Lie & Cheet for Profit

The stock MUST go up !!!!! Too bad that the days of running an honest publically traded (NYSE) manufacturing business in the USA is gone. Big American Businesses have thown the baby out with the wash. Even my wife buys cheep Chinese house hold Product. She has been asymilated.

I have been an Engineer(BSMET)for 23 Years and before that I was Toolmaker. For most of these 23 years I worked with product design teams advising them in the areas of quality, machinability, moldability, producability, assemblability, quality, cost etc...

In the begining we created many quality products. I need to explain QUALITY since many people are still using a very old deffinician which does not match todays marketplace. I did to up till 1990.

Fro example using the an equitable numeric benchmark/scale a $0.01 plastic trinket can have the same quality rating as a %140,000 Bentley. Perfect quality is when the customer feels satisfied. That statement is a mouth full. For this discussion it is basically when the expected robustness matches the purhcase price. The old adage "You get what you pay for" continues to prevail.

Again, on a equitable numeric rateing scale the plastic trinket can equal the Bentley. It is even possible that the Bentley could be rated lower.

In todays market many Americans buy cheep very low robustness type products made in SE Asia. Last year I was assigned to move ALL of a brade named American made product to SE Asia (China/Taiwan).

I started feeling so bad about it that something acured in my life that has never happend before. I just could not get excited about my job! I actually hated to go to work. While I used to arrive at my office as early as 6:30 am I now arrived at 8 am. And, I used to not leave untill 6:30 pm now I was in the car at 4-4:30 pm.

Don't get me wrong, none of the American employees that have lost and are still lossing their jobs said anything too me. They worked extremely hard to take cost out just the keep the prodcut here. But in the end it is not possible to match a prodcut cost that pays from $0.25 to $0.50 per hour for labor.

The last straw for me was the fact that the company lied to the Amrican employees. The employees were told almost daily that they only needed to get a few more cents out. When that target was met they were next told that there was a NEW target do to a competitor dropping their prices. I checked this out and in almost all cases it was not true.

In the closed door meetings that I attended the main topic was WHEN will we complete the cost savings so can move the product. There never was a real opportunity to keep the product in the US.

It was understood that the experience of the American Emloyees would do a better job at taking the cost out.

Since last fall I have felt so much better about my self. But as you may have guessed, I am now unemployed also. I left a very high paying position based on my personal morals and ethics.

After a much needed several month subatical I will start looking for a job. I am in no hurry and My review on any new company will now include two more areas of concern (Morals and Ethics).

A basic part of this standard is that my new employer must understand that profit is the results of putting the employees first. The equation is like this: employee + means = profit. A substantiated track record must exist through a third party.

I am not a literary wizard so forgive my grammer and spelling.

Jerry

Hi Jerry;

I remember 20 years ago or less, quality control was the rage, a spin off of what the Japenese were doing and an overreaction. I think we may have inspected ourselves out of business. I like your definition of quality, "when the customer is satisfied". Your right, but I remember when quality control determined what the customer should be satisfied with not the customer. Of course top managemnent was behind quality control therefore they believed and supported them.

Management is on a new kick now. Moving manufacturing overseas where labor is measured in pennies instead of dollars. Will they pass the savings to the customers? I don't think so. They will cut the price somewhat but the savings will go in their (Management)pocket for the most part.

Talented Machinists, Toolmakers, and Engineers are being tossed onto the streets.
Their skills going to waste. At the same time, apprentices are not trained either. We are becomming less independent each year. Hmmm....didn't we make this mistake once before??? The Longshoreman strike and the SARS disease should have been a wakeup call. They claim we are entering an information and service economy, well then where are these jobs?

Wealth is not created with service and information services. Wealth is created by taking a natural resource combining labor with it and the product having more value than the sum of the two.

In my opinion, the only way out of this mess is to devaluate the dollar. This would make the imports more expensive and the exports less expensive when sold abroad. The people most hurt by this would be the foreign investors and I'm not going to worry about them. In some way the playing field must be leveled between the domestic and overseas manufacturing. Manufacturing in the U S is burdened with taxes, OSHA, EPA and thousands of lawyers. It isn't just labor costs that make the U S less competitive.

This is my song and dance
I'm a Tool & Die Maker not an economist.

Jim

I would be inclined to agree with some of what has been said about this issue. Here in this country we praise the little guy who starts a buisiness and then builds it up into something good and profitable. But then we seem to try as hard as possible to crush the buisines by taxing it to death. If an employer has to pay people $30.00 per hour for there skills plus all he must pay for taxes and insurance it is no wonder he cannot compete with some other company that can pay its people less. To over come this dispairaty the employer is forced to apply more and more automation in his process so he can hire people that will work for less money. This seems to be a self defeating policy.

It would appear to me that if you cannot afford to pay people what they are worth then we must find ways to drop the income of all workers. The only way to do this is to redue the tax laws and payment structure so that people don't need to make $50-$60 thousand a year just to survive. After all our parents did just find earning much less than we did. And who says that progress means that we have to charge more for goods and services than we used to anyway?

I quess I should not complain to loud because I truely don't know how this would be accomplished. Like most of you I am a machinist not a financial wizard, but it makes sence to me that if you can't lick'em one way, you have to do it some other way.

Charles

I'm no economist now. But I have to beleive running up these large deficits makes the problem that much worse. Imagine trying to run your family finances with $100,000 in credit card debit hanging over you.

The people who pass these budgets need to realize the ramifications on the interest from all this debt. It increases costs for everyone. Makes the costs for products that much more expensive. Requiring more taxes.

Something must also be done to reduce government regulation.

Well, commodity production chases low cost labor. That's a fact that has been with us since the US put the French and English paper manufacturers out of business in the 1800s.

The only way to beat it is to make them join you. We made the Japanese join us, nothing much is made there now. Too high a cost.

Taiwan has too high a cost of labor also, so China is the answer.

They are poised to have expanding labor costs also, and the history has been that the rate of cost increase is "greater later".

Japan went from 1945 to 1985 before it happened to them.

Korea had it happen between the 1950s and the 1980s

Taiwan had it happen between 1975 and 1995.

We can hope that China started in the 1990s and will finish within the next 7 or 8 years.

Two things work for and against this. There are a lot of people in China. This is bad, because there are a lot of folks to draw from who might be taking lower pay.

There is a large internal market in China, waiting to be tapped. The production of goods for them will subtract from external production. There may be som bidding for factory space.

But, in order for the internal market to emerge, people need money. They need a factory job to pay for the goods. However, their need for goods also means higher pay, so the outlook for china is increasing pay and more internal production.

I expect this to accelerate at an increasing rate, roughly between a square and a cube function, once "critical mass" is reached. I don't know when it started, but I will guess about 1995.

Once it reaches the critical mass, where pay really affects internal consumption, the big pay rate advantage of China will be gone rapidly. Labor will not be "free" anymore, it will be a major factor in costs. It is less so now than it was, but still is low, however one can if one looks, determine that the process has started.

Don't forget, the labor rate has a huge and multi-level impact. Miners pay rate affects everything that derives from the mined product.

Following steel, there are miners, transport workers, blast furnace workers, steel workers in the steel plant, and more transport workers.
Then there are workers in the "conversion" plants (rolling mills), and more transport workers.
After that, workers in stamping plants, workers in asssembly plants, and more transport workers.

When each of these folks gets a small pay rate increase, it ripples up through everyone's costs as the profit and "markup" rate, even if constant, gets multiplied by all the steps.

It CAN happen, and it will.