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Too_Many_Tools
07-09-2010, 09:39 PM
I wonder what Harbor Freight will then sell...cheap American tools?

TMT


Companies brace for end of cheap made-in-China era
By ELAINE KURTENBACH, AP Business Writer Elaine Kurtenbach, Ap Business Writer
Thu Jul 8, 11:09 pm ET

.SHANGHAI – Factory workers demanding better wages and working conditions are hastening the eventual end of an era of cheap costs that helped make southern coastal China the world's factory floor.

A series of strikes over the past two months have been a rude wakeup call for the many foreign companies that depend on China's low costs to compete overseas, from makers of Christmas trees to manufacturers of gadgets like the iPad.

Where once low-tech factories and scant wages were welcomed in a China eager to escape isolation and poverty, workers are now demanding a bigger share of the profits. The government, meanwhile, is pushing foreign companies to make investments in areas it believes will create greater wealth for China, like high technology.

Many companies are striving to stay profitable by shifting factories to cheaper areas farther inland or to other developing countries, and a few are even resuming production in the West.

"China is going to go through a very dramatic period. The big companies are starting to exit. We all see the writing on the wall," said Rick Goodwin, a China trade veteran of 22 years, whose company links foreign buyers with Chinese suppliers.

"I have 15 major clients. My job is to give the best advice I can give. I tell it like it is. I tell them, put your helmet on, it's going to get ugly," said Goodwin, who says dissatisfied workers and hard-to-predict exchange rates are his top worries.

Beijing's decision to stop tethering the Chinese currency to the U.S. dollar, allowing it to appreciate and thus boosting costs in yuan, has multiplied the uncertainty for companies already struggling with meager profit margins.

In an about-face mocked on "The Daily Show with Jon Stewart," Wham-O, the company that created the Hula-Hoop and Slip 'n Slide, decided to bring half of its Frisbee production and some production of its other products back to the U.S.

At the other end of the scale, some in research-intensive sectors such as pharmaceutical, biotech and other life sciences companies are also reconsidering China for a range of reasons, including costs and incentives being offered in other countries.

"Life sciences companies have shifted some production back to the U.S. from China. In some cases, the U.S. was becoming cheaper," said Sean Correll, director of consulting services for Burlington, Mass.-based Emptoris.

That may soon become true for publishers, too. Printing a 9-by-9-inch, 334-page hardcover book in China costs about 44 to 45 cents now, with another 3 cents for shipping, says Goodwin. The same book costs 65 to 68 cents to make in the U.S.

"If costs go up by half, it's about the same price as in the U.S. And you don't have 30 days on the water in shipping," he says.

Even with recent increases, wages for Chinese workers are still a fraction of those for Americans. But studies do show China's overall cost advantage is shrinking.

Labor costs have been climbing about 15 percent a year since a 2008 labor contract law that made workers more aware of their rights. Tax preferences for foreign companies ended in 2007. Land, water, energy and shipping costs are on the rise.

In its most recent survey, issued in February, restructuring firm Alix Partners found that overall China was more expensive than Mexico, India, Vietnam, Russia and Romania.

Mexico, in particular, has gained an edge thanks to the North American Free Trade Agreement and fast, inexpensive trucking, says Mike Romeri, an executive with Emptoris, the consulting firm.

Makers of toys and trinkets, Christmas trees and cheap shoes already have folded by the thousands or moved away, some to Vietnam, Indonesia or Cambodia. But those countries lack the huge work force, infrastructure and markets China can offer, and most face the same labor issues as China.

So far, the biggest impact appears to be in and around Shenzhen, a former fishing village in Guangdong province, bordering Hong Kong, that is home to thousands of export manufacturers.

That includes Taiwan-based Foxconn Technology, a supplier of iPhones and iPads to Apple Inc. Foxconn responded to a spate of suicides at its 400,000-worker Shenzhen complex with pay hikes that more than doubled basic monthly worker salaries to $290. Strike-stricken suppliers to Honda Motor Co. and Toyota Motor Corp., among many others, also have hiked wages.

Foxconn refused repeated requests for comment on plans to move much of its manufacturing capacity to central China's impoverished Henan province, where a local government website has advertised for tens of thousands of workers on its behalf.

But among other projects farther inland, Foxconn is teaming up with some of the biggest global computer makers to build what may be the world's largest laptop production hub in Chongqing, a western China city of 32 million where labor costs are estimated to be 20 to 40 percent lower than in coastal cities.

Given the intricate supply chains and logistics systems that have helped make southern China an export manufacturing powerhouse, such changes won't be easy.

But for manufacturers looking to boost sales inside fast-growing China, shifting production to the inland areas where many migrant workers come from, and costs are lower, offers the most realistic alternative.

"The new game is to find a way to do the domestic market," says Goodwin.

Many factories in Foshan, another city in Guangdong that saw strikes at auto parts plants supplying Japan's Honda, have left in the past few months, mostly moving inland to Henan, Hunan and Jiangxi, said Lin Liyuan, dean at the privately run Institute of Territorial Economics in Guangzhou.

Massive investments in roads, railways and other infrastructure are reducing the isolation of the inland cities, part of a decade-old "Develop the West" strategy aimed at shrinking the huge, politically volatile gap in wealth between city dwellers and the country's 600 million farmers.

Gambling that the unrest will not spill over from foreign-owned factories, China's leaders are using the chance to push investment in regions that have lagged the country's industrial boom.

