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The Wisdom of the Marketplace

I understand as well as anyone the impulsive, almost instinctive desire to want to use government – in the form or tariffs, import restrictions, subsidies, legislation, etc. – to try to limit the impact of cheap (and often subsidized) foreign competition and the incursion of (often below market-value) offshore products.

But time and time again, I’ve also seen that if left to operate on its own (and given just a modicum of patience), the market will invariably do naturally what so many knee-jerk types would cry out for our often ham-fisted federal government to do by artificial means.  What’s more what it does will always be better for those concerned in the long run.

Case in point; this week I read about yet another textile mill opening up in the Carolinas, once the cradle of U.S. textile manufacturing (and, therefore, world textile manufacturing).  The owner?  Some jingoistic, flag-waving, Made-in-the-USA investment group?  A bunch of private-equity Tar Heels or Gamecocks with emotional ties to the area?

Nope.  The company opening the mill is a China-based manufacturer named Keer, an offshore entity that looked at Indian Land, South Carolina, its closeness to the U.S. market, the extent to which its workforce’s salary demands had leveled off after years of outsourcing and foreign competition, its vast resources, and, just as important, the growing labor, energy and transportation costs it was experiencing stateside, and came to the conclusion it would be an ideal spot to open a textile mill (and add about 500 new full time jobs to its suddenly lean, hungry and motivated local economy).

The lesson?  The market got us where we needed to go – exactly where we needed to go – and did it without government intervention.

And while there was clearly a lean period for many locals, and there were (as there always will be) unintended victims of the ebb and flow of market dynamics, look at the incredible benefits that were realized in the process.  Workers in the area, many of them still trained and still job-ready, are now much more in tune to the reality of the global marketplace, more level-headed in their compensation demands, and more willing to partner with ownership and/or management to ward off future losses of jobs and plant closings.

What’s more, having gone through what they’ve gone through, those workers, along with their managers and elected officials, are now collectively even further ahead of their Chinese counterparts on what you might call the macro-economic learning curve.

Where once had been, at least to some extent, the kind of collective myopic, short-term and me-first thinking that one finds when people grow complacent, is now a far more big-picture understanding of global market dynamics and how such dynamics can impact a local economy, a wisdom that will only stand to benefit the men and women of Indian Land and positively impact their future decision-making, strategizing and economic planning.

Look, I am not one of those “ready-fire-aim” anti-government whack jobs.  In fact, I see a much greater role for a benign government in America than do many of my friends and colleagues.  But honesty compels me to admit that time and time again I’ve seen government prove itself to be ill equipped to lead economic prosperity and to protect companies (and its citizens) from a force more dynamic and relentless than it will ever be.

Because, believe me, as the little community of Indian Land, South Carolina showed us yet again, government is not only less capable than the marketplace in shaping the future, it’s also not nearly as smart.

Do Unions Finally Smell the Coffee?

A friend of mine, a union leader here in Chicago, once mentioned to me that he loved to drive around and count the number of cranes along the city’s skyline because it gave him a sense of how many jobs had to be filled for his rank and file members.

But even as he was saying this, I wondered if my friend (a long-time, old-school union guy) really understood the intricate relationship between cranes and his role as a union head. Because, you see, as he was talking I got the sense my friend’s notion was the cranes were merely a starting point for him, as opposed to the end product.  He, in other words, saw his role as a union leader as one that made absolute certain those cranes employed union workers.  He simply took their presence as Point A.

But I saw it, and still see it, as just the opposite.

I see my friend’s role as a union leader as one that helps build a business climate that fosters more and more cranes and other visible signs of an area’s economic growth and development.  They were the fruits of his labors, in other words, not the seed.

And I write this today because over the past few months I’ve seen any number of pieces of evidence that unions are finally starting to wake up and smell the coffee.  And as someone who has long contended he isn’t anti-union as much as he’s anti-what unions currently stand for, I have to tell you this warms my heart.

I’ve seen any number of examples since the end of last year where union leadership has seemingly become less concerned with individual jobs and salaries and more concerned with the health of its industry and the skills of its members – realizing, it would seem, that taking care of the latter would in turn ensure the former.

Consider:

This spring, the International Association of Machinists (IAM) announced it would sponsor an ongoing and tremendously innovative inner city high school-level manufacturing training program here in Chicago, the Austin Polytechnic Institute. This would indicate to me that at least one union, perhaps even more than recruiting young members, is (just maybe) concerning itself more with skill development and training. It’s a small step I know, but one in keeping with my belief that in this era, the greatest thing unions can do for their members is to train them for the jobs of tomorrow, whatever they may be. Because as a manufacturer I will tell you the issue is not so much keeping skilled workers, as it is finding them in the first place.
Then in January, Boeing workers in Washington State – just months after rejecting in a 2-to-1 vote a company proposal for wage and benefits concessions in exchange for long-term stability – voted to accept ownership’s package.  It would appear that, at long last, union leadership woke up to the fact that they’re no longer living in a bubble, but competing – just as Boeing is – in a fiercely competitive global marketplace, and they needed to scale down demands and expectations accordingly or risk losing everything.  As a result, their members now have the security of good-paying jobs and long-term stability, along with the comfort of knowing the company that employs them is better equipped to go to war against foreign competition.

And finally (and I’m sorry I didn’t write about this sooner), as a die-hard Cubs fan I just loved how the media fully grasped the importance of the late head of the Major League Baseball Players Association (MLBPA), Michael Weiner, who succumbed late last year to a brain tumor. While not nearly as visible or well known as his two predecessors, Marvin Miller and Donald Fehr, both of whom had confrontational, slash-and-burn styles and would rather see full seasons and World Series cancelled than approve such socially acceptable things as drug testing, Weiner had a far greater respect for the game and its traditions – not to mention the non-cheaters among his rank and file. As a result, as a union head the man was loved and respected by players, owners and fans in ways that Miller and Fehr never were, or frankly never will be.  What’s more, he helped restore the game to a place of honor in the eyes of many, something neither of his predecessors could say.

Does this mean that unions are now focused more on the big picture than their little staterooms on the Titanic?  Who knows?  Human behavior being what it is, it could just be they’re are doing what they need to survive now and may go back to trying to kill the very thing they need, if it means in the short term more money and better benefits

But maybe – just maybe – America’s labor unions are waking up and smelling the coffee, and just maybe we’re entering into a new age of management/workforce partnership, one that — again, just maybe — will lead to an even greater era prosperity and growth for all of us.

We can only hope.

On Germany, Manufacturing and World Cup Success

So Germany won the World Cup. Bravo for them.

And if you think there is a hint of sarcasm or jealousy in my tone…well, you may be right.

Hey, I wanted the U.S. to win the World Cup. I admit it. Wanted it badly, as a matter of fact.

But you know what?  The Americans didn’t win because we weren’t the best team. The best team won. And I know the Germans were the best team because that German team was designed the best, built the best, and prepared the best.

Germany’s World Cup team as assembled was a team whose architects and builders were focused – and some might even say obsessed – on building a quality roster from top to bottom; on building a team constructed not for expedience, quick returns or any short-term benefit, but for one thing and one thing only; winning over the long haul.

Think about the Germans for a moment. There are probably no people anywhere about whom the rest of the world more loves to make definitive general assumptions or more loves to paint with a broad brush than the Germans.  Listen to how non-Germans have always talked about or described them (including so many announcers and analysts in this year’s World Cup). The Germans are always “clinical” or “ deeply analytical,” and everything they do is always done with “steely precision” or in a way that is conspicuously “devoid of emotion.”

Heck, I remember Michael Lewis, the author of Moneyball, began an article he wrote for Vanity Fair a few years back by broad-brushing Germany and taking great pains to detail what he described as the country’s collective and centuries-old fascination with human feces.  In the beginning of the piece he teed things off by citing dozens of German euphemisms for feces and quoting just about every notable German from Mozart and Martin Luther to Hitler, all of who seemed to feel compelled to, at some point, either talk about the stuff, write about it, or in some way reference it.

(But to Lewis’ credit, making such a broad generalization turned out to be a clever and effective way to lead into the focus of his story, which was how Germany has hoisted on its shoulders and continues to carry so many of its fellow EU partners’ toxic, foul-smelling economies.)

But as someone who operates a sales office in Berlin and who travels to Germany regularly, I will tell you such generalizations are, if not dangerous, than at least unfair.  Germans are in many ways just like people everywhere, and the more you know them the more you realize cultural generalizations are simply intellectual shorthand or a lazy man’s way of trying to make a point.

But at the risk of being accused of such shorthand, in light of Germany’s recent World Cup triumph and in light of my having just returned from ten days in the country, I will offer one generalization that seems to go to the very heart of not only why the Germans are now World Cup champions but why I continue to operate an office there.

And that is this: the German people of today, many of whose parents, grandparents and great grandparents were at least tacitly complicit in one of the darkest, most evil chapters in human history, have collectively spent the past 60 years (beginning on VE Day in 1945) rebuilding their society and (in time) reunifying their country – and doing it the right way and doing it for the long haul.

And that collective focus – and, again, some might say obsession – on building things the way they should be built, building them with quality, building them with a meticulous eye for detail, and building them to last, is what separates the Germany of today from just about every other country, if not every other culture on the planet.

That, my friends, is why Germany won the World Cup.  That’s why I continue to run a business there.  And that’s why, all sarcasm and jealousy aside, I mean it when I say to my friends and colleagues in Germany, “Bravo.”

In the world of global soccer you are weltmeister, and it couldn’t have happened to a better-built or more richly deserving team – or for that matter, a harder working or more richly deserving people.