U.S. Competitiveness: It's Not All Doom and Gloom
I've chosen to do a separate post here simply because 200 words are inadequate to the task.
I am the owner of a small business - we just celebrated our 10th anniversary. Now much of what I have to relate here is anecdotal, so make of it what you will, but it is based on 10 years of practice and experience. My business is a small manufacturer of electronics for a niche branch of a major US industry. We're not part of the main and most visible sector, but we can see pretty well what they're doing there and have a lot of insider knowledge. I can't speak for the service or retail sectors as our products are strictly sold B2B.
1. Technology - High quality automation equipment is now within reach for small US businesses, and the inside scoop I'm hearing is that the "outsource boom" is ending. US businesses can't trust the quality or delivery times of Chinese factories, or risk the theft of intellectual property. These last few years the smarter companies have been investing in capital equipment here.
Most electronics assembly today consists of surface-mounted electronics. If you open your computer or cell phone and look closely at the parts, the lead wires of the parts do not go through the board, with the exception of some large capacitors or connectors. Look at a computer motherboard from 1993 and you'll see something different - lots of "through-hole" parts. Surface Mount Technology (SMT) was developed during the 1970's and 80's, but was cost-prohibitive for most until fairly recently. You need very precise and very fast robots to put these parts down, and these are large capital investments. In the 1990's a business of my size could not afford this kind of equipment. Now we can, but I only need to hire one very-skilled person to run the line, where in the 1990s I would have needed 6-8 people to populate boards. But that 1 person can produce in one day what my 6-8 people would have needed a week to build.
A startup with decent capital can set up an entire line for $200K to $500K. There are a number of US-based contract-manufacturers (job shops) that will do the work too if you want to hold on to your capital.
From a manufacturing standpoint, unless you're making a million pieces of something, you can absolutely stay local, and based on my conversations with our contractors, business is up big time. If you've got an idea for a product, you've got more tools than ever to bring it to fruition, if you know where to find them. And it is still a truism that America dreams for the entire world. The Chinese can build mass quantities on the cheap, but they don't design anything. American designers are still very powerful, and now the equipment is affordable enough to build it here, even when the wage gap is huge.
2. Worker Skill (and motivation) - Here's the bad news. Skilled and motivated workers are darn hard to find, but they actually always have been.
The problem is that due to our expanding welfare state, they're a lot less hungry now for work, and they've been weaned on self-esteem [nonsense] and "workplace diversity," and can lawyer up faster than you can say "Ricochet". 20 years ago it was easier to fire someone when you suspected them of theft or sabotage, or for plain laziness or redundancy, so we could treat hiring as more of a gamble. Now you've got to build a case file 1/2 inch thick or else catch 'em on camera to sack them cleanly. Workers have always been a mixed bag of the motivated and lazy, it's just a lot easier to be lazy today - even if you get fired you'll not starve. But they sure know their "rights." We'll work until our hands bleed before we consider adding even a single person, and nepotism is the new way to find that worker. Can't rely on strangers.
Oh, and too many folks want to be a managers. The last two generations have been brought up to believe that actual work is somehow beneath them. They don't want to get their hands dirty, or work extra hours during crunch times.
Three things are needed to fix this: Break the fed/teacher-union monopoly on education, lower the minimum wage, and gut the "safety nets." When Americans are hungry for work again, when they NEED work, they'll come grumbling back.
3. American Business Acumen - Claire's foreign friend does hit at a truth: Too many American businesses are run by idiots and accountants. You've got companies that don't pay on time, companies that abuse both their customers and their suppliers, and companies that are just coasting on their reputations. But those companies are starting to die rapidly, even in my industry where we have a natural protection against foreign competition. As these old companies fail, new ones are springing up, and they "get it." They're not run by the "old-timers" who rely on corruption, old brands, and buddy networks. I'm pretty hopeful here, but these guys need a good decade (as we did) to get up to speed (and the Fed can't bail out the sclerotic old companies). When they hit their stride, watch out.
As for inventory, we maintain a 52-week supply on key parts, and we know we are unique in this. Yes, this is a huge capital tie-up, but we no longer have to pay property taxes on the parts. Many of these parts have 52-week lead times, and we can't stop shipping product on account of earthquakes, tsunamis, cyclones, or tornados. Our customers are still wedded to "just-in-time" delivery, which may make their short-term books look good, but we do factor this into our prices. "Lean Manufacturing" sounds good to managers and accountants, but you pay for it elsewhere. Our suppliers love us too because we're not constantly pestering them with pull-in orders and push-out orders. Oh, and we pay our bills on time. You don't know how critical that is. When you need to call in a favor, people will bend over backward to help knowing that you'll actually pay the bill. But this is a model unique to our type of business.
All told, businesses here may be in a funk, but it's a generational funk. Our predecessors outsourced and out-promoted themselves out of work, but younger companies are rising up to fill the vacancies. They can afford the high tech gear to make their own products, and they watched as their older competition let the accountants sink 'em. There are serious problems in the labor force to be sure, and don't get me started on taxes (I need a bumper sticker that says "I pay YOUR taxes") and regulations, but "the bones are still good." It's not all doom and gloom.
