“Ahh I see so your one of the nimrods who made fat stacks offshoring good for you but now since you are retired its all “we need to stop not what made me a nice living...””
You seem to have a knack for disparaging people you don’t know by calling them names. Was this part of your conservative upbringing or did you develop this talent through life experience?
I spent 20 years working for a major corporation fighting to keep the US factories. Based on your account, your business was adversely impacted by government regulation. I accept what you say is true and understand how your perception of reality was formed by that experience. My experience was different. I found that with investment in modern equipment the US factories could be competitive, even with government interference. It was the corporate office staff, financial MBA’s who had never worked in a factory or faced a customer, who were persuaded by Wall Street banks and management consultants they could drive the stock price by announcing a big migration to Asia. The loss of US jobs was not due to the oppressive hand of government. It was due to executives who were disconnected from the operations making short term decisions to drive earnings and maximize their bonus payouts taking what they thought was the easy path.
With respect to me making “fat stacks” offshoring, I’m afraid I didn’t. I performed the due diligence on offshoring as part of my job by visiting the Chinese factories where I saw the working conditions. I strongly opposed the move and lobbied hard to modernize US factories instead of sending the work offshore. When the decision was made to send production offshore, I stood in front of the employees and announced the decision since the people who actually made the decision didn’t have the guts to do so because they never visited factories or talked to customers. Once the dirty work of telling the people was done I was told my services were no longer needed because my vision wasn’t aligned with the future direction. It didn’t matter that the divisions I headed were the most profitable in the corporation and had grown profitability at twice the rate of the rest of the corporation for seven straight years. As an operating executive I was not yet at the corporate staff level that qualified for golden parachutes so I left with a modest severance payment. I easily found another job with a competitor (never applied for unemployment so don’t accuse me of living off the government) and enjoyed watching my former employer spiral down when they found the economics of offshoring weren’t as attractive as the smart Harvard MBA consultants and Wall Street bankers promised. My former company no longer exists but it was managed by some really smart Harvard educated financial MBA’s until it was broken up and sold off by some equally brilliant Wall Street bankers. Millions of dollars were made on the breakup by the executives and their Wall Street banker friends. Too bad for the thousands of employees who lost their jobs and did not share in the fees and bonuses paid to the decision makers who destroyed the company. In my mind it is also unfortunate the millions spent lining the pockets of the executives and the bankers weren’t invested in the operations so the domestic factories could have competed.
I beat you in starting to work. My first paid job was at age 6 working for a local farmer. Since then I’ve done everything from cleaning toilets, to throwing newspapers, to running a deli, to working for several companies. I’ve turned around failing businesses and I’ve developed and grown new business concepts in a corporate environment. I’m semi-retired today but I still do some consulting work with the few US manufacturers in my industry still surviving. Let you think I’m anti-education I do hold an MBA from a leading business school. However, I can assure you I learned much more sweeping the floor of a factory and making sales calls as I climbed the letter than I learned in any classroom.
Let me offer you another perspective on the business world since your experience is not with large business. Up to the 1960’s US companies were headed by executives who worked their way up through manufacturing or sales. One thing they had in common is knowledge of the products the company made, how to make the products, and the knowledge of what their customers wanted. Companies invested in developing innovative new products and invested in maintaing their manufacturing operations with modern equipment in order to ensure low cost and high quality. Up to that time Wall Street was primarily concerned providing long term financing, either equity or debt, for corporations making long term investments in new products and production facilities. Wall Street was not the casino it is today where stocks are flipped in nanoseconds and the investment horizon is measured in minutes, not decades.
In the 1960’s the financial executives, many educated with MBA’s from top business schools, wrested control of corporations from the operating managers. These financial managers (who had no direct understanding of customers, products, or production) viewed business very differently. They partnered with other bright young MBA’s entering business on Wall Street to develop a new operating model for American business. The old model was about making money over the long term by developing great products customers wanted to buy and then producing them efficiently. Capital was used to invest in growth and the growth horizon was long term. A business would take a short term reduction in earnings to invest in a major new product to drive even higher growth in the future. This philosophy made the US economy the most innovative and productive in the world. Under this model CEO’s were paid decent, but not obscene salaries, and businesses made long term investments in employees and the communities where they operated as well as the capital required to be competitive.
