 |
| http://usa.chinadaily.com.cn/ |
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Saturday, January 26, 2013
Leave it For the Longshoremen
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Leon Russell and that Other Guy
It was magical back then... take a wild guess who is running the show? Hint: I already told you. The other guy, Mr. Cocker, simply suffered over how people did not do songs right, so he brought together the people who could get it right, and they did. And how. Have you ever seen such talent gathered? Well, yes sometimes. Have you ever seen back-up singers having such a good time, ever working so hard? I don't think we'd call Mr Cocker a song and dance man, but there he is, surrounded by absolutely top talent. Why do they all join him? Because of the joy he finds solving the problem over which he suffers. This is precisely the winning combination we all ought to shoot for in small business.
In saw her do this in Seattle... to this day, what a song... another example similar to above.
In saw her do this in Seattle... to this day, what a song... another example similar to above.
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Wine Trade Booms After Taxes and Restrictions are Cut
The taxes and restrictions in USA well serve the huge wine makers in USA, restrictions and taxes which disadvantage the small winery in world trade. hong Kong cut the taxes on restrictions on wine and spirits in 2008, and the market is booming, naturally. Even USA retailers are opening up to take advantage, and of course to make money.
“Hong Kong is the strongest wine market in the world right now, so it was a logical transition,” says Ms Bradbury, who has run similar businesses in New York and Las Vegas.
“We looked at Tokyo in 2007, then Beijing in 2010, and were always keen to try our luck in Asia. But when the tax was repealed on wine in Hong Kong, the city seemed like the obvious location,” says Andrew Bradbury.
The USA auction houses do better in Hong Kong than in New York. So what do we do to compete? Nothing. And doing nothing also makes it hard for USA wineries to compete in China. The silly paperwork required for exports on the USA side is an opportunity killer. Why should the USA govt care in any way what is exported? Isn't the importer's concern and care enough of a check?
If we want to see USA wineries thrive, we have to match Hong Kong's deregulation and tax elimination on wine. And beer. And spirits.
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“Hong Kong is the strongest wine market in the world right now, so it was a logical transition,” says Ms Bradbury, who has run similar businesses in New York and Las Vegas.
“We looked at Tokyo in 2007, then Beijing in 2010, and were always keen to try our luck in Asia. But when the tax was repealed on wine in Hong Kong, the city seemed like the obvious location,” says Andrew Bradbury.
The USA auction houses do better in Hong Kong than in New York. So what do we do to compete? Nothing. And doing nothing also makes it hard for USA wineries to compete in China. The silly paperwork required for exports on the USA side is an opportunity killer. Why should the USA govt care in any way what is exported? Isn't the importer's concern and care enough of a check?
If we want to see USA wineries thrive, we have to match Hong Kong's deregulation and tax elimination on wine. And beer. And spirits.
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Friday, January 25, 2013
When International Trade Data Is Goofy
I was helping a student with some trade data analysis for an exercise, he picked caskets, and rarely have I seen such "off numbers." One reason the numbers should to be put into a spread sheet and analyzed is so those anomalies do in fact jump out.
 |
| Just in case casket design |
Trade data problems are nothing new, and the USA and China are working to sort out some of the problems. Some of it has to do with rational people trying to get around goofy restrictions, but as the Chinese press reports:
Major causes of the discrepancy in China's export data include differences in trade moving directly from China to the U.S., the amount of goods shipped via intermediary countries and value added in those countries, as well as conceptual and methodological differences, the report said.
Fair enough... Here is the info on metal caskets, it's a jpg, I think you can enlarge it by clicking on it, if not, email me and I'll send you a .pdf...
So here are my notes on this analysis...
| colormute.com |
The zero year in 2007 is probably a year before they made a new HTS number just for these metal caskets. Note that there are wood and paper caskets too... so those would be a different HTS number.
| Something less expensive? |
1. As an overview, the Chinese numbers are nonsense. Data entry errors or something...if caskets were your thing, you'd bug the specialists at usitc.gov for a "how come?".
a. I-15, china export 31 million metal caskets in 2008? One for every 10 americans? At 46 cents each?
b. By 2011, chinese caskets are $30,000 each? This would take a bit of research, somebody is not doing their job.