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Nov '10
Re: U.S. Competitiveness: It's Not All Doom and Gloom
The ads on the right of the Ricochet page sometimes are a great illustration for the articles. I clicked away from this page and got an ad for a law firm that said, "Hurt on the job?" The trial lawyers certainly have a lot to answer for.
Feb '12
Re: U.S. Competitiveness: It's Not All Doom and Gloom
Mama Toad, I understand that and agree. But ... no one became an adult knowing how to succeed. Everyone was taught how to do their job, whether by a boss, a mentor, or just incredibly patient customers. Someone gave them a chance.
A business is not obliged to hire people, but Christians are supposed to "do unto others ..." and "pay it forward." Someone took a chance on you at some point in your career; someone paid you more than you were worth; someone let you do the job less efficiently than they could do it themselves so you could learn how.
Please take a chance on someone else.
Mar '11
Re: U.S. Competitiveness: It's Not All Doom and Gloom
My sister ran a business for several years. Hearing her stories about trying to hire people for medium-skilled jobs was shocking. They'd run an ad, pre-screen the respondents by phone to weed out the obviously unqualified, and then still more than half of those they invited for interviews would not show up, often not even calling to cancel.
Jan '12
Re: U.S. Competitiveness: It's Not All Doom and Gloom
It sounds to me that this concept of nepotism is more like networking.
Jan '12
Re: U.S. Competitiveness: It's Not All Doom and Gloom
Skipsul here's a technical question, can you elaborate on what "pull-in orders and push-out orders" are. I think they are to do with JIT but would like some clarification. Thanks in anticipation.
Mar '11
Re: U.S. Competitiveness: It's Not All Doom and Gloom
Okay, we set up long-term blanket orders with set release schedules on critical or high value parts. We try to anticipate what we'll need 3-12 months out when setting those dates, with some cushion built in for safety stock levels. When I refer to pulling in or pushing out I'm referring to tinkering with those dates. Sometimes demand goes up and I pull dates in, sometimes demand goes down and I push dates out.
But we try to manage things so that we don't have to monkey with things too much - sticking to schedules and agreed quantities makes suppliers happy.
Edited on April 9, 2012 at 8:39pmFeb '11
Re: U.S. Competitiveness: It's Not All Doom and Gloom
Amy Schley
A business is not obliged to hire people, but Christians are supposed to "do unto others ..." and "pay it forward." Someone took a chance on you at some point in your career; someone paid you more than you were worth; someone let you do the job less efficiently than they could do it themselves so you could learn how.
Please take a chance on someone else. · 3 hours ago
I hope and pray you will find the employment you seek. And the best bosses can be those who mentor their employees. But your assumptions about my employment history have made me chuckle ruefully. No one ever hired me out of kindness. They hired me because I impressed the employer that I could do the job efficiently and well, or because I had the demonstrated competence in an area. And I don't ever recall being paid more than I was worth.
Sep '11
Re: U.S. Competitiveness: It's Not All Doom and Gloom
I think Stephen Bishop is correct--what Skipsul, Mama Toad, and others refer to is really networking, rather than nepotism. Faced with a need, you're asking around for personal recommendations--and that recommendation cuts both ways. (Your colleagues recommend a friend or former co-worker to you; they recommend you to the friend or former co-worker.)
This kind of networking reduces risk--your colleagues have a pretty clear idea of the workplace and work requirements. They can judge whether a friend of theirs will be a good fit--and if your workplace will be a good fit for their friend.
There's an implicit warranty, too--if you recommend someone, and they don't work out, that reflects on you. People tend to be very careful about whom they recommend in a situation like this.
Compared to placing ads in the paper, networking is infinitely better.
Feb '11
Re: U.S. Competitiveness: It's Not All Doom and Gloom
I concede that "nepotism" connotes an assumption of unfair practices and that "networking" is less incendiary.
As you note, John Murdoch, networking can still be dangerous -- my brother-in-law runs a construction business and hired a friend who was in need of work. They'd known each other socially for several years, and he was pleased to be able to help a friend out. One day while eating lunch in the front seat of his truck, the friend saw an invoice my b-i-l was sending to the client. He was outraged that bil was earning so much while he was being paid so little. He was a poor worker without any experience, came late to work, sat around drinking his coffee on arrival instead of getting straight to work, presumed on his friendship with bil, and now was demanding greater share of profits as his right.
Bil fired him soon thereafter, losing the friendship.
He admitted that his best workers are Ecuadorans, who network like crazy and who have probably entered the country illegally but work their tails off so he gets his jobs done on budget and on time. They lack the entitlement sense.
Dec '11
Re: U.S. Competitiveness: It's Not All Doom and Gloom
Claire Berlinski, Ed.
"Nepotism is the new way to find that worker" is a point that really needs stress.