Under the new model developed in the 1970’s, the focus of business began to be the efficient use of capital and maintaing predictable earnings. The financial executives now running companies stopped investing in the continuous modernization of their factories. They stopped replacing old equipment with more productive modern equipment and pumped up earnings by deferring or eliminating investment in the operations. Product development budgets were slashed and innovation suffered. Companies lost intimacy with consumers and customers. Foreign competitors, observed the absence of innovation and customer service, and began making inroads into the US market, despite the tariffs and quotas in place at the time.
In the 1980’s the Wall Street driving leveraged buyout boom began. US companies were bought by Wall Street investment firms, loaded with debt, and stripped of cash and assets. There was no cash in the business to keep equipment maintained. Quality and productivity declined as a result. I lived through those times where we cannibalized machines to get spare parts because our budgets for replacement parts were eliminated so the cash could be diverted to the pockets of the private equity partners and Wall Street banks. At the same time, the senior executives of American companies began ratcheting their compensation to obscene levels. The average earning of a CEO in the 1950’s was 10 to 15 times that of the average blue collar laborer. Today it is 100 times or more. Plus they introduced the “golden parachute” allowing them to depart their jobs with huge payouts instead of being put on the street with nothing (like the average laborer) for poor performance. Excessive executive compensation is another factor limiting capital investment today.
By the early 1990’s the US manufacturing infrastructure had decayed from 20 years of underinvestment and mismanagement by CEO’s with little understanding of the business but great relationships with Wall Street. Corporations reached the point where their costs were uncompetitive globally despite tariffs. There were two options. The first was to invest in modernizing US factories. Essentially this meant giving US employees the state of the art equipment needed to be competitive with modern foreign factories. The second option was to lobby to drop tariffs and quotas to lower the cost of foreign products. The corporations would then invest overseas and take advantage of incentives from foreign countries seeking to attract the capital to build their industrial capability. We know which option US companies chose. The only government involvement in this major shift was to negotiate the trade deals (WTO, NAFTA, CAFTA, etc). Unfortunately for US labor, and the US economy, the US completely opened up its market with virtually no restrictions and no incentives for US factories. In the meantime our trading partners in “free trade” were allowed to maintain tariff and non-tarrif barriers as well as subsidize their own exports.
It may or may not be of interest to know that the financial models prepared in the 1990’s when the offshoring decisions were made showed that US factories, if given updated equipment, modern lean manufacturing processes, and a truly level playing field could realize production costs within 10% of offshore factories, despite higher US labor costs and higher government regulation. Lower transportation costs and the higher productivity of US labor using modern equipment offset the much lower hourly labor costs overseas. However, the goal of corporations and Wall Street was not a level playing field for the US worker. The goal was to gain a cost advantage which was realized though foreign governments directly subsidizing capital investment and exports. The US government acquiesced and signed these one sided trade deals. Investment flowed to Asia instead of into modernizing US factories.
By my definition it is not free trade when foreigners have open access to the US market but do not reciprocate. It is not free trade when US factories compete in our home market with foreign factories who can undercut US factories in our home market because their capital and operating costs are subsidized by foreign governments. It is not free trade when China deliberately manipulates its currency to keep the cost of its exports lower than the cost of products produced in the country to which it is exporting.
I fully understand the problems small businesses face with government. One of my friends operates a small manufacturing business and we’ve discussed many times the oppression of state, city and federal government he faces everyday. In my consulting work I’ve worked with businesses who have to fight state, federal and local regulators and politicians. These politicians and local bureaucrats view a business struggling to keep its doors open as having unlimited resources to be harvested.
With respect to unions most of my experience, thank goodness, has been with nonunion shops. I have been involved in the decertification of one union in a US factory. I’ve also been responsible for one union operation where my managers were able to explain the economics of the business to a reasonable local shop steward who negotiated a reasonable contract that permitted the flexibility of work rules and level of compensation needed to be competitive. While I do not favor unions, I can understand why they exist. I have sat in senior management meetings where financial executives proposed extracting millions of dollars from the retirement plan of non-union employees and then canceling the plan, paying off the employees at cents on the dollar. If it weren’t for government laws and regulations prohibiting this financial move, it would have happened. In this case government regulation was good.