2. The Chinese numbers screw up all of the other analysis, so they'd have to be backed out until rectified. But Canada UK and France look goofy too...
3. If you look at 2010 and 2011, things begin to look a bit more rational... seems the going price is about $250 a casket... whereas France is making high end caskets...
4. What this report seems to suggest is as far as sourcing caskets worldwide, Mexico is the source for a standard model, Dom Rep for cheapo models, and France as designer models looks like what the report says. So you have to decide what your market is, and at the small biz level it should be specialty, so France would be the place to look for suppliers for a small, start-up casket company.
| odditycentral.com |
5. China figures need to be rectified before they can tell anything... but as the article notes, this is being worked on. In any event, you can always track down the commodity expert at the usitc.gov and get his opinion.
The Vegetarian?| dailymail.co.uk |
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Thursday, January 24, 2013
WalMart, Li & Fung, & Design
Although WalMart failed in Hong Kong, it relies on Hong Kong talent for its success. Walmart has been using Li & Fung, a first rate sourcing agent for a lot of goods, like clothes. Li & Fung smartly set up the Walmart biz as a separate division, in case, as it turns out, Walmart changes emphasis.
To handle sourcing for Wal-Mart's U.S. and international operations, Li & Fung set up a separate company, Direct Sourcing Group, and said the unit would employ hundreds of people. The development was seen as part of Wal-Mart's move toward direct sourcing, since the company had an option to acquire Direct Sourcing and take over its supplier relationships in 2016. Wal-Mart at the time said it hoped eventually to use its own staff to source 80% of private-label goods, such as Faded Glory clothing, cutting costs 5% to 15% within five years.
Sure, Li & Fung is taking a bit of a bump, but they are not going under, like so many who work with Walmart do. Well played.
To thrive at the small business level you must compete on design, something Hong Kong is emphasizing right now.
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To handle sourcing for Wal-Mart's U.S. and international operations, Li & Fung set up a separate company, Direct Sourcing Group, and said the unit would employ hundreds of people. The development was seen as part of Wal-Mart's move toward direct sourcing, since the company had an option to acquire Direct Sourcing and take over its supplier relationships in 2016. Wal-Mart at the time said it hoped eventually to use its own staff to source 80% of private-label goods, such as Faded Glory clothing, cutting costs 5% to 15% within five years.
Sure, Li & Fung is taking a bit of a bump, but they are not going under, like so many who work with Walmart do. Well played.
To thrive at the small business level you must compete on design, something Hong Kong is emphasizing right now.
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Competing on Design, Architecture Division
If our circumstances are to be reduced for our since, at least we can do it in style. From Sasha:
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Wednesday, January 23, 2013
Who Makes Money On Informercials
Someone posted a question on branding as to celebrity endorsements of products to increase sales, to which I replied do you have the millions up front to pay for the product, and what if it worked, but your product was flawed, and you had to recall ten million what-evers. You don't get your endorsement fees back. Plus, you left all of the money on the table that you would have had from earlier versions, and you also have to pay up front for the infrastructure to move such massive amounts of product.
Along these lines, I spent and hour interviewing Andrea Matzke, a producer of one of the most famous celebrity endorsed products of all time. Here is the first ten minutes, and you can click through after each session to see it all.
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Along these lines, I spent and hour interviewing Andrea Matzke, a producer of one of the most famous celebrity endorsed products of all time. Here is the first ten minutes, and you can click through after each session to see it all.
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Tuesday, January 22, 2013
Branding Part Three
So far we have rejected branding here and here as an element in the start-up or small business effort, except as a natural consequence of building a business by serving customers. Following Seth Godin and his idea that a brand is the sum total of all experience of your company by customers, then branding follows building a customer base.
Also, the original intent of the brand was simply to distinguish one commodity from another among illiterate people. Folger’s Coffee. SPQR Security. Rolling Rock - Same As It Always Was. The error in thinking is first there was a brand, then came the customer. We sell to customers who form a customer base. The we can sell new products (under our name) to those same customers, and our old products to new customers (expand the base.) One thing we never try to do is to sell new product to new customers (except in the start -up mode, which we never want to repeat.) When in start up mode and selling new product to new customers, what point would there be to having had invested in brand? None, of course. After starting up, you old customers need only know it is you offering something new, they need no extra push by means of some brand. New customer need only know your old products are established and proven at leading retailers, a fact they glean by their exposure to you at that very retailer. So what is left? New products to new customers, for which we’ve established a brand is desultory.