They have little choice. Many of today's factory workers have higher ambitions than their parents, who generally saved their earnings from assembling toys and television sets for retirement in their rural hometowns. They are also choosier about wages and working conditions. "The conflicts are challenging the current set-up of low-wage, low-tech manufacturing, and may catalyze the transformation of China's industrial sector," said Yu Hai, a sociology professor at Shanghai's Fudan University.

___

Associated Press researcher Ji Chen contributed to this report.

oldbikerdude37
07-09-2010, 09:50 PM
To save shipping cost I will buy sand and cow poo and cast my own machines in my front yard. use old tires to fire the furnace and melt down Ford cars.

Cant recycle and be more GREEN than that.

CCWKen
07-09-2010, 09:53 PM
Companies will continue of shave costs by importing more tools from India. If you think Chinese tools are junk, wait until you experience tools made in India. I'd rather see the stuff made in Mexico. At least they know how to cast iron there.

squirrel
07-09-2010, 10:05 PM
The price of China imports has been going up since January of this year. Now the big companies are all heading to a major port city in southern INDIA, they are now saying that town is like Detroit in the 1920's.

JoeFin
07-09-2010, 10:08 PM
I wonder what Harbor Freight will then sell...cheap American tools?

TMT.

With the pending end of cheap junk tools to peddle Happy Fart will soon cease to exist

lakeside53
07-09-2010, 10:25 PM
use old tires to fire the furnace

....
Cant recycle and be more GREEN than that.


Burning tires in the front yards is green? I'll get right on that! :eek: ;)

oldbikerdude37
07-09-2010, 10:29 PM
Burning tires in the front yards is green? I'll get right on that! :eek: ;)

LOL we can be partners, you got many old tires? ;)

datsun280zxt
07-09-2010, 10:58 PM
LOL we can be partners, you got many old tires? ;)

If you need some, I've got a pretty big pile I was just going to throw in the ditch...they biodegrade...didn't you know? But if it's a little "greener" to burn them, I'll let you have them for your furnace. They light off nice if you soak them in used oil and gasoline ;)

scmw
07-09-2010, 11:10 PM
With the pending end of cheap junk tools to peddle Happy Fart will soon cease to exist

Happy Fart? What a great name for a place with crappy tools...if you can actually call them that.

Richard-TX
07-09-2010, 11:47 PM
To save shipping cost I will buy sand and cow poo and cast my own machines in my front yard. use old tires to fire the furnace and melt down Ford cars.

Cant recycle and be more GREEN than that.

Don't let the EPA catch you burning tires. They will lock you up and throw away the key.

Tinkerer
07-10-2010, 12:49 AM
Don't let the EPA catch you burning tires. They will lock you up and throw away the key.
Only if it's one or two... kinda like spilling a quart or two of oil. But if you burn several hundred thousand it's kinda like pumping a few mill barrel in the Gulf. The EPA just shrug their shoulders and goes after the guy that broke a CFL bulb in his home that burner out in a week.:rolleyes:

andy_b
07-10-2010, 12:50 AM
Don't let the EPA catch you burning tires. They will lock you up and throw away the key.

Or recommend you just ship the tires to China so they can burn them when they melt down the old Fords.

If this means the end of Horror Freight, can Wal-Mart be far behind? Nothing like a good dose of cost increases to help out in a double-dip recession.

andy b.

Davo J
07-10-2010, 01:48 AM
There was a bloke over here that used to let all the tyre companies dump there old tyres on his property for a race track and charge a few bucks a tyre. Every few years a fire would happen to go through his property and burn them all.:confused:
The authorities caught on after a few fires and jailed him. I suppose the money was good while it lasted, but not worth years in jail.

Dave

PeteF
07-10-2010, 01:50 AM
Companies will continue of shave costs by importing more tools from India. If you think Chinese tools are junk, wait until you experience tools made in India. I'd rather see the stuff made in Mexico. At least they know how to cast iron there.

Ken, I go to India reasonably regularly and my experience has been quite the opposite, I've found some pretty good products coming out of there (admittedly amongst a sea of crap). One example was an indicator, to cut a long story short the guy was trying to tell me the Indian brand was actually "better than Mitutoyo" (which was the one I was after). I said "yeah riiiight" but at the end of the day, the price was right so I bought it just as a "knock-about" indicator (along with some Mitutoyo of course). You probably won't believe this, but I sincerely do think he was right, it IS indeed better than the Mitutoyo indicators, much as I hate to admit it.

The difference as I see it between the Indians and Chinese (I deal with both at work), is that the Chinese QC simply doesn't exist. People are people (particularly in that level of work) and will try to take short-cuts. I find the Chinese notorious for that. However there isn't a decent quality control system to pick up the errors; nobody cares and that goes right up the line. In contrast, one thing the Brits left behind in India was a bureaucracy, the Indians then perfected it, to the point of being absurd. So if you get something that says it's been "certified" it probably has indeed been certified, indeed possibly checked and "rubber stamped" to within an inch of its life! I've watched guys constantly make mountains from molehills and meticulously check stuff off where, even in a western country, it would normally just be waved through.

Bit of a generalisation of course, but just my experience.

Pete

John Stevenson
07-10-2010, 05:10 AM
Send your old tyres over here so we can burn them.

Our cement works are fired by old tyres and they pass all emissions regs.

toolmaker76
07-10-2010, 10:58 AM
If you happen to know any one with a machine shop at their home:D this could be an opportunity.

I am a journeyman tool and die maker with 3 decades worth of experience; I took a job at a major corporation, 13 years, and was then offered early retirement as a buyout, which I accepted.

