What are the consequences of this process? The good news is that if a company meets the Street's expectations, Americans build wealth. The bad news is that many Americans lose jobs and current workers are just pieces of protoplasm, pushed to the brink to keep their jobs and lose the quality of life they deserve. We no longer "care" about employees as people.
So where did all those lost jobs go. Some to technology, an expected consequence in today's environment. BUT, most of the jobs have been lost to low-cost countries--it includes "outsourcing" and new factories built for American production. The American culture of caring, loyalty and compassion is gone and we can't seem to stop the momentum. All the result of "chasing the bottom line".
Do you think this condition is a new trend?--WRONG! I was a reluctant corporate prostitute. I wanted a shot to the "TOP" and played the corporate chasing game in the '80's. As CFO of a troubled division of a huge corporation, my charge was to help our division meet the corporate mandate of 10% sales growth and 15% earnings growth. I succeeded and was transferred to another division as President and was "awarded" the label of "Turnaround Agent".
My charge in my new position was to take a "losing" division and put it back on the track. Our main manufacturing facility had a hourly labor cost of $16.50/hr. We had a Taiwanese partner that we determined could replicate our proprietary manufacturing process for less than a buck an hour. This was a "no-brainer". We put 5,000 people on the street causing a local economy to have a 9% unemployment rate. Initially, I tried to compensate the high cost factor by boosting our R&D effort in new-product development. It worked for a while, but the "Ivory Tower" saw no long-term solution other than outsourcing manufacturing to Taiwan and China. The deed was done and we returned to black numbers within two years.
My "die-hard" tactics and my strategic plan to start over with a blank organization chart, resulted in my own self-inflicted demise. I left the company and received a call from a former employee who was then Chairman of a London-based company. As President of the North American business, I was again charged with a major turnaround situation. The NA operation had suffered losses for seven consecutive years, but was kept in operation due to the company's image as an International company.
The business was high-end retail boutique stores (no wholesale business), appealing to the classic style for women. With 60 retail stores, the image factor (Madison Ave, Palm Beach, Beverly Hills, etc) had to be ditched in favor of profitability. The biggest liability was $25 million in long-term leases. So what's the answer--identify every store that was not covering direct expenses and reduce the portfolio of stores to only those with long-term profit potential. Only 22 passed the test. On the other side of equation was the corporate overhead costs. I basically wiped out our corporate offices of 50 employees to a skeleton staff of 10, many wearing 3 hats.
What were the results? Devasting! I negotiated $20 million of lease commitments to a $1 million opt-out deal for almost 40 stores and closed them; thereby putting loyal employees with an average of 20 years experience, many over 50, on the street. Did I accomplish my mission?--YES. Was I happy?--NO! We were family and we had fun. I visited every store once a year and developed very close relationships with many of my employees.
I tell these two stories because I am among the "Guilty" who contributed to our emerging culture of heartless corporate vultures. I burned out completely at the age of 54 and retired from business forever. Unfortunately, soon after my early retirement I suffered a major breakdown and spent 2 years in a "Black Hole", one-year totally housebound by panic attacks. Three more years of recovery, I emerged strong and spent the past 3 years volunteering approximately 800 hours a year.
So what's MY "Bottom Line"?--a very dismal outlook of this "chasing the bottom line", with total disregard for hard-working Americans. When will this madness stop? I can assure you that gold watches will not be given to 50-yr employees. No one will retire voluntarily--they will be pushed out.
I'm angry and dismayed that the trend of outsourcing is self-perpetuating. When and if will we return to a more compassionate corporate leadership model? In my mind, the only high point is the growth of small businesses where loyalty goes in both directions. I WANT to be optimistic, but I personally know some of the "corporate prostitutes", selling out their value system to "The Steet".
My hope is to see "Made in America" again!