But the expectation remains, the brand is a magical element that allows one to take new products to new customers and succeed. This idea is essentially voodoo marketing.
Since we cannot know what that eventual customer base is as we start, and since the business is ourselves, we simple name the business after ourselves and let what “brand” we inure accrue to our name.
The customers we sell to, those established firms, are necessary and sufficient for marketing our name. If they sell our product, their blessing on our product provides all the brand benefit for which we could possibly hope. End-users do not purchase our product from the retailer because our brand is unknown, but because the established retailer is known. Everything we can possibly want in a brand is allocated to us by being on the shelves of a first rate retailer.
We may leverage their inevitable advertising to our advantage by offering that particular retailer an advertising allowance, and in this way while our customer is enticing the end user into our customer’s store with the promise of new and better offered in our otherwise unknown product. At the same time that very ad is signaling our customer’s competitors our product is first rate, and available. By never advertising we leverage our business reach exponentially.
With this in mind, let’s take questions that I commonly get, these merely most recent from a pair of correspondents:
Your anti-IPR stance was a very new approach to me, but your reasons in the book made it LOGICAL and EASY to understand why. What I am still struggling with is how to implement the pro-contract, licensing/private label, branding after your own name, everything happens, everything that makes money approach. If I could walk you through a scenario below I think your critique would help me better understand.
SCENARIO:
1) I recognize a product and gain positive feedback from retailers, buyers, etc for widget X (Ed. Note, this would be Plan B).
2) Get confirmed orders to meet minimum, order from supplier
3) place new and innovative product in showrooms, samples to sales agents etc.. feedback is positive and item beings to gain more and more orders.
My Struggles:
You suggest that I market my design as simply the hard sample, pictures, material specifications, functional name of design, and under the Mine Name Company? Can you elaborate why you are against trying to build a brand around this item or at least give it a brand name?
I am against wasting time and money.
Are you saying that every product that people ever bought from you was always under the John Spiers Co.?
More or less.
What if you had multiple product lines at same time that were unrelated?
I do. Everything Calvin Klein is named Calvin Klein...everything Boeing is Boeing... your name is the brand name... now I do have something not me that I have branded without my name because I intend to give it away eventually...
Everything Toyota is not named Toyota i.e. Lexus, Everything under Mars Candy company is not names Mars Candy Bar i.e. skittles, snickers etc.
But you and everyone else knows Lexus is Toyota. The 747 is Boeing. Brand equity is a textbook notion. It has accounting implications under "goodwill" but that is so ephemeral I wonder why anyone would ever consider it. Think Exxon, Nixon, SPQR, Washington Mutual.. once priceless, next day worthless.
As you said, if it is successful why would you give it away eventually?
The reason is that I know my limitations, and if it is more than I can manage, it is open to homesteading anyway, as an ethical matter. Torvald has given away Linix, as he should, and I am giving away Seattle Teachers’ College. No one owns wikipedia, but Jamie Whathisname runs it and get a free anything he wants anytime from his admirers. Some things are naturally cooperatives, and should not be “owned” by anyone. To “own” it I’d be obliged to rely on intellectual property rights, and that would be evil.
By giving X product a brand name you can then create brand equity???
??? suggests you are not so sure. Surely you do not believe a brand name instantly creates equity. If so, I should pick things up off the street, brand name them, and arbitrage the instant equity.
It seems that you prefer a rinse, wash, and repeat method rather than building brand equity?
I say rinse, wash and repeat IS how you do build any brand equity. The sum total of sales transactions, plus word of mouth, is the basis for brand equity. But you now introduce the term “equity.” That is a balance sheet item, some value above and beyond the value you get from buying and selling as a business. This suggests an interest in someday selling the business for premium above and beyond the value it provides in its operations. I’d suggest that the small business ought to ignore this dimension and put all of its resources on serving the customers.
In regards to branding, I guess what im trying to say is in some form or another related to your overall theory...