Before starting there, tool and die makers could go just about anywhere and get a job. Now a lot of that work has either been outsourced overseas or replaced by computers/ CNC.

One thing that I have noticed is that companies are now outsourcing components to the smaller shops, where they used to be made in house. The overseas market while cheap has its drawbacks. There have been many machine shops at least in my area that have closed their doors over the past couple of years, and that market has gone stale at best. What I think will open up like gangbusters are the services of the little home machine shops.

I am presently at least two weeks out from getting electricity hooked up in my shop. I have not advertised at all, other than people close to me know about it, and I have still had to turn down a couple of jobs over the past week because of the power issue.

This is a time that will prove to be an opportunity for the home shop, and this article is only icing on the cake!

J Tiers
07-10-2010, 11:08 AM
I have found that tools from India are far WORSE than chinese......

Bought a couple MT2 to JT and MT2 to chuck thread adapters..... turned out to be made in India.

BOTH were so thoroughly defective that one did not need to measure anything to realize it. Diameters were obviously rough-turned on different centers, and the grinding had not fixed that, nor did the grinding go all around the part...... some was left "black".

Every one they had was like that. These were not $2 cheapies, either, IIRC they were $15 or so each. I bought Jacobs for $35 instead.

Some otehr items have been of similar "quality", and I haven't even "sampled the market" for a few years on account of that.

lakeside53
07-10-2010, 11:12 AM
I bought a small lathe cut-off holder from Enco - Indian.... It wouldn't hold the blade remotely close to vertical, and the threaded clamp was so messed up it striped in a few tries. I called Enco - instant credit and "don't send it back"...

PeteF
07-10-2010, 07:46 PM
I have found that tools from India are far WORSE than chinese......

I agree, I too have found that the Indian stuff I find outside the country is truly dreadful, so maybe they don't export the decent quality goods? However they clearly can do decent work as I have the goods to prove it. Another thing that absolutely shocked me were taps/dies. I've also bought a heap of them while in India, particularly Whitworth as they're getting more difficult to get here. While not exactly "top shelf" I was certainly impressed with the quality, and I bought a complete range of commonly used sizes for the price of what a single tap would have cost me here in Australia. 2 sets of Whitworth spanners I have were purchased in India, again not exactly Star Willie quality, nevertheless quite good, and far better than any Chinese equivalents I've come across either in China or outside. I have numerous other things I've bought while in India that are "pretty good" quality wise. As mentioned, never truly "great" (other than that indicator), but if you know where to look there are plenty of things there worth lugging home. Trust me I was as shocked as anyone when I started turning this stuff up, so why they want to develop a reputation for having nothing but crap is beyond me, as I have never seen or heard of any of the brands I've purchased, yet they seemed to be relatively common there. Go figure :confused:

Pete

PeteF
07-10-2010, 08:00 PM
Incidentally, one thing I haven't seen in India, and I don't know if it goes on, is the blatant counterfeiting of tools that I have seen in China. My last trip to Hong Kong I decided to buy a Presto 6 -10 mm drill set in 0.1 mm rises. It was a good thing I had another set myself as I was quite shocked at the number of sets I was shown that Had Presto written all over them, but were clearly not from that company. That sort of thing frankly pi$$es me off, I don't mind buying crap if you know that's what you're getting and pay accordingly, but when I'm paying big dollars for something I expect to get the quality I paid for. I'm surprised they thought there was a big enough market to justify ripping off this brand, so it makes me wonder where else they're turning up!

boslab
07-10-2010, 09:38 PM
I was in a panic when the steelplant i work for was bought out by the Indians[ tata/corus], i just had terrible visions of what it would do to the place, it got better, steel quality has improved, steel cleanliness is amongst the best in the world and i got a pay rise, i dont understand it either, i hear what you say about some of the tools ive seen, absolute rubbish, particularly taps and dies, carbon steel cut thread ground and polished to look like HSS ground thread, till you stick them into a bit of tool steel and all the teeth come off.
However i have been suprised by some of the better quality stuff, suppose they could just buy out Easterbrook and Alcard [Presto] at the moment as they dont seem to have weathered the recession that well, theres talk of badging going on if you see what i mean.
mark

PeteF
07-10-2010, 09:49 PM
It's nice to hear a good news story involving some of these developing countries, especially when it works out so well for you personally. Yes "surprise" is certainly the word, sometimes even shock! Many years ago I backpacked around part of India and didn't exactly leave with favourable impressions. When I began going back there for work I really wasn't looking forward to it, but now I actually have to say I quite like the "experience" of going there. It's always nice to have low expectations and be pleasantly surprised. India has a huge number of highly educated middle class, and know how to implement processes that will guarantee the quality they're aiming for. Sadly there is a massive market for crap there to satisfy the, mostly poorly paid, population. I think that's mostly what we get to see, and that's a shame really.

Evan
07-10-2010, 11:36 PM
This story isn't about massive price increases. It about razor thin profit margins and increases measured in pennies. As was pointed out the difference between publishing a book is about 15 to 20 cents in favour of China. To bring that to the US will require very large expenditures and an assurance that employees will be available that are willing to work for under 6 to 10 dollars per hour. Wages aren't the biggest cost in many products and only make a small difference to the consumer price but when margins are thin even pennies matter.

