Tipota
-Tipota (greek) = Nothing
Nothing for Something
Bamboozlement
by Corporate America
Dean Gaines
September 20, 2004
As a not-too-bright engineer
of Greek ancestry I have been keeping an eye on the U.S. economy
for, essentially, my entire professional career. As a youngster
I was always proud of the way we Americans went about business:
the things we invented, the things we manufactured and the commitment
with which we went about those tasks. I started my professional
career working for one of the largest corporations in the U.S.
(which also meant the world). I was encouraged by the ethics
of the people who managed and ran the company and their displayed
concern for their employees. People were given the authority
to run the business within corporate guidelines to the extent
that individuals really felt the company and its responsibility
was theirs. Most people realized that they were an element in
a larger picture and that what was accomplished in their own
section benefited the big picture. What a place to work! People
approached their work with the thought in mind that the products
and services they produced would be second to none in the world.
And there was this underlying comprehension that good products
resulted in prolonged employment.
Somewhere along the line I
started reading and hearing about a fellow named Jack Welch.
I looked on with astonishment as he closed and sold manufacturing
facilities that were part of the General Electric Company. If
projected sales for an organization did not meet his target budget
and time frame they were eliminated. In short order, within GE,
he was known as "neutron Jack" by the way he made departments
and divisions disappear. I was told by several GE employees that
one of his first orders of business as the CEO was to visit each
of the manufacturing sites. All of the employees were assembled
and introduced to Mr. Welch. Mr. Welch would start his presentation
by stating to the employees: "Our job is to produce the
most reliable products in the industry!" The employees would
cheer and holler with enthusiasm. "Our job is to make the
best products in the world relative to our competition!"
Another roar of approval and applause from the employees. There
would then be a noticeable pause, and Mr. Welch would continue:
"WRONG!!... our job is to work for the stock holder!!"
I was told that when Mr. Welch made that exclamation the audience
got eerily quiet and everyone just looked at one another.
I remember thinking at the
time that this represented a major shift in the basic philosophy
of corporate America. It used to be that people who had money
to invest would naturally seek out those companies which produced
good products at reasonable costs and shared their success in
business by way of dividends to the stock holder. A company doesn't
really profit from the fact that the price of their stock increases
(unless they plan to issue more stock). The people who really
profit from major stock price increases are those who have stock
options within the company. What a self-serving agenda! Of course
Mr. Welch's actions were the precursor to stock market mania
that soon swept the country.
Mr. Welch set the trend for
other paths that corporate America would fall all over themselves
duplicating. Two of those trends were outsourcing and convincing
people that the next wave of corporate prosperity in the U.S.
would be via a "service-oriented" society.
Outsourcing became a unique
way of increasing profits fast and at multiples of those obtained
by producing the products within the borders of the U.S. It doesn't
take a genius to realize that if a labor rate of $0.20 to $0.75
per hour is paid instead of $16 to $22 then profits are sure
to increase, at a minimum, by the percentage of the labor involvement
times the differential in labor costs. Especially, when the products
are sold within the U.S. at the same price as would have been
charged had the product been produced in the U.S. And that's
not to mention the fact that taxes are no longer paid on the
manufacturing facilities and equipment because it has been packed
up and shipped out to the country whose labor source is now being
used. Outsourcing eliminates union problems and any concern for
the welfare of the employees who may work for the corporation.
It also eliminates the taxes those folks used to pay when they
had a job. The sad thing is that most outsourced products are
sold for the same price as if they were produced in the U.S.
This means that most of the folks who lost their jobs could still
have been employed. The difference being that the corporation
would not reap the profit margin that resulted in a stock price
increase which, in turn, resulted in the executive branch of
the corporation reaping huge windfalls by way of their stock
option positions. Talk about the rich (CEOs etc.) getting
richer and the poor (labor forces) getting poorer... it doesn't
get any better than this.