By developing a brand name for an already established product and/or commodity, you are taking a product and redesigning it (packaging, branding, whatever) and changing it for better or worse essentially alleviating the pressure of competing on price!
There is a new twist, branding alleviates pressure of competing on price. What if we are not competing on price? How does a redesign of a package or slapping a logo on a product benefit the customer?
These two watches are the exact same made from the same factory in China. The one on the left is sold at Walgreens for 10 dollars. The other is sold online for $40. According to your theory in you book, using the economies of scale provided by the large corporation, flex watches would eventually lose their business over time. Again, the watches are the exact same but through their marketing/advertising they have created a brand name that people want to buy and are not only able to compete with the big box retailers, they are able to sell at a much higher price and continue to do well.
I doubt that the website is making a profit or the brand is contributing in any way to any success. You’ll have to get audited statements to back up your claim.
Doesn't this example contradict your theories and the point you are making?
I love being proven wrong. But I need to be PROVEN wrong.
I mean, 7-11 (or any other coffee shop) coffee is similar to starbucks coffee but why do people buy the starbucks coffee?
Starbucks serves a better product than 7-11. Starbucks has about twice the coffee in the cup (more coffee particulate, as well as more caffeine) and the barista makes it fresh whereas at 7-11 the coffee is of dubious vintage. One can taste the difference. I once asked the clerk at a gas station how come the coffee tasted like dirt and she said “of course, it was ground this morning.”
because its trendy and chic. People want to be seen drinking starbucks coffee.
Prove it.
Why do people prefer Nike basketball SHoes over Converse basketball Shoes? People want to be seen playing in Nike shoes just like Kobe and Lebron do. Not in the converse shoes that no popular stars wear. Shultz has created a brand name and that's why he outperforms his competitors.
Nike is a better shoe than converse, Nike puts more into design. Converse is being milked as fashion statement shoe. Both nike and starbucks built their brands organically, and only now do both drive business through co-branding (LeBron = Nike). Phil Knight started selling Nikes out of the trunk of his car, Starbucks started by buying tea in Vancouver at retail and marking it up to sell in seattle in the Public market. Later came the customer satisfaction associated with a brand.
I think branding can alleviate the pressure from competing on price and create longevity in a product instead of getting squeezed out by the conservator. By creating a brand name, you protect the product (that can be copied i.e. watch example) through your brand and consumer loyalty to that brand.
How does a conservator squeeze you out? They sell a cheaper version of your product, made at a different factory, financed not by you, managment and logistics for which you played no part, to customers you could never serve. Where in that did you get squeezed out?
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Front Yard Gardens
Plenty of press on people being fined for doing this, but growing veggies in the front yard often makes the house look so much better... not to mention the fresh organic veggies.
And look what this couple found under a cabbage!
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And look what this couple found under a cabbage!
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Monday, January 21, 2013
Branding Part Two
Part one is here, and I continue my essay based on interaction with two people who presume branding is part of startup.
One of the problems has to do with categories, branding vs advertising, wholesale vs retail. One advertises brands. A retailer advertises in the sense where there is some sort of display ad, and the ad will feature a brand. Wholesalers do not.
if a wholesaler is selling to retailers, then of course the wholesaler may desire to do a ad allowance, as outlined in my book. In the case of an ad allowance, the name of the wholesaler is included in the ad. The name of the wholesaler functions as a brand, but in these cases no one recognizes the name. The wholesaler requires the retailer to include the wholesaler’s name not because the wholesalers name draws retail sales, but because the retailers competitors will see the name of the wholesaler and contact that very wholesaler about buying goods from the wholesaler for the retail store. here again, the brand development, such as it is, is organic and cumulative.
So a start up wholesaler under no circumstances should be actively branding and advertising. So that leaves the startup retailer. Although it is debatable, I think the start up retailer is ill served by depending on advertising. here again, the smart way is build customer loyalty, and then open your business.
If you have not proven you have customers, how could you be confident a brand would reach them? One correspondent replied:
You are absolutely right - where are my customers? I can't even answer that question at the moment.
And another -
Ever consider branding? IMO, branding builds equity, it creates consumer loyalty.