You can do a rough estimate of how much it costs to make hardware items by taking the selling price and divide by 4. That gives you an idea how even dollar stores are able to make a profit. The biggest obstacles to repatriating oversea production is political followed closely by the problem of finding a reliable work force. Cost of living in the US is also much higher than in China so that has an impact at every level of production. For significant numbers of companies to return to the US will require some major changes in regulation and life style expectations. Prepare for a long spell of lower income and especially less disposable income. The global financial situation is very badly out of balance and until it rebalances there will be a very slow recovery in the USA.

J Tiers
07-11-2010, 01:17 AM
Tata, IIRC is a quality company.....

The head guy is a "Dalit" a member of the lowest caste in India, and he apparently takes care of his people decently, and has high quality standards...... Maybe that is how he got to be the big boss......

J Tiers
07-11-2010, 01:22 AM
This story isn't about massive price increases. It about razor thin profit margins and increases measured in pennies. As was pointed out the difference between publishing a book is about 15 to 20 cents in favour of China. To bring that to the US will require very large expenditures and an assurance that employees will be available that are willing to work for under 6 to 10 dollars per hour. Wages aren't the biggest cost in many products and only make a small difference to the consumer price but when margins are thin even pennies matter.

Cost of living in the US is also much higher than in China so that has an impact at every level of production. For significant numbers of companies to return to the US will require some major changes in regulation and life style expectations. Prepare for a long spell of lower income and especially less disposable income. The global financial situation is very badly out of balance and until it rebalances there will be a very slow recovery in the USA.

Remember that lower wages are a square function........ they lower costs also. prices come down, because profits must be less.

And, wages are NOT the highest cost.....

A decent wage is 40 to 50 grand..... ONE stinkin executive paid 4 million is displacing 100 decently paid workers.... HOW MANY COMPANIES HAVE JUST ONE OF THOSE?

Quite a few companies have CEOs paid as much as 40 million, adding up all the forms of compensation. That amounts to saying that the CEO is worth 1000 decently paid workers in productivity and "added value to stockholders".

I DO NOT THINK SO. That is idiotic, and unsupportable.

How much better off could the company be if it paid 50 more workers, let alone 500, who actually would PRODUCE something, rather than one bimmer-driving stinker who knows nothing about production except how to outsource it?

Add up the compensation of all the "highly paid executives" in the US, and see how many workers could be employed at good wages if those generally useless individuals were to make only HALF what they do now.

What would be teh difference in company profits?

My guess, based on experience, is that in many cases, the executive could be entirely dispensed with.... leading to quite a bit more profit for the company.

Executives seem to be , these days, only pirates who suck the life out of the company, both financially, and in poor leadership, wrong-headed decisions, etc. I hate to think that, but it is clear that it is more and more true. Just about nobody can be worth 40 million in salary.

Depending on how many hours per day you consider that they work, they are being paid $10,000 to $20,000 PER HOUR. That is an astounding and ridiculous pay rate.

if they, and the others in the executive suite were NOT being paid so much, if they were paid HALF that, quite a number of companies would not need to be be so quick to close plants. The cost of a very highly paid executive group is a heavy drain on teh profits of a company, and with that, it is no wonder that companies must outsource to places where labor is "free".

Folks who think the US is so expensive, and who have "bought in" to the idea that high worker wages are the issue, should open their eyes and see just how much profit the executive group may be skimming off the top. The executive group may easily be paid as much as 5000 workers, or more, in larger companies. Smaller companies obviously are not so bad off, but the owners of small companies are often guilty of the same sort of thing...... sometimes by "hiring" family members who do very little, but collect pay.

Something to think about when the next company announces the layoff of 5000 or 10,000 workers....... Did the execs get a raise of that amount?


There are other factors, of course......

Prices have a way of being constant..... not in money, but in value, like food. if we pay you-all more, you buy more, but prices go up, and money is worth less..... so you get nothing much.

the other problem is that EVERYONE wants to live the "executive life style"....... not unique to US and Canada.... also true of china, which is how this is happening.

Evan
07-11-2010, 01:55 AM
The caste structure in India doesn't quite work they way many think it does. The Highest caste are the Brahmin Priests. They live strictly by begging, often in the streets, depending only on the unofficial welfare system. The highest caste is the poorest.

BTW, Dalit isn't a caste. It refers to the "untouchables", those outside the caste system. It is fairly common to see them succesful in business now although they are still excluded from nearly all social functions.

BTW, if you get a call from a telemarketer in Mumbai tell them this:

Please Hamai, call Karna bandt Kijiye!

It means "Please sir, never call me again!" in Hindi.

J Tiers
07-11-2010, 02:26 AM
BTW, Dalit isn't a caste.

it is a "de-facto" caste of folks considered so low that they are virtually not admitted to be human.

The reason for it is that they do the really dirty jobs....... like cleaning up crap.... And, since traditionally, people ate with their hands, scooping food from a communal plate, you would NOT want such people putting their hands in the communal food plate.

hence, they are by extension, all filthy and literally 'un-touchable" unless you are satisfied to be as dirty as they are. No matter what they actually do.

The caste system is "officially" illegal....... but impossible to eliminate.

loose nut
07-11-2010, 11:33 AM
Prepare for a long spell of lower income and especially less disposable income. The global financial situation is very badly out of balance and until it rebalances there will be a very slow recovery in the USA.


All of which means fewer imports from China since people will less disposable income which will just aggravate the problem even more. A continual downward spiral. Anybody remember when "Dub'ya" said it was good to ship jobs off shore.

gwilson
07-11-2010, 12:32 PM
India can and will make good products IF AMERICANS WILL PAY FOR THEM. My journeyman was having an 18th.C. multi gun tool made by casting tool steel in the USA. He met an Indian who ran a factory in Delhi. The Indian told him the facts about Americans demanding very cheap prices.

