Trouble brewing at Starrett....

Fellas,

Hello all from NC. This is my first post here, so bear with me if it looks out of whack. With some luck, it'll actually be legible.
I'm taking machining courses at my local community college down here in Surry Co., NC. This is just under the Virginia line in the western Peidmont. The big news last week was the SWAT raid at our Starrett plant in Mt. Airy.
It seems something bad was amiss, as the Feds sent in quite a crew and closed off the CMM department. Our metrology instructor, who works there, was barely allowed to leave the building! Naturally, he's mum on the mess and so is most everyone else around here.
I've heard something about pirated software, and also about big-time quality contol issues in the money-making CMM division. Anyone know the real scoop? This could be pretty bad for 'em. Try to run a modern company like Starrett on the margins from micrometer sales.
Some kind of summer w/Bridgeport biting the dust. Where will this lead?

Regards,
Joel Elliott

Welcome Joel. Here's the scoop-
http://online.wsj.com/article_email/0,,SB1031788156865187675,00.html

Sounds overblown to me..

good morning.

sounds overblown to me too, but there is the concept of riding in an airplane that might or might not be 'right'. i don't fly anyway, but my kis do.

i would think that the government might be doing this to take the heat off some of their other mistakes. i will follow this news with interest. i own/use a lot of Starrett stuff. never had any problem with it that i know of. only problem i know is that it is expensive. but then, you pay for quality.

probably some irate employee.

later.
bill

Looks like swat teams now do what the marketplace used to. We had better watch out. Events AFTER 911 opened my convervative eyes to how abuse of power can take root and grow if unchecked by a vigilant people.

Den

Don't know why jobs are going to China. Sounds like another case of corporate greed.

Heck, Starrett is successful, and they actually make things.
So, they must be destroyed by government action.

I got a really bad attitude today.

I also decided today that Sam Walton was effectively a bigger traitor than any of the atomic bomb spies etc. When you trace back the run to China, all roads lead to WalMart oops, I meant BeijingMart.

My opinion, of course.

[This message has been edited by J Tiers (edited 09-13-2002).]

I am 100% in agreement. I will not buy anything from Walmart. My whole family is in on the plan too. I almost always pay more to get the same item elsewhere as Walmart tries to undersell everyone in town. At least I am giving my business to stores that are doing the right thing for our country. I relay the Walmart story to everyone I possibly can.

TMD

I am interested in knowing more of this, "walmart story" please fill me in.

You asked for it....

Its the "dive for the bottom".

Walmart wanted to stay at the lowest price for everything. So each year, they call up their suppliers and tell them what they are paying next year for the goods. Not ask, mind you, tell.

If they got any protest, they just stopped talking and got another supplier who was more scared and would play their game.

If you don't sell to WalMart anymore, your volume drops a bunch, and your overhead raises your costs so that you are priced out everywhere else too. You are out of business.

Therefore, suppliers were scared. They played the walmart game

That new price of theirs is lower than the current one. After a few years, a LOT lower, since the suppliers pass any "real" (process-related) savings to other customers also, to keep their business.

So the suppliers have to figure out what to do to make goods cheaper than is actually possible. The answer was mexico, but everyone went there.

Now the answer is china.

Since producers needed low costs of equipment, they beat on machinery suppliers, who then did the same run to china.

Once that started, it spread to other industries that don't have anything to do with walmart. That might have happened anyway, but probably slower.
Walmart was the largest and widest-ranging customer in the herd, so they affected more different companies at the same time.

So WalMart, which has a huge presence as a customer, actually was one of the major forces in pushing production offshore at the pace it has gone.

Since that is not good for the US, the theory is that Sam Walton was effectively one of the biggest traitors we have ever seen in the US.



[This message has been edited by J Tiers (edited 09-15-2002).]

Actually, Sam Walton believed in buying/selling only American Made goods.
Only after he died, and Walmart turned into a Mega-Corporation, did they start the low price/Made in China B.S. .