How did you form the opinion branding builds equity? How does branding create consumer loyalty? Is the assumption not getting the cart before the horse? Doesn’t the sum total of customer experience and the concomitant word of mouth establish brand? Or is the idea that you can design a logo and advertise it and people are somehow mysteriously drawn to it?
Why do people choose to buy Adidas over Nike and visa versa? Brand loyalty. Why do people buy Grey Goose Vodka as opposed to the cheaper Costco Vodka even though it is made from the same factory in france and distilled the same way? People want to be seen drinking the Grey Goose name, which is created through branding.
This begs the question, whence the brand loyalty? is it gained organically, deal after deal, overtime? Or was it money bombed in? Ben & Jerry's, Costco, Lululemon, Ferrari, Sudoku and Body Shop are all well known brands that have never put a dime in advertising. They all grew brand organically. Lancome did not for its first fifty or so years. Coca Cola blew one billion dollars advertising new formula coke in the 1980s and its brand loyal customers failed them.. Washington Mutual, Enron, Worldcom and every politician puts immeasurable sums into “branding” only to go bankrupt. And then Patron Tequila was slapped together by hairdresser Paul Mitchell out of Vegas. So have you built a billion dollar hair care business, and you are at the right place and time to drop another billion making people think your product has been around since Columbus? Or not?
1.) Once you have developed a new product, created a product line, have gained orders from retailers, trade shows, etc. and are all set to carry out production with your overseas supplier; what is your marketing/branding strategy? Do you license/private label the products you design to companies and alleviate the pressure of marketing the product or do you take control of the brand and try to build more equity? i.e. logo, website, social media, brochures, catalogs, etc?
Do you see the pattern where brand seems to have this power that must be harnessed or shared? I reject the premise. You start the Mine Name Company. Done! I've said nothing about IPR in the book because I wanted to develop that separately. I am anti-IPR, pro-contract. Yes to licensing/private label, branding after your own name, everything happens, everything that makes money.
The customer is most important, getting the product right is the hardest thing. marketing is in essence your job. You do all the other not so much to alleviate pressure, but to extend into all markets.
Why is it a dentist will clean your teeth, charge you, and lo! your teeth are clean. A painter will paint your house, charge you, and lo! your house is painted. Why is it advertising is the only field in which youa re told “advertising will increase your sales, “ but if and when it does not (which is the case in almost all instances), too bad. You already paid! Is there any legitimate business that works on that model? Only casinos (and society does not enforce gambling debts), state lotteries palm readers and such work on that basis. Even stock brokers only buy and sell for you, and tell you up front “past performance is no indication of future returns.”
No one should start a business or continue of they have not read Ogilvy on Advertising. it was his teaching that proved accurate, and why I have spent nearly nothing on advertising (or SEO) yet have more business than I can stand and have high SEO rankings. Ogilvy says to advertiser and branders, "prove it." The TV series MadMen is based on Ogilvy, the revolutionary.
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Clarification on ImportGenius, Panjiva, PIERS, etc
On Jan 19, 2013, at 6:45 PM, J wrote:
I refer to your blog comment and would like to check if you know of any free sources that provide the same data as what ImportGenius is Selling? Thanks so much for yr help.
http://hbhblog.blogspot.sg/2008/05/ergin-wants-importgeniuscom-reviewed.html
J,
I am not sure I said I provide the same data as ImportGenius for free, I think I said their data is pointless and I offer the source of other free info that is very useful, if you are serious about building a business. Anyone who wants the info provided by panjiva, importgenius, PIERS, etc, is delusional about what matters in business.
Anyway, here it is:
(I send out a .pdf on what info matters, where it is, and how to analyze it.)
Let me know how it works out for you.
John
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Sunday, January 20, 2013
Unions Busting, Boeing and Michigan
People say there are unions, therefore there are problems. Not true, there are problems, therefore there are unions.
- Gary Booker
The law requires labor and management meet and confer, not meet and agree.
- The law.
There is no such thing as an outrageous union demand, there are only outrageous management concessions.
- R A Smardon
This is exactly right. Unions formed in reaction to management abuses. If you look around today, poorly run companies have unions, well run companies do not.