For many years,this Indian factory HAND FORGED these gun tools,and accurately filed them up. Actually,for not much more than the cast versions,but much stronger and authentic.

An English engineer told me years ago that several of Britain's best machine builders had their castings made in India. You've just got to pay for something you want done right.

lynnl
07-11-2010, 01:49 PM
I got a good chuckle the other day.
I had bought a set of four light duty tie down straps at HF, and in using them the second time, noticed a little cloth warning label sewn onto one end.

In small print it cautioned against overhead lifting, and exceeding the capacity, etc. But in larger print, at the top of the label it read:
"WARNING MADE IN CHINA". :D

Farbmeister
07-11-2010, 06:39 PM
The MBA's are the problem.. no the people on the factory floor.

Few people WANT to make crap products.... but HAVE to because of the bottom line (which is mostly a fictitious number for stockholders).

I think the greatest harm ever done to consumers is done by the MBAs. My point is Craftsman Tools. 20 years ago they were like gold. Buy one screwdriver and it was guaranteed for LIFE... not that you would ever take it back.

I recently bought a 1/2in deep well at Sears.. CRAFTSMAN. Took it home and it was to small (diameter). Took it back and told the salesman I needed a HALF INCH deep well. I even took a bolt with me to make sure the second one was really half inch. The THIRD SOCKET FINALLY FIT. We checked the bolt in some wrenches and other sockets and it fit fine in every one.

The company I work for made $1,200,000,000 in PROFIT (after tax... $1.2 BILLION) and still acts like its going out of business... the quarterlies NEED to show +5% +10% same store sales or the stock price goes down. The CEO is paid MILLIONS but for the life of me I can't figure out WTF he does.

J Tiers
07-11-2010, 10:03 PM
The CEO is paid MILLIONS but for the life of me I can't figure out WTF he does.

he displaces a large number of workers, and makes bad decisions based on the information his assistants allow him to see.

he also provides a huge drag on profits, even more so when the senior VPs etc are added in

Evan
07-11-2010, 10:52 PM
This is ridiculous. The increase in executive "compensation" (theft) is astounding in the last 20 years.



The Fortunate 2,500 of The Fortune 500: Compensation Summary Compiled By Jerry Goldberg
Goldberg reports on senior C-level management compensation.
PLAINVIEW, N.Y. (EWORLDWIRE) Nov 29, 2006

With exhorbitant CEO compensation on the minds of shareholders, Jerry Goldberg has prepared a list of the top 2,500 top executives of the Fortune 500. "With ever greater amounts going to executives, there is less to go to shareholders and other employees," stated Goldberg.

Aside from confirming the average CEOas compensation in 2005 was $12.7 million, reflecting an increase of 5.7 percent over 2004, Goldberg details the additional executive compensation received by other senior executives on the management team. "All public companies have at least four other executives who report to the CEO; many of these executives are also handsomely paid," said Goldberg. "I have prepared a list of the top 2,500 top executives of the Fortune 500 companies, and what they get paid. I call the list 'The Fortunate 2,500 of The Fortune 500.'"

The total compensation paid to the aFortunate 2,500a in 2005 was $14.4 billion or an average of $5.8 million per executive.

WHY IS THIS IMPORTANT?

For Shareholders.
As more profits accrue to the top executives, there is less for the shareholders in the form of dividends, or earnings per share.

For Employees.
The inflation-adjusted pay of the average worker in the United States has been stagnant for over 20 years. Twenty years ago, the ratio of CEO pay to the average worker pay was approximately 10:1. The ratio in 2006 is now a whopping 282:1. This is clearly out of line.

For Society.
Money is "Power." Not only does it buy goods and services but also political influence. Too much wealth has accrued to too few people - an unhealthy society where one class of workers can become an aristocracy at the expense of everyone else.


http://newsblaze.com/story/2006112905300200001.ew/topstory.html

Too_Many_Tools
07-11-2010, 10:53 PM
All of which means fewer imports from China since people will less disposable income which will just aggravate the problem even more. A continual downward spiral. Anybody remember when "Dub'ya" said it was good to ship jobs off shore.

Hmmm...I do remember seeing MILLIONS of AMERICAN jobs offshored in the eight years of George Bush.

Is that what you are referring to?

TMT

Evan
07-11-2010, 11:08 PM
Sigh. The president isn't responsible for what business decides to do. Jobs have been moving offshore for many years. It is a result of the globalization of companies that operate all over the world. Xerox is a prime example as they have been globalized for 40 years. When I hired on in 1975 the units included Xerox US, Xerox Canada, Rank/Xerox 50/50 partnership, Fuji/Xerox 50/50 and Latin Xerox. Along with that were about 50 wholly or controlling interest owned subsidiaries that operated under their own names, many world wide.

At various points in time the Xerox Financial Division owned all the kitchen equipment in MacDonald's restaurants on a lease back basis and several BC Ferries on lease back. They also provided executive management training to the US Armed Forces at a very secure facility in Virginia called the Xerox International Center for Training and Management Development. I have gone there for training at least six times on Xerox business.

J Tiers
07-11-2010, 11:30 PM
The ridiculous rake-off that CEOs and their immediate reporting group get is, for 5 total execs at an average of 5.8 million per, 29 million for a single company with that staff and compensation.

For 1/2 of that, 14.5 million, the company could afford 290 workers making $50,000 per year. or 414 workers making $35000 per year.