The reality is, free trade is not free trade when it comes to China and most Asian countries. You can have your cheap Chinese goods but like it or not they were produced by slave labor in factories where the working conditions are much worse than you would allow any of your family members to experience. These imported products are also subsidized by the host country government through direct payments to the factory, no cost loans for capital investment, and manipulation of currency. If this is free trade, I want no part of it.
I agree with you that much government regulation is unnecessary and bad for business and the economy. However, corporations are to blame for many of the problems we face economically as well. If you look at the last 40 years, the senior executives of many corporations have been feathering their nests while squeezing employees through offshoring, downsizing, and wage/benefit compression in the name of being competitive. Wall Street raiders have purchased once great companies, stripped them of their cash and productive assets, and then run them through bankruptcy to push the pension plan obligations on the taxpayer. The Wall Street bankers have made billions stripping companies, creating financial instruments no one understands, and skimming funds from individual savers and pension plans through speculation and excessive fees. When they faced bankruptcy in 2008, the Wall Street institutions were bailed out by the government and a year later were shamelessly paying billions in executive bonuses while going back to their same games. I’ve seen all of this from the inside and it isn’t a pretty picture.
You said, “I can honestly say I haven’t and it because I was taught to never participate in such a thing that would stain my soul. Apparently you missed the part of your upbringing.” Again you are wrong. I fought the battle and lost. I delivered for the shareholders and customers while protecting my employees from the games at the corporate office. It cost me my job and the opportunity to benefit personally from the ultimately bad decisions that were made after I departed. I did not retire a wealthy man but I did retire knowing I did the right thing. Those who made the decisions did retire extremely wealthy even though the company went down. They took care of themselves first. Not unlike the current president of the US who says he despises the wealthy yet lives as though he is a king. This is the outcome of “free market” capitalism and has nothing to do with the heavy hand of government.
My last comment to you is you will never win a debate by defaming your opponent. If you truly walk the higher road, you gain nothing from disparaging other people. I suspect you and I are much closer in our core beliefs than you might imagine. I’m not a free trader because in my experience there is no free trade. It is a concept, not a reality and it has been my experience the pursuit of free trade has hurt the US economy and the US worker while enriching our enemies and a subset of the 1% in this country. My opinion does not make me a bad person just as your opinion does not make you a lesser being.
Defamation of character is one of the powerful and frequently used tools in the arsenal of the leftist statists who run the government today. For conservatives to use this tool when engaging in free speech only serves to undermine the moral and intellectual superiority of our belief in individual liberty. If you have the superior argument, how is it enhanced by disparaging the other person? Perhaps this is why the left successfully portrays conservatives as mean spirited.
Commie! </sarcasm>
Maybe you missed that part in Business training but the job of the CEOs and other Corporate officers is to increase shareholder value. Its not to provide jobs for people.
See the idea of starting a business is to make a profit. The idea behind a business that incorporates is to run it in a way that the Stock Price increases while making a profit. You are upset that the Corporate officers did their job and increased Shareholder Value. The Gub'ment created an environment wherein once container ships were designed and made super efficient it was cheaper to build many things overseas and ship them back here then deal with the hurdles Gub'ment throw up in front of business.
When you are a business owner your major concern is not if somebody has a job or not. Your major concern is if you can make enough of a profit to make it worth your while. Free Markets work in Labor as well as goods. But the government has removed the Free Market in labor and instead mandated minimum wages, disability payments and now Healthcare costs. The Pacific Rim doesn't do this. These costs alone making hiring American workers a losing proposition when compared to workers on most foreign shores. Before long mandatory retirement plans will be instituted being that Social Security is officially bankrupt. Add into the mix that the Fed Devalues the dollar daily and you have a no win situation for doing business in America.
When the Govern'ment decides they really what business to prosper in the USA then they will cut the bullshit out and let Business get back to doing business. Until that happens it will continue as it is now.
BTW you claim I disparage you by pointing out you are a union lover. Every other paragraph you bemoan that the workers aren't treated properly because their jobs were taken away. Which is right out of the Union Manifesto. Guess what its not their job they didn't create it or take any risks to provide it. That was all on the business owners shoulder. See if the business fails the Owners can lose everything the put into it. The workers lose a paycheck. When you figure that out and understand that it is NOT the job of a business to provide jobs you will have a better understanding of how business works.