(None of this applies to house unions, which are not unions at all, for example a government worker union. A government worker cartel is no more a union than a school is a gun-free zone. Or As President Roosevelt put it
All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management.
Read more at http://globaleconomicanalysis.blogspot.com/#lYyO62WlMrLIDskz.99
But do note, not to put too fine a point on it, the State is heavily unionized.)
In 1934 Boeing was a well-run company with a brilliant manager in charge. The progressives in DC accused Boeing of being a criminal and began writing rules on how his company should be managed. Bill Boeing sold out and left the company, and in essence the State took over. One year later Boeing was unionized. As in every economically challenging time, war strains were in the background, so being in essence state-run was good for a company that would make war materiel.
After the wars Boeing developed the jet airliner under heavily subsidized conditions, which made it easy for the unions to charge management a high fee for lack of management capacity. Given the state was so advanced in managing the economy circa 1970, and with the failure of the SST program at Boeing, the company went on life support. Nixon closed the gold window, which gave inflation a chance to rage, and Boeing grew with the booming economy, led by its military contract baby, the 747, a freighter converted to haul humans.
Today Boeing workers are considering a strike, put on hold as Boeing's latest great hope is grounded worldwide. Boeing workers blame the problem on outsourcing. Wait. Boeing always has outsourced. Boeing is a big assembly plant fed by 3000 subcontractors who ship in parts JIT. So they must mean outsourcing overseas. But this is a management decision. And outsourced parts are managed in production as well. So this problem is again management, not labor.
When a company becomes State run and State subsidized, it will be no more successful than Сухой, which has emerged from its Soviet origins but is yet to build a winning craft. Boeing's big threat is not Airbus, but the Chinese airlines. Back in the early 1980s Boeing knew immediately China intended to compete when China bought Boeing jets but enough spare engines (the toughest part of a plane to get right) to go into Chinese production.
A privately owned Boeing would not be in the condition it is today. The solution is for Boeing to compete with China by becoming a military division, like its Chinese competitor, or better yet, remove all of Boeing's subsidies and regulations so it folds and 1000 more Bill Boeings today start aircraft companies that no other country could take on competitively. An Aaron Swartz would bury Airbus, Сухой, and anything the Chinese State coudl produce. O wait, we killed Swartz. But you get my point, somebody.
Jimmy Hoffa saw the state taking over the economy, the inevitable theft of the worker pensions, and was having none of it. He was tossed into prison by the State for his resistance, but Nixon let him out after closing the gold window in 1971. With the gold window closed, there was no chance Hoffa could do anything to save worker pensions. Inflation would do the trick. But by 1975, after Nixon was putsched out, Hoffa began outing the state on other matters, and Hoffa, Roselli and Giancana were assassinated in turn within a year's time.
Within a few years, Reagan was elected and signaled the future by busting PATCO, and a year or so later I was sitting on management's side in the 1982 West Coast Longshoreman's Master Contract negotiations. There were murders then too, in Oakland and San Francisco at this time, but internal union stuff. The "strike issue" was unfunded pension liabilities.
In the 1980s the teamsters, with Hoffa gone, were decimated and pensions plans folded with the companies that could not stay open in the inflation-driven "get big or get out" Government economic policy.
So Mish comes now with his theme that unions are a bad thing, busting them is a good thing. He hails a court decision backing up Wisconsin governor's divide and conquer union busting. Complicated business, that. This busting is inevitable. In the Wisconsin case, it does not matter, because it is state unions being busted.
But real labor unions are needed where management is bad. Sadly, their leadership too have been bought off, not that it would matter, because the fix is in on the pensions anyway. The court ruling is just the judiciary doing its part, consolidating the strangulation of all unions. For a literal case-by-case study of how the courts follow political whims, read Horwitz.
If you do not study this book, you've never studied the USA.
What USA needs is in fact a genuine renaissance in labor unions to check the rampant fascism of the Obama administration, or whatever party is in charge.
Feel free to forward this by email to three of your friends.
- Gary Booker
The law requires labor and management meet and confer, not meet and agree.
- The law.
There is no such thing as an outrageous union demand, there are only outrageous management concessions.
- R A Smardon
This is exactly right. Unions formed in reaction to management abuses. If you look around today, poorly run companies have unions, well run companies do not.