Outsourcing in the U.S. has
become (speaking of Greeks) a reverse Trojan Horse. Instead of
filling the horse with folks prepared to defend our country's
economic heritage we have packed the horse full of fighting implements
and ammunition that will eventually be used to bring about our
demise. Our forefathers learned a long time ago if we were ever
going to be free from the bondage of overseas producers for the
products that are necessary for life we would have to manufacture
the products ourselves. The English thought that by colonizing
the world they would be able to get all the products they wanted
at the price they chose to dictate. One by one the 'colonies'
realized that what is produced within their borders is theirs
and theirs to determine what value shall be placed on the items
leaving their country. Shoot, the Arabs already snookered us
with that logic back in the seventies. Not to mention that we
were the ones who discovered the oil, dug the wells, installed
the pumping and shipping facilities and provided the ships to
make their product available world-wide.
A 'service-oriented society'
is right in line with Corporate America's fixation to be 'world
class.' Every time I hear a corporate manager spout that
rhetoric I reply: "have you been to other parts of the world
where people are conducting the same business you're in? If you
have, then what you've just said to me is that you want to lower
your standards!" The sad thing is, that is exactly where
corporate America is headed... DOWN. But, returning to a 'service-oriented
society,' when someone spouts that phrase the picture
that comes to mind is "I'll clean your windows if you rake
my yard" or "I'll eat your hamburgers if you come over
and eat my hot dogs." What corporate America doesn't seem
to be able to grasp is that in order to produce a viable service
industry, it must produce products of which its employees have
the most intimate knowledge and can assure the users of their
product that a service provided by them will provide the user
with the most reliable and efficient use of the product. If you
want to know about service-oriented societies ask the Greeks
when the Romans took over. Or, how about the Israelites when
Pharaoh decided the Egyptians needed a 'service-oriented' society.
If you're a king, a pharaoh, an emperor or a dictator you're
all for a 'service-oriented' society.
Another scary aspect of the
U.S. economy today is that retailing makes up such a large part
of it. Just as low skill service industries make up the bottom
rungs of an economic ladder so retailing represents the bottom
of the food chain when it comes to the economy. Look at all of
the third-world countries around the globe. Everybody's into
retailing. They sell coconuts, bananas, baskets, rugs, cow turds,
and bandanas. The few that produce the products that they retail
are a half-notch higher on the ladder.
Speaking of retailing, Walmart,
the largest retailer on the globe, used to have a slogan: "Bring
it home to the U.S.A." Not many folks seem to have noticed
that several years ago they shelved that slogan for this: "If
it's not made in Asia, we don't carry it!" Of course they
don't display the slogan anywhere and I don't know why... do
they think some American is going to get upset? Hell no, as long
as we can get something cheaper, we don't care where it was made
or who was put out of a job as long as it wasn't us.
Which brings up one other small
point. When one looks across the spectrum of our economy, as
I have for the last twenty or so years, and see what has happened
to us, it's not hard to see how one's stomach can be twisted
into knots and to come to the conclusion that we are awfully
self-serving and not too bright on top of it. There is no such
thing as loyalty to American products by Americans even if it
means putting our neighbors out of work. We've abdicated the
creed that was our trade mark to the world which was: we (as
Americans) can do anything better than anyone else. When General
Motors, the largest corporation in the world concedes that they
can't produce cars or engines better than anyone else they're
saying, 'WE give up.' When Boeing says that it must have
the wings for its airplanes produced on foreign soil they are
saying, 'WE give' up. When Maytag, Levolor, Radio Flyer, Levis,
DeWalt, Black and Decker., etc, etc., say that in order to compete
they must move their manufacturing facilities out of the country
they're each saying, 'WE give up.'
Not only are they giving up
the ability to produce the products they once produced, they
have given the technology of producing those products away. Another
area in which we are not too astute in is that the folks that
we have given these capabilities to have no regard for patent
rights, trade marks, copyrights, or proprietary information.
It's going to be humorous watching high-priced New York lawyers
spouting their rhetoric in foreign kangaroo courts.
The day is coming when the
countries that possess all of our manufacturing capabilities
will say to us: "the facilities are ours, they are on our
sovereign soil, we will produce the products you want at the
quantity and price we dictate... take it or leave it." We
will have no choice because our ability to produce any product
on our soil will have vanished.
So, because of a few fast-talking
CEOs who convinced corporate America of globalization,
outsourcing, and that a service-oriented society is the next
step to economic security (and loaded their pockets with cash
in the process) they have left US (the U.S.) with Tipota for
something. That something is (was) our economic heritage.
Dean Gaines
email: dg0825@hotmail.com
321gold Inc
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