I came across this article a few days ago and was shocked, at first, to read where an American named Ben Schwall working in China and repping some lighting firms there said, "Even if all the factories here burned down tomorrow, it's not going to bring the lighting industry back to America." He went on to add, "If the yuan appreciates and China loses its competitiveness then the next move for me is India, not Indiana." That struck me as incredibly ignorant of manufacturing and economic realities, and even more as a decidedly un-American thing to say.
After a litttle more digging into just who this guy is, however, I realized that the article on Chinese competitiveness failed to put Ben and his comments into perspective. In her book "Factory Girls; From Village to City" author Leslie Chang wrote about Ben, saying "I called him up and asked if he could introduce me to karaoke girls who engaged in prostitution." As it turned out, Ben was the right man for the job and the book goes into considerable detail on the inner working's of China's prostitution trade.
So I understood Ben's comment. I have worked with a number of manufacturers in Indiana and, while repping manufacturers and whores in China is pretty much the same thing, I have to agree with Ben. There is a huge difference between the two in the Hoosier State. Ben was simply stating his opinion that a general purpose pimp can fare better in Mumbai than Fort Wayne.
A Question of Balance
A few months back I took BP to task for trying to promote a culture of safety, while compensating people only for financial results. It seems as though they not only took that advice to heart, they went completely off the deep end with the idea. "BP employees' performance on safety issues will be the only measure for awarding fourth-quarter bonuses, the British oil company said." THE ONLY MEASURE -No weight will be given to profits, quality, delivery … just safety.
No one can argue with the intent, but as BP spokesman Robert Wine said, "Everyone will be completely concentrating on running a plant safely." Right – it shows they learned that in the past everyone was "completely concentrating" on making money. What would be even better would be to make money and operate safely – to do both at the same time. Maybe next year …
Gee … Ya Think So?
Richard Fisher, President of the Dallas Federal Reserve Bank, recently gave a speech to the New York Association for Business Economics saying, "In my darkest moments, I have begun to wonder if the monetary accommodation we have already engineered might even be working in the wrong places. The Treasury International Capital, or TIC, data released yesterday morning show that foreign interest in buying Treasuries remains robust. Yet, far too many of the large corporations I survey that are committing to fixed investment report that the most effective way to deploy cheap money raised in the current bond markets or in the form of loans from banks, beyond buying in stock or expanding dividends, is to invest it abroad where taxes are lower and governments are more eager to please."
So in his darkest moments he wonders if driving interest rates to near zero has created a lot of easy cash for big companies to borrow to build plants in China instead of here. No need to stay in the dark any longer Rich, no need to wonder. Come on out into the daylight and see what everyone outside the land of the ivory towers has known for years. It's true.
When Are They Gonna Learn?
Gardner-Denver – a company about as committed to becoming lean as there is anywhere – reported massive earnings increases, along with cash flow improvements almost twice their earnings (it takes a lean manufacturer to accomplish that trick). And Boeing seems to finally have it going on all cylinders and they are building the leanest plant they can conjure up in South Carolina to build the dreamliner. Wahl Clipper is building a huge addition to their plant in Illinois. In short, lean companies are doing well everywhere – recession or no recession.
And then there is the fumbing and bumbling at Johnson & Johnson. They are losing money at a staggering rate as a direct result of shoddy manufacturing. "In the consumer division, known for such iconic brands as Band-Aids, No More Tears baby shampoo and Listerine, sales were down in every business segment except baby care. Over the past 13 months, the division has announced 10 product recalls involving tens of millions of bottles of Tylenol, Motrin and other nonprescription drugs. In addition, the recession continues to push penny-pinching shoppers to opt for cheaper store brands, a problem J&J executives have been citing for about two years." You would thinkthe financial wizards at the top would figure out that a manufacturing company has to be led by people who repect and understand manufacturing.