(None of this applies to house unions, which are not unions at all, for example a government worker union. A government worker cartel is no more a union than a school is a gun-free zone. Or As President Roosevelt put it
All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management.
Read more at http://globaleconomicanalysis.blogspot.com/#lYyO62WlMrLIDskz.99
But do note, not to put too fine a point on it, the State is heavily unionized.)
In 1934 Boeing was a well-run company with a brilliant manager in charge. The progressives in DC accused Boeing of being a criminal and began writing rules on how his company should be managed. Bill Boeing sold out and left the company, and in essence the State took over. One year later Boeing was unionized. As in every economically challenging time, war strains were in the background, so being in essence state-run was good for a company that would make war materiel.
After the wars Boeing developed the jet airliner under heavily subsidized conditions, which made it easy for the unions to charge management a high fee for lack of management capacity. Given the state was so advanced in managing the economy circa 1970, and with the failure of the SST program at Boeing, the company went on life support. Nixon closed the gold window, which gave inflation a chance to rage, and Boeing grew with the booming economy, led by its military contract baby, the 747, a freighter converted to haul humans.
Today Boeing workers are considering a strike, put on hold as Boeing's latest great hope is grounded worldwide. Boeing workers blame the problem on outsourcing. Wait. Boeing always has outsourced. Boeing is a big assembly plant fed by 3000 subcontractors who ship in parts JIT. So they must mean outsourcing overseas. But this is a management decision. And outsourced parts are managed in production as well. So this problem is again management, not labor.
When a company becomes State run and State subsidized, it will be no more successful than Сухой, which has emerged from its Soviet origins but is yet to build a winning craft. Boeing's big threat is not Airbus, but the Chinese airlines. Back in the early 1980s Boeing knew immediately China intended to compete when China bought Boeing jets but enough spare engines (the toughest part of a plane to get right) to go into Chinese production.
A privately owned Boeing would not be in the condition it is today. The solution is for Boeing to compete with China by becoming a military division, like its Chinese competitor, or better yet, remove all of Boeing's subsidies and regulations so it folds and 1000 more Bill Boeings today start aircraft companies that no other country could take on competitively. An Aaron Swartz would bury Airbus, Сухой, and anything the Chinese State coudl produce. O wait, we killed Swartz. But you get my point, somebody.
Jimmy Hoffa saw the state taking over the economy, the inevitable theft of the worker pensions, and was having none of it. He was tossed into prison by the State for his resistance, but Nixon let him out after closing the gold window in 1971. With the gold window closed, there was no chance Hoffa could do anything to save worker pensions. Inflation would do the trick. But by 1975, after Nixon was putsched out, Hoffa began outing the state on other matters, and Hoffa, Roselli and Giancana were assassinated in turn within a year's time.
Within a few years, Reagan was elected and signaled the future by busting PATCO, and a year or so later I was sitting on management's side in the 1982 West Coast Longshoreman's Master Contract negotiations. There were murders then too, in Oakland and San Francisco at this time, but internal union stuff. The "strike issue" was unfunded pension liabilities.
In the 1980s the teamsters, with Hoffa gone, were decimated and pensions plans folded with the companies that could not stay open in the inflation-driven "get big or get out" Government economic policy.
So Mish comes now with his theme that unions are a bad thing, busting them is a good thing. He hails a court decision backing up Wisconsin governor's divide and conquer union busting. Complicated business, that. This busting is inevitable. In the Wisconsin case, it does not matter, because it is state unions being busted.
But real labor unions are needed where management is bad. Sadly, their leadership too have been bought off, not that it would matter, because the fix is in on the pensions anyway. The court ruling is just the judiciary doing its part, consolidating the strangulation of all unions. For a literal case-by-case study of how the courts follow political whims, read Horwitz.
If you do not study this book, you've never studied the USA.
What USA needs is in fact a genuine renaissance in labor unions to check the rampant fascism of the Obama administration, or whatever party is in charge.
Apple never unionized, but Jobs is gone. Jobs was an Arab-American love child who grew up in anarchy, the unregulated micro-computer world, which was further opened by deregulation of telephony. Unregulate the airlines and we will see an economic renaissance. And USA jets that can actually fly safely.
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