You can reduce the number to 0.6 x counting all benefits etc. it's still quite a few.

Do you suppose those workers might provide more value than the exec can by raking off that money?

When you consider the way companies cry poor, and demand to reduce wages, etc, complain about regulations, and so forth, and then they spend 30 million bucks on 5 guys, you have to wonder who is intended to benefit.

It appears, and seems provable, that the pool of executives operates merely to rake the most money out of their nominal employer's pockets..... It looks much more like the companies EXIST merely to provide a source of huge money for the "international consortium of executives".

"Bu***r teh stockholders, and anyone else, I'm getting mine" seems to be the rule, and anything that potentially or in reality gets in the way is of no importance......

"Well blowouts, massive pollution, whatever, ho hum, show me the money..............."

Mcgyver
07-12-2010, 07:28 AM
The MBA's are the problem.. no the people on the factory floor.

.....any intelligent and educated business person would realize the "craftsman" brand was where the value was. I see the problem as more systemic; the market's preoccupation quarter results for example. That person, MBA or not is in tension between the market and making the right long term decision - keep the product quality up. Take any group of people and plunk then in an environment and you get roughly the same results...if you don't like the results its rarely the people, its the environment/system. Running a mid size and up business is complex, I would find it stunning that anyone in a position to appoint a leader wouldn't want there to be a competent level of education - explain how MBA's are the problem and how business would be better off if people with less knowledge were running things?


It appears, and seems provable, that the pool of executives operates merely to rake the most money out of their nominal employer's pockets.....

so who out there doesn't act in their own best interests? Whats the difference between this and striking? All you can depend on is people acting in their own interests and they will do so to the boundaries that thekir environments allow - this, not what type of people, will produce the results. I agree the system needs a tweak; but I think where its broken is more along the lines Evan indicated - Essentially free trade with country's such as china will tend to pull up their standards of living and push ours toward theirs.

Executive compensation annoys people for obvious reasons but its a bit of a red herring. Its real value is akin the the prize in a tournament - I can't argue the exec is worth all that money however that's not so much the point; the prize of success in business is what gets people up early,. causes them to start companies, innovate etc etc. Another aspect is we hear about the tournament winners - they'e the rarity. Most execs aren't making 10m, they're making 150 or a coule of hundred running a mid sized business or division.... mere VP's less than 200....a nice living maybe but hardly the extravagance that annoys us when we focus on the pinnacle. I was with a tool die maket the other day, was making over 100 at the peak -spoke another guy I know that day, a GM/Sr Vp position , an engineer in charge of hundres of production people who makes 150 - no big disparity there and in my experience thats more typical than CEO's 10m headlines

I'm not supporting it though; I think its way to clubby between directors and senior execs of the giant public co's - no one wants to upset the apple cart because they are all benefiting. just pointing out the role it plays isn't just compensation. I'm not sure how to fix though, or even if it should be fixed - its easy to do hard when changing systems. absurb exec comp creates an inequity but otoh its part and parcel of the greatest wealth generating system yet devised - (which if you don't think benefits everyone take a look at the poor here vs say Africa)

oldtiffie
07-12-2010, 07:32 AM
A couple of points here.

A listed company has to tell its share-holders and the market what it pays its upper executive team.

It is the Board - the representatives of the share/stock-holders - that decide the remuneration of the Executives and set their job criteria. They set the targets for the executive as well as performance bench-marks and bonuses. They can fire the Executives.

Whether the CEO of the CFO etc. have an MBA is a matter for the Board.

"Private" or unlisted companies do not have to report to anyone else but themselves and their share/stock-holders.

The job of the company is not to engage and/or keep "labour" or "workers" and to find something for them to do and pay them whether they are productive or needed or not. It is not part of the Social Service system.

It is only required to engage labour/workers for the minimum time and wages and benefits as are required to fulfill the company's role in making a profit. Where and when it employs that labour or whether it contracts it out locally or over-seas at the best terms it can get is the sole prerogative of the company.

Its really no different in many ways to hiring a specialist company to work on your machines or to do electrical, heating/cooling, plumbing etc. work in your shop and home. All you want is the most work for the least cost in the least time with as long as you can get to pay the account and then see him off the premises.

"Labour" is only another commodity after all with the need for and cost of it pretty well determined by market forces - supply and demand. "Labour" is a "cost-centre" and has to "pay its way" - or else!! Wages and salary and benefits are all in that cost.

If you have a skill set that is not needed in your area and/or require or demand wages in excess of the "going rate" for your skills in your areas, you will not be employed - or employable.

Perhaps you need to seriously consider either never being employed again or re-training for some other "in demand" skill-set and/or relocating to where you will or may be employed.

Being over 40 is a big hurdle - ie ageism - which is practiced but rarely mentioned or discussed other than is strict privacy.

There seems to a vast number more job-seekers than there are jobs for them. It is a classic "buyers market".

This is the classic "free market" at work.

J Tiers
07-12-2010, 08:47 AM
Tiffie....

A company is only required to make money, and even THAT is only an "unwritten law", in the sense that the stockholders are supposed to punish it for not making money.

The problem is 2-fold....

1) It USED to be that management felt a responsibility both to the stockholders, AND to the society that allowed the company to operate. This was very reasonable, since teh company does operate within that larger society, and by 'giving some back", it provides a reason for society to tolerate it.
Now, the management thinks the larger society is just a nuisance, a disposable obstacle to even larger profits, which could be had if the demands of society are totally ignored.

2) The value of a company in the investment arena is NOT related to its solidity, its respectability and solid profit history.....
A company these days is seen by the investment folks as merely a source of stock to trade. The "value" of the company varies day by day, even hour by hour, in response to the probability of the stock "ticking upwards" slightly or downwards slightly in the next few hours or days.
As a result, the company will usually be PUNISHED FOR MAKING MONEY, if it exceeds expectations..... because then it probably will fall below expectations next quarter, and so its stock is sold off and teh value falls.
That separation of "value" from longer term operations means that longer term is ignored, and there is no benefit to any form of social responsibility.
Even the gulf oil problem has apparently not punished BP as one might have expected....

Evan
07-12-2010, 09:40 AM
Things that are broken:

Lobbying (gifts, junkets, corporate donation limits)
PACs (contribution limits)
Non Profit Charitable Trusts (look up the PEW Trust for example)
Futures trading (look up Derivatives, gambling on the market)
Voter participation ( how many people actually voted for a president )
Membership of Corporate Boards (who knows whom, conflicts of interest)
Electronic trading (time delays, human intervention, program trading)
"Free trade" (tariff and non tariff barriers to trade, Dept of Commerce)
Military spending (black spending, oversight, cost plus contracts)

There are many more examples of a system that is no longer operating as a free market system in a democracy but instead as an unregulated oligarchy.


ol·i·gar·chy   /ˈɒlɪˌgɑrki/ [ol-i-gahr-kee]
–noun, plural -chies.
1. a form of government in which all power is vested in a few persons or in a dominant class or clique; government by the few.

Farbmeister
07-12-2010, 10:51 AM
Many CEOs of the past could boast of 'Mailroom to the Boardroom' climb through the ranks. The current CEO of my company did just that.

But the truth is he worked in the mailroom while in college... so he was put into the management pipeline as soon as he graduated.

There is to much money, and to much nepotism (well, not directly, but the people with the money are not going to allow anyone not thoroughly brainwashed buy 'higher institutions of learning' to get in control).

Yes, shareholders elect the BOD, but the huge funds have so many votes that it is THEY who control the management... no me with my 100 or so shares of voting company stock.

My company magazine had 2 articles about two guys, both with the company 20 years. One was recently moved to a VP position, with a long line of promotions. The other was (after 20 years!) just made receiving coach. One is well into six figures, the other has a '6' in his salary (but nowhere near 6 digits).

I am not a workers rights socialist libtard.. but there is no way CEOs are making the decisions that warrant that money. Its guys in the cubical that are tweaking the processes and getting 3-5% increase in performance that make the money... not that fat old white guy at the top.

Too_Many_Tools
07-12-2010, 12:20 PM
A couple of points here.

A listed company has to tell its share-holders and the market what it pays its upper executive team.

It is the Board - the representatives of the share/stock-holders - that decide the remuneration of the Executives and set their job criteria. They set the targets for the executive as well as performance bench-marks and bonuses. They can fire the Executives.

Whether the CEO of the CFO etc. have an MBA is a matter for the Board.

"Private" or unlisted companies do not have to report to anyone else but themselves and their share/stock-holders.

The job of the company is not to engage and/or keep "labour" or "workers" and to find something for them to do and pay them whether they are productive or needed or not. It is not part of the Social Service system.

It is only required to engage labour/workers for the minimum time and wages and benefits as are required to fulfill the company's role in making a profit. Where and when it employs that labour or whether it contracts it out locally or over-seas at the best terms it can get is the sole prerogative of the company.

Its really no different in many ways to hiring a specialist company to work on your machines or to do electrical, heating/cooling, plumbing etc. work in your shop and home. All you want is the most work for the least cost in the least time with as long as you can get to pay the account and then see him off the premises.

"Labour" is only another commodity after all with the need for and cost of it pretty well determined by market forces - supply and demand. "Labour" is a "cost-centre" and has to "pay its way" - or else!! Wages and salary and benefits are all in that cost.

If you have a skill set that is not needed in your area and/or require or demand wages in excess of the "going rate" for your skills in your areas, you will not be employed - or employable.

Perhaps you need to seriously consider either never being employed again or re-training for some other "in demand" skill-set and/or relocating to where you will or may be employed.

Being over 40 is a big hurdle - ie ageism - which is practiced but rarely mentioned or discussed other than is strict privacy.

There seems to a vast number more job-seekers than there are jobs for them. It is a classic "buyers market".

This is the classic "free market" at work.

A few points to add about the classic "free market"...

The customer can freely buy from whatever company they choose from.

The customer can demand the lowest price.

The customer has no loyalty to any company.

The customer gets what he paid for...no more, no less.

These too are the classic "buyer market".

TMT

Too_Many_Tools
07-12-2010, 12:33 PM
Many CEOs of the past could boast of 'Mailroom to the Boardroom' climb through the ranks. The current CEO of my company did just that.

But the truth is he worked in the mailroom while in college... so he was put into the management pipeline as soon as he graduated.

There is to much money, and to much nepotism (well, not directly, but the people with the money are not going to allow anyone not thoroughly brainwashed buy 'higher institutions of learning' to get in control).

Yes, shareholders elect the BOD, but the huge funds have so many votes that it is THEY who control the management... no me with my 100 or so shares of voting company stock.

My company magazine had 2 articles about two guys, both with the company 20 years. One was recently moved to a VP position, with a long line of promotions. The other was (after 20 years!) just made receiving coach. One is well into six figures, the other has a '6' in his salary (but nowhere near 6 digits).

I am not a workers rights socialist libtard.. but there is no way CEOs are making the decisions that warrant that money. Its guys in the cubical that are tweaking the processes and getting 3-5% increase in performance that make the money... not that fat old white guy at the top.


I agree...

It is the soldier who wins the war...not a general.

It is the player who wins the game..not a coach.

It is the consumer who makes the purchase decision...not a company's CEO.

When you make your own decisions instead of blindly following someone else's orders, you have taken your first step towards independence.

TMT

lynnl
07-12-2010, 01:08 PM
I agree...

It is the soldier who wins the war...not a general.

It is the player who wins the game..not a coach.

It is the consumer who makes the purchase decision...not a company's CEO.

When you make your own decisions instead of blindly following someone else's orders, you have taken your first step towards independence.

TMT

Well that makes a nice sound bite, but it ain't necessarily so. A division of 10 or 12,000 soldiers put into battle without leadership would be quickly decimated by an organized force of similar size.

At Omaha Beach, on June 6, 1944, one Brigidier General, Norman Cota, is considered by most historians as making the difference between success and anihilation.
See here: http://www.huffingtonpost.com/robert-slayton/an-american-hero_b_594925.html

Like a chain, a team is only as strong as the weakest link.

Tony Ennis
07-12-2010, 01:33 PM
It is the soldier who wins the war...not a general.
It is the player who wins the game..not a coach.

Only the short-sighted would really believe that.

While it's fashionable to hate on CEOs, the fact is they generally are worth their salaries. You don't hear about the hundreds of thousands that do a good job. You only hear about the fringe cases where companies tank and the CEO opens the golden parachute. A good example is GM's ex-CEO Wagonner. Under his watch, GM's stock dropped by 95%. Yet they didn't fire him. That's a clue there is indeed a problem.

Be that as it may, in most cases CEOs are big-picture thinkers that make the long term decisions that allow the company to remain viable for years in the future. A windshield installer at a Ford plant can not run the company. A lathe operator can not run Boeing. A clerk can not run Grizzly or Harbor Freight.

sansbury
07-12-2010, 01:45 PM
It is the soldier who wins the war...not a general.


Successful generals motivate their soldiers to do extraordinary things, like Patton moving his army 100 miles in 48 hours.

The problem is that an excellent CEO is really worth an amazing amount to the shareholders of the company. As a result, boards bend over backwards to meet CEOs' demands, so that even the failures get paid very well. If every company with an high-paid CEO was growing at 10-20% a year, we'd have an awesome economy.

Evan
07-12-2010, 03:55 PM
If every company with an high-paid CEO was growing at 10-20% a year, we'd have an awesome economy.


Sure. And if every American that is overweight lost 30 lbs medical expenses would be cut in half. Neither is going to happen.

loose nut
07-12-2010, 08:05 PM
I agree...

It is the soldier who wins the war...not a general.

It is the player who wins the game..not a coach.

It is the consumer who makes the purchase decision...not a company's CEO.

When you make your own decisions instead of blindly following someone else's orders, you have taken your first step towards independence.

TMT


Soldiers might be the sharp end of the stick but it is the supply line that wins wars

The players may win the game but only if they follow the coach's orders or they are off the team

consumers make the buying decisions after an advertising company brainwashes them into buying some junk they didn't want in the first place.

if you are aloud and able to make your own decisions.

Too_Many_Tools
07-12-2010, 08:59 PM
For those who believe the general/coach/CEO is mighter than the soldier/player/employee, a simple question....who is more important in stopping the BP oil spill...the BP employee designing/building/capping the well or the BP CEO?

Millions of Americans would tell you the employee.

They have seen how useless the CEO really is.

Warren Buffet is one of them...

http://news.yahoo.com/s/yblog_upshot/20100708/bs_yblog_upshot/buffett-bp-ceo-should-go

TMT

J Tiers
07-13-2010, 12:02 AM
To be fair, a CEO may need to make only ONE really good decision, and avoid making many bad ones, to be a huge success.... and to actually repay more than his total lifetime salary. But that does not happen often.

Trouble is, too many seem to think they are worth a huge salary for just showing up..... and then they try to justify their existence by making decisions....... even though it might be better for the company if they would just play golf all day and not DO anything at all.

loose nut
07-13-2010, 07:56 PM
Sure. And if every American that is overweight lost 30 lbs medical expenses would be cut in half. Neither is going to happen.

And if they would quite getting old it could be halved again and just about as likely.

Tinkerer
07-14-2010, 11:33 AM
Things that are broken:

Lobbying (gifts, junkets, corporate donation limits)
PACs (contribution limits)
Non Profit Charitable Trusts (look up the PEW Trust for example)
Futures trading (look up Derivatives, gambling on the market)
Voter participation ( how many people actually voted for a president )
Membership of Corporate Boards (who knows whom, conflicts of interest)
Electronic trading (time delays, human intervention, program trading)
"Free trade" (tariff and non tariff barriers to trade, Dept of Commerce)
Military spending (black spending, oversight, cost plus contracts)

There are many more examples of a system that is no longer operating as a free market system in a democracy but instead as an unregulated oligarchy.


ol·i·gar·chy   /ˈɒlɪˌgɑrki/ [ol-i-gahr-kee]
–noun, plural -chies.
1. a form of government in which all power is vested in a few persons or in a dominant class or clique; government by the few.
Oh I agree like the whole bailout BS... Cash4Clunkers... and the bevy of other action by the Fed's as of late. And depressing the dollar to encourage market participation.... spending and punishing those that do not.