I have been in the ‘Center of the Cyclone’ of economic change since the mid 70′s. What a ride!

The breezes of change had already started when I graduated with my sparkling new MBA, which at that time, was still somewhat valued in the workplace, but now stands for “Mighty Bad Attitude”.

I headed in the 1970′s to Chicago with less than $100 left in my pocket and a car running on 3 cylinders. Since then, I have worked for very large corporations at the divisional level, developing and bringing new products to market. I have also been involved in two start-ups. Make it, bag it, ship it, and wash the windows.

During the last 30 years, I have seen dramatic changes occur in large and small industrial manufacturing concerns in the U.S. I have watched these operations fall apart thinking it was only due to a needed adjustment in the U.S. economy. I experienced, more than once, corporate auditorium… what’s the new word? – transitionings – pink slipping, clearing dead wood, – take place en masse. Whole divisions let go at once. A Monday morning experience to share with fellow workers. Fast, efficient, and definitely “Lean”.

Things always seemed to rebound, however, with this downturn, the changes are more permanent. Firms are moving out of the U.S. and closing their doors at an accelerated rate.

Before leaving my last employer, who exited to Asia, I walked out onto the large dimly lit and empty U.S. manufacturing floor and saw the gloves laying on the work bench where the workman left them on his last day. He is gone and also the manufacturing skill sets developed over many years of trial and error – gone and lost.

In the middle of the plant, hanging on a beam, was “Old Glory” the American Flag. A symbol of the pride that was carried to work every day by the people who put “Made In America” on the box as it went out the door. As I looked at the empty manufacturing floor, the workman’s gloves left on the table, and “Old Glory” hanging , I wondered what type of song Francis Scott Key would write about this flag if he was here to make this observation. Would we have a new anthem to sing at ball games?

What went wrong? Did the purchasing engine – the Baby Boomers – start to sputter? Most still have their “Great Rooms” and the 4 bedroom home , even though many planned to cash in and down-size to a warm location according to Yankelovich. However, it won’t go to waste. The kids will be back soon.

I’m just a sideline observer, not a PhD economist from Harvard, but it seemed to start falling apart at an accelerated rate in the 80′s…

In the late 70′s, U.S. companies still had 3-year and 5-year rolling plans, well communicated long term goals and objectives, and people were empowered to make things happen, and yes, you could make a mistake and learn without going to the gallows. Everyone pulled together rather than spending time reading books on corporate politics and how to climb the ladder. – micro management did not exist. You could make your own decisions and live or die by them.

But then came the 80′s and 90′s . Individualism, that wonderful thing that built America, lost. Now 15 people set around in a feel good group and tried to cook the soup. yes lets team up. If the soup was bad though,, someone must hang. Protect yourself was the motto. Nice guys finish last the war cry of the day. Working together was only becoming a nice word. And then came the new manager model, 2 years of experience, being groomed for something, who in the past, would have worked for you and learned from you. Now this ameoba was attached to everything you do. After all, he had new process words, like gated process, customer face time, share of mind, and a nice Brooks Brother suit. His hand shake is limp and his hands soft from lack of real work. He is afraid to go into the field. That’s where the customer will quickly spot his lack of experience and have great fun. Yes, he is the new corporate suit, but young is now in and old and experienced was out. And who knows, maybe he is a Mason.

I also saw a new focus by the helmsmen. I saw Division Managers and Corporate Heads slowly become concerned about one thing – The Annual Bonus – “Annually Meet or Beat The Street” or else. 3 year plans were out the door. We became focused on one year profit and sales goals (the annual plan). After all, it impacted everyone’s year-end bonus. We all wanted a Merry Christmas. Yes, we all knew there was someone, somewhere, in an office, looking at the big computerized control screen, with graphs and math formulas – the fat man with the brains – the Long Term Strategic Planner… the Thinker, The “Big Bucks Guy” – but what happened, why are we where we are today? The fat man certainly made his due.

Isn’t constant Corporate Growth, and getting bigger, and providing economies of scale, a good thing? Isn’t that good? Or, is free enterprise like a snake that eventually will eat it’s own tail as it constantly is focused on the pursuit of growth? A chain letter system? Maybe a big Ponzi scheme where China it left holding worthless U.S. Treasury Notes. Will we become the Greeks?

We have eaten ourselves. Just take a look at product distribution in the United States and the changes over the last 30 years. China’s top 3 export targets today are the U.S., Japan, and Wal-Mart. What about all those local grown product distribution companies in rural communities and city neighborhoods? ( the mom and pop hardware stores). Where are they? New Hampshire has preserved a few. Lowe’s and Home Depot ate most of the rest of them. These types of “Big Box” businesses eat up neighborhood and rural businesses fairly quickly. The large carnivorous “Big Box” store operations take money that was re-circulating in these small rural and city neighborhood communities, and they send the money back to the corporation to support opening more stores and buy more low cost products from China,. They offer, in return, part time minimum wage jobs, and force the cost of production down to where only slave based wages in China can keep production costs down to levels that will support the “Big Box” Strategy – Growth and economies of scale generates lower costs and captures more market share. We must, at all cost, keep consuming. Unfortunately, In the end, the workers in these city neighborhoods and rural towns lose their “Rice Bowl” and everyone needs a rice bowl. After all, the consumers need to keep feeding the snake.

What’s left when the snake starts to eat it’s own tail?  They leave. And behind is left a neighborhood, or town, that is a financial husk…empty. U.S. rural businesses close, the town’s economy dead – gone-another Prairie weed town with little opportunity to keep young people in place.. However, some hope remains. Backyard gardens spring up to feed the remaining residents. Manufacturