Saturday, January 21, 2012

Somehow Missing the Point

In the NY Times there is a long piece on Apple and manufacturing in the US. Also why China is getting so much of the work. Now this is hardly new. When I was at Warner in the early 80s we had Pioneer in Japan manufacture our cable converters. Quality, price and performance. That was not even new then. We saw disk drives being made in Asia, then in Mexico, business finds the lowest cost place to do this with possibly a quid pro quo. That gives the American consumer the best price and they then buy more which means ultimately higher profits. It is called business.

Now that is not the way the current administration sees it. The most absurd quote I have ever seen is:

“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.” 

Nonsense. Total and complete and utter nonsense. One must look to the credentials of the source to see why.

Under our legal system, and under our economic system, at least as understood before the current administration, Companies have a fiduciary duty to make money, and the way they manufacture is a reflection of this. In my opinion the very statement is a demonstration of a gross disconnect with reality, but a reason why we are in the mess we are in. If those in Government believe that a business has a first duty to support American workers over growth and profit then they are just wrong, business does not work that way.

I moved a company from New Jersey to Prague because of lower costs, reliable electrical supply, and good workers. The burdens of the US overhead, poor infrastructure and high taxes, plus regulation on everything, made moving the only alternative. Perhaps Washington should get some people with some real experience.