While I wouldn't go so far as to hang the "traitor" moniker on Walton, I doubt things would have been much different if he was still in control. I supect he did indeed prefer to buy American, but Walmart's pricing demands eventually forced American manuf. and distributors to the Asian situation. He, and the board members may not have seen this senario coming...all they cared about was growth, growth, growth...at any cost.

Yeah, that's about the story. The only actual person associated with BeijingMart is Sam Walton, who set up the game.
The faceless "board" just continued it.

But, if you think about it, volume purchase, which was one of the principles of low cost, has two pitfalls when it comes to incremental lowering of costs at incrementally higher volumes.

1) Producers have to invest in tooling that lowers the cost of production. Once done, its lowering is over, it is all increasing costs from there (labor, maintenance, etc).

2) The drop is fixed, the difference between 5 million parts and 10 million parts is negligible, your amortization is already so low per part. So for a manufacturer already tooled, a significant lowering of cost with increasing volume involves either MORE investment in new tooling (and a loss on existing good tooling), or taking a lower cut.
When next year it will be undercut again by "customer 1" , corporate boards don't take kindly to the thought of either one. Both mean lower profits, stock problems, potential eviction of the board, etc.

3) a third factor is that all other large customers press for the same costing as "customer 1" gets, and you need to give it to them to keep their volume. Then they can sell at similar costs to "customer 1" unless "customer 1" has a different and lower cost retail delivery "model". Walmart looks just like Target, and has a similar "model", costs etc. No advantage there.

So the Walmart economic theory was faulty from the start. The ONLY way they could do better than a fairly similar large competitor was to press for costs requiring different production at a lower worker (labor) cost.

AND, in the end they fail to stay lower unless they put the others out of business, since everyone can dive for the same bottom level, and get there at similar volumes. There just is not that much difference in costing possible when both buy from the same supplier.

So, stripped of the BS, the WalMart plan was "get in there fast and destroy the competitors with low costs before they can react", and "Use or use up anyone and everyone to get to your goal". Good classical capitalist doctrine, but a tad over the top on the "me first" scale.

In the process, BeijingMart has destroyed a lot of small towns, which are now inside out. Downtown is a ghost town, the strip where BeijingMart is has the fast food and other support for it that would otherwise have been downtown........
The shopkeepers are now BeijingMart greeters.

And the workers who used to make the goods are out of work, can't even afford BeijingMart.

[This message has been edited by J Tiers (edited 09-15-2002).]

Gentlemen,

Wow, I surely didn't mean to get y'all started off on a US vs. World kick. Unemployment is bad news and not fit for near-bedtime thought. Since I might have gotten the ball rolling, however....
Guys, I must with deep respect for the pain suffered by many American machinists disagree. Somewhat, anyway.
What isn't normally mentioned in the Wal-Mart/NAFTA/Mexinese discussion are the BENEFITS brought to this country by these events. Every Christmas, millions of American families find that their dollar goes a little further than it used to down at Wal-Mart. And every other day too. Personally, I despise the place, and largely for the aforementioned reasons. But facts are facts, life is life, and you'd better come to realize the silver lining around a juggernaut like Wal-Mart.
This place is the absolute face of the future. Economists and cultural anthropologists could devote a lifetime to tracking the changes in our country and the world wrought by this single corporation. On our side, you can go there and buy essentials for a price lower than you paid for similar items ten years ago in the local department store. This place is a bonanza for poorer Americans, who can be, lest we forget, a boiling cauldron of unhappiness looking for trouble. This is a tough country to live in, and at the moment I have to count myself among the disadvantaged underclass. Monetarily, that is. This shop is better at soaking up $$$ than a boat.
I live in rural NC, and let me tell you, Wal-Mart is a way of life out here. For a VAST number of folks in this region, and I'm sure it is the same elsewhere, $10 an hour looks like big money. Well, $10 per is chickenfeed if you have kids, and lots of poor folk have a lot of kids. You know the drill.
These people are barely scraping by, even with Wal-Mart's extraordinarily low prices. Where might they be had the cost of living continued its 5% a year hike before ol' Sam did his Sherman's March down Mainstreet? America, say HELLO to a lot more crime and misery. The jobs lost by Wal-Mart's business model are killing poor people at the same time, of course, as they are all the low cost factory workers too. Don't think we who support global trade don't know it. I know it for sure, as this region of NC is one of the densest textile manufacturing areas in the world. We've got jobs not just exiting the area, but leaving the door wide open with dinner on the table on the way out. I mean whooosh, baby, GONE!
It sucks, it stinks; in even a mraginally more pefect world it wouldn't be this way. But these jobs we are losing are going to EXTREMELY poor people in countries where our political reach barely matters. Our money matters though, and China is slowly becoming glued to US and the rest of the world through trade. And lots of it. It sucks for us, but so did 9/11 too, and you can trace a lot of that hatred back to the abysmal economic state of the terrorist's embittered little world they came from.
Do you know what the best way is for us to disuade further such outrages? Build Wal-Marts in Karachi! In Beijing! And in Tehran and all the other $%^@$%^@$% places these people come from.
We've lost a lot of manufacturing jobs and the bloodletting isn't done. But the whole country is enjoying lower prices on items that are better-made (largely) than they used to be as American makers up the quality, at least, in order to hold market share.
Alright, enough I suppose. I fully understand the complaints made so far and the pain behind them. It is all around us here in NC. But it isn't all bad, it can't be stopped, and for those of us left in such fields, it moves us to become better yet at what we do.
That might not be much solice, but it isn't nothing either. World trade has brought the world together in a way never realized by politics, and especially after 9/11 I can't but believe this is more than a just a rosy thought. There are a LOT of unimaginably desperate people on this planet looking for catharsis, and if Wal-Mart can partly placate their need to find a chump (US) to screw with, then so be it.
I mean, is welfare free money to bums, or a lifeline to bums who'd be robbing the little old lady next door for rent without it? A little of both, unfortunately, which is why hating Wal-Mart to the exclusion of realizing the benefits it brings us is little other than a way to feel nothing but screwed.
I'm already getting screwed by the county tax ASSessor. That's enough for the time being, I'll just be glad to have enough $$$ left after they are done to buy another cheap shirt to put on my back.
So they can get it too next year....

Agreeing but disagreeing,
J. Elliott

JE

I don't know if you knew or not, but Wal-Marts labor tactics stink. This is a big deal and everyone should open their eyes to what is going on. A few months ago in your area (SE) the meat cutters at a Wal-Mart store decided they needed a raise above the meager seeds they were thrown by Wal-Mart so they went on strike. Wal-Marts response? Fire em all.. start buying meat prepackaged and eliminated all meat cutters! The average wage at Wal-Mart is less than $13. an hour. Wal-Mart says everyone is a full time employee. What is Wal-Mart's definition of full time ? 28 hrs a week. Add it up.. 28 X 13 .. not enough for anyone to get very far in the world. Also only 33% of Everyone who works at Wal-Mart even has health insurance.

Once they have drivin the competition out of town, they can charge any price they want for goods as they totally control the game. Now they are trying to buy their own banks and get Wal-Mart customers sucked in to their own Credit Cards at 22% annual interest. These people are worse than fleas on a camels back. They buy from prision labor in 3rd world countries and PRICE is everything and when you control EVERYTHING the manufacturers have no one else to sell to. It is either sell to WM or go out of business. This is their creed and they seem to be doing a great job at it. WM has sent more jobs and manufacturing overseas than any corporation. Is losing our jobs good for America? We all know unemployment breeds discontent and WM is the leader! They take the jobs away from people working at competitors by putting the competitor out of business and then hire the same people into their organization for 1/2 the wages the people were getting before. If Wal-Mart were not in your area I am sure there would be ample opportunity for many Mom and POP start ups which would provide many more jobs that WM does (and at better wages).

Boy, there's just nothing that pays better than a monopoly, is there? I really believe that you can't choose up sides on a round planet, but I think this trend is going to end badly for us. Has anyone looked at Walmart for Enron type tactics?

I'm waiting for the ads for Soylent Green to show up in the Walmart sales flyers.

Gents,

Yep, this is one of those topics where you wonder if you said the right thing as soon as you hit 'Submit Reply'.
I went to bed last night feeling a little uneasy about my last post. I can't retract anything, but the whole matter smacks of the old Bobby Knight gaff where he said, "If rape is inevitable, lay back and enjoy it." I'm trying to find the good in Wal-Mart, but I feel I'm shilling for a serial murderer.
Maybe they really are stinkers. Wal-Mart got in some trouble a few years back for dumping pharmaceuticals at below wholesale price. Clearly, they were trying to drive small drugstores out of business and it was working.
But d***, what can ya do? The Republicans would NEVER stand for passing legislation strong enough to curtail these kinds of business practices, and if the Dems try it they'll be crucified as business haters. When Clinton fell in with NAFTA it really upended the old alignments, when everyone knew who sided with unions and who sided with the boardrooms. Now what we have is no one in Washington who would even BEGIN to think of telling Wal-Mart how to behave. Basically, they can do whatever they want.
Ol' George Bush II has got 'em suckered good. If you read the kinds of magazines that chronical his business exploits in detail, you'll find all manner of shenanigans that make Whitewater look like what it was - a failed housing development by a few bumpkins that hurt a bank at slight taxpayer expense. The only money George Jr. has ever made involved some kind of BS at someone else's expense. Check it out. He was a 40-something drunk who found Jesus and thinks he made his marks the old fashioned Texas way. What a lie. This current president absolutely detests interfering with big business, so don't hold out any hope for changes on his watch.
Politics aren't the point of this forum, so this will be the last time I reference Washington. But for all you guys who have bought into the Republican hype, all I can say is watch yer back. The fatcats HATE hearing about the problems of working people. They've managed to get most of the countryside to think that unlimited access to handguns, hatred of gay rights (not my favorite either), and raising hell about religion are the only things that count. They have absolutely no intention of governing, because they despise govenment and won't do the first thing that might end up making govenment look good.
I don't know exactly where I might fall on this issue if it were given a full airing in public. I do know, however, that nothing will ever be done about it under the Republicans. They'll paint anyone who questions their stance as unpatriotic, as they always do on virtually every issue.
Something about this bothers me. Whatever happened to dialog, with the party in power publicly justifying their moves? Neither of the Bush presidents have any time for explaining themselves.
I guess they must be perfect.

Sincerely,
J. Elliott

Have you noticed the "Walmart is rolling back prices" commercials on TV? Is Walmart cutting their profit margin to accomplish this? I don't think so! This shows exactly how they force suppliers to lower prices. Let it come off someone elses bottom line.

And Joel, (I should have known from your previous post you are a liberal democrat who wants to take my guns away), you are saying we should be happy that Walmart has taken over towns and patronize them because of that?
First off, if poor people have too many kids, that is their problem, not mine. Yes, I could have had 10 kids and be struggling to feed them but I chose not to. It sounds like you feel it is our responsibility to provide welfare for these ignorant people.
I patronize my local hardware store before I will go to Home Depot or Lowe's. It may cost me a dollar or two more, but the service makes up for it. And they stock the little widgets you can't find at the big box stores. Dogfood? I go to my local feed store instead of the places that feature 25,000sq ft of dogfood under one roof.
We all have our choices to make. I refuse to cave in to some merchants tactics and say, "oh well, they have taken over so I may as well shop there."
Les

[This message has been edited by L Webb (edited 09-16-2002).]

F'n-A right on!

Another thing about Wal-Mart......
I recieved a 'Free one-day pass' to Sam's Club in the mail last week.
So outta curiosity, I strolled into ol' Sam's Club, and low-and-behold.......
A friggin' DUMP !!!!
"Jesus H., what a dump this place is !!"
Cheap junk -IN BULK, for sale.
Processed frozen garbage food -IN BULK.
White trash as far as the eye can see -IN BULK.
This place is only good for residents of North Carolina with 10 kids. *cough*
I'll do my grocery shopping at my local grocer.
Thanks, but NO THANKS !

Fellas,

In truth, I'm nowhere near being or becoming a liberal. I don't want to take anybody's guns away, give hard-earned money to losers, or burn the flag. Same old mudslinging from hard right high school dropouts.
What?! You're not hard right? Well, I'm no liberal Democrat either. Pigeonholing works both ways, but doesn't produce much in the end.
Let's get back to how NAFTA, etc. affects machinists and how it might be changed. OK - so Wal-Mart rolls back prices by 30% this time 'round. Just saw it on TV. Looks great! The whole country gets its fix for third-rate nonstick skillets cheaper yet. Even though, I'm sitting there thinking, "Hmmm, nice to see stuff getting less expensive. Won't be so hot when the market becomes soooooo low that nobody over here can make the stuff regardless of how they re-tool and re-train."
I think we all know what's up here with what is happening, but not so clear on what might be done to stop it, or whether it should be stopped. Holler at me about wanting to confiscate guns if it makes ya happy, but the Republicans count on such ranting to get 'em of hot water all the time. Hot water to the Republican leadership is too many people expecting them to do something via government to help out. If someone evers comes up with a way for old ladies in the Sunday school class to reverse NAFTA, then I guess they'll come out for that and call it being in favor of keeping jobs here. (Dangit, I guess I caved in about leaving the politics out it. Politics created this situation, however, and politics is the only thing to reverse it.) Listen, I read two papers a day. I'm a news junky, I love thinking about policy and I pay attention to who does what and why. Get ill about the liberal Democratic agenda if it helps - I do too. I think welfare is the worst thing to happen to this country in the last 50 years, I can't stand gay rights, ad nauseum.
But none of these things has the least to do with world trade driving jobs out of this America, and the only people who talk about it with an intent to stop it are Democrats like Gephardt. It would take some heavy-duty goevenment tinkering to put a stop to this trend, believe it. But every day, Republicans use disgust of liberalism to throw all of us off their primary agenda, which is to allow business to follow its own course, unfettered and unsullied, and not to expect them to institute any govenmental programs that might help things out. The GOP hates government, pure and simple. Folks might key into this, you'd think, but all the GOP has to do every time the heat starts to rise is point a finger at liberalism and wait. There are more people in America who hate liberalism than there are those who want government to do something, anything. The numbers are on the Republican's side in this issue, which is why they get it this way. If more folks wanted govenment to stop this, then it would be stopped.
All I'm saying is place the responsibilty where it belongs. NAFTA was a Republican idea - and it was a big surprise to most of us Dems when Clinton joined in with it. I must admit though, he and MANY CONSERVATIVE THINKERS could do a good job of making free trade look like it will be worth the cost to us.
There are a number of eggheads on the left who can accept that free trade is awful for some people but good for us and the world in the long run. There are businessmen on the right who simply know that this is the way business works, and boy how it works. Still, you can beat the bushes and find some Dems who think this all stinks and should be reversed. But if you want to find some Republicans who want to keep jobs here at an expense to business, well, good luck.
I have two points to register with this issue. One, free trade brings some useful benefits to this country, but after all this talk I can see the jobs it costs us are possibly too much of a loss to bear. The issue needs a much fuller public discussion, and some general recognition that free trade is a Republican ideal more than a Democratic one. Secondly, you'll never get this discussion going with an eye for reeling in big business with the current Republican leadership. Never, ever, ever. Those of you who have lost your jobs to free trade but vote Republican can shake your own hand for the results.
Clinton was a dog, liberalism has created a giant group of crybabies and do-nothings, and Democrats in general have a real problem seperating what is possible from what isn't when their warm fuzziness kicks in. I can't stand any of that crap, and caving in to it has driven way too many people into the Republican party. But I'm willing to hold my party to what it has done wrong, while remaining a believer in the ability of govenment to make some things better. Where are the Republican representatives who'll try to restrain big business for the sake of the common man? Where are the Republican voters who will insist that something be done to change this mess?
There aren't enough to make a difference, so when it comes to bemoaning the state of the American workplace, please, stop screaming about the NRA and queers and look at who is doing what. Dems can't vote in Republican primaries, ya know. Anyone out there who truly wants NAFTA rescinded has only one choice - find the Dems who'll help 'em get it done, or start living with it. It doesn't make sense to lobby for change on this one and vote Republican.


Not liberal,
J. Elliott