera. I looked for a loose bolt, threads, anything, but no, the only thing attaching handle to blade was a plastic sleeve fitting. $19.95, ladies and gentlemen of the jury! The grinning idiot’s price!
I did the manful and useful thing. I flung it across the yard in a stream of profanity. As I did so, it occurred to me the open blades made the shape of a duck bill, and the duck was laughing at me as it flew into the back fence. Somewhere in Chengdu the owners of Harmonious Factory of Disposable Goods for American Suckers #27, were enjoying Peking duck around a roaring fireplace, and weighing their money on truck scales, and they were laughing. The scale tenders, girls hand-selected from the villages, were pouring cognac and lighting cigars, and they, too, were laughing, giggling really, in short duck print dresses, while the men perused Beverly Hills property on Zillow. Ah, ha, ha. Tee, hee, hee. Quack, quack, quack.
China 1, Slack Jawed Yokel 0.
Back in the kitchen… ruminating on the manufacture of craptastic things…I decided blaming the Chinese for being Chinese was a fool’s errand. Craptastic on an industrial scale is what the Chinese do well. The sin resides in foisting craptastic on an unsuspecting public. Now who did that?
This guy. Eric Smidt, scion of Harbor Freight Tools, which his father began, I’m sorry to say, as a mail-order business in North Hollywood. Back in the oughts, Smidt Jr, forced his father out in a palace coup and began Harbor’s viral expansion. I’ll let Bloomberg News explain it:
“It’s like a money-printing machine,” said Lloyd Greif, founder and CEO of the investment bank Greif & Co. in Los Angeles that specializes in representing entrepreneurs and their companies. “He’s mastered the art of the dividend recap.”
“Smidt’s father, upset by management changes made to re-position Harbor Freight after the 2008 recession, criticized the practice of borrowing to take cash out of the business in a 2010 lawsuit, filed over a decade after he sold his interest to his son. Allan Smidt, who died last year, said Eric Smidt had “dramatically leveraged the company” and enriched himself at its expense. The suit cited a loan in excess of $500 million that “has had serious negative consequences, including inability to keep inventory on shelves.” Interest on the loan, the suit said, was at one point as high as 10 percent. The elder Smidt accused his son of kicking him off the board of directors and looting Harbor Freight in part to buy the Knoll, a painting for $100 million and a Manhattan apartment for $20 million.”
Dividend recap is accountant-speak for taking cash out of a company today against future earnings. Borrowing from yourself. If you can keep expanding fast enough you can get away with it. Until you can’t.
Harbor Freight is opening a new store every three days.
In retrospect, all the clues were there. The Sepulveda outlet was the equivalent of a pop-up restaurant, impermanent, unadorned, boxes piled on the floor with pricing information on laser printed sheets of paper taped hither and yon.
His $100 million painting? It’s rumored to be Eight Elvises by Andy Warhol. I would say artwork and buyer are neatly matched here. Indeed, artist, subject and patron have achieved something like Chinese harmony.
I feel like a patron of the arts already.