This was an extremely relevant point as well. Our private business won't hire anybody who is neither a close personal friend or family member of a trusted and experienced employee. Good employees can often be the most effective screening process an owner can utilize because their reputation is on the line as well.
It'd be great to read more posts on business topics; I'd love to swap notes with other entrepreneurs. Thanks!
Edited on April 10, 2012 at 1:27amFeb '12
Re: U.S. Competitiveness: It's Not All Doom and Gloom
Amy, the US trains far too many lawyers.
If I hire someone, I'm not going to pass over, say, my brother, in order to take a chance on someone else. I don't think asking people to put their personal acquaintances second is going to work.
Feb '12
Re: U.S. Competitiveness: It's Not All Doom and Gloom
Getting a JD is like getting an STD. Everyone who doesn't have one assumes you're an awful person for having one and so doesn't want you to work for them.
I would disagree with you slightly, though. The US graduates too many JDs -- JDs who need someone else to train them to be lawyers. "Training lawyers" would require law profs to know something about the actual practice of law.
Apr '12
Re: U.S. Competitiveness: It's Not All Doom and Gloom
Great post. Thoughtful comments also. I've forwarded the post to my nephew and others.
Thanks.
Dec '10
Re: U.S. Competitiveness: It's Not All Doom and Gloom
Amy Schley
Beg your pardon, but why are you embracing a policy of nepotism-only hires when you know from personal experience that there *are* people out there willing to work -- people who would be valuable additions to the company but are held back by the normal "gatekeepers"?
I'd say that it's because, as a lot of us have, he has found out that the only connection you can trust these days is by blood (and even then you have be a little bit wary).
Unless your family really sucks, your cousin or nephew or sister/brother/mother/father is a lot less likely to try to skin you after you give them a job.
The same cannot be said of a stranger, regardless of their motivation level.
During the time that my father ran a construction company, we got to pay for a broken neck (car wreck happened over the weekend in their personal vehicle, IE not our fault in any way), several broken legs/arms (again, over the weekend or after work, not our fault), and carpal tunnel surgery for a welder (actually tore his tendons lifting weights while drunk), just to name a few.
Continued . . .
Edited on April 10, 2012 at 10:43amDec '10
Re: U.S. Competitiveness: It's Not All Doom and Gloom
In the three decades he owned/ran that business, we had two or maybe three honest to God accidental work related injuries. However, our work-comp insurance got to pay for dozens of injuries incurred elsewhere on the guy's own time.
Don't even get me started about thievery. It's as though every man who works construction just assumes that anything small enough to steal is just part of the compensation package. We used to buy 4" angle grinders by the dozen (~$250 a pop back then) at least once a year, and I swear after thirty years of doing that, we have three (3) left. Sure, some got worn out, mashed, lost, etc, but the great majority of them simply walked off the jobsite in someone's lunch box.
Angle grinders, oxy/acyt torch rigs, hand tools of every sort, welding leads, hitch balls, materials (steel, wood, etc), cutoff saws, chainsaws, you name it, we had it stolen from us, mostly by our own employees.
Enough years of that, and you start to get rather jaded as to the virtuosity of strangers.
Dec '10
Re: U.S. Competitiveness: It's Not All Doom and Gloom
EThompson
It'd be great to read more posts on business topics; I'd love to swap notes with other entrepreneurs.
I concur.
This place is getting a little heavy with the political and religious topics of late.
It'd sure be nice to have some discussions of actual productive work for a change.
Mar '11
Re: U.S. Competitiveness: It's Not All Doom and Gloom
CoolHand - We could start a whole sub-forum of bogus workplace injuries. My favorite was a lady we had who:
1. Got a bad review and was denied a raise, then
2. Quit and cleaned out her desk, then
3. File for full disability claiming she had torn her rotator cuff on the job, then
4. When those benefits weren't enough claimed psychological damage and anxiety attacks brought on by her shoulder injury.
All of this was backed up by an OUT OF STATE doctor (who lived 4 hours away) who strangely never was questioned by the state workman's comp folks.
The state ignored testimony and direct evidence that this lady also ran an illegal hair salon out of her house (where she may well have injured her shoulder).
Total cost to business of legal fees, claims, insurance, etc: $200K. This would have paid for 1 worker for 4+ years, or a nice piece of capital equipment.
Punchline was that the state did eventually figure out that she was defrauding them, but we never got a cent back.
Jan '12
Re: U.S. Competitiveness: It's Not All Doom and Gloom
Many thanks I know what you mean now.
skipsul
Okay, we set up long-term blanket orders with set release schedules on critical or high value parts. We try to anticipate what we'll need 3-12 months out when setting those dates, with some cushion built in for safety stock levels. When I refer to pulling in or pushing out I'm referring to tinkering with those dates. Sometimes demand goes up and I pull dates in, sometimes demand goes down and I push dates out.
But we try to manage things so that we don't have to monkey with things too much - sticking to schedules and agreed quantities makes suppliers happy. · Apr 9 at 11:39am
Edited on Apr 9 at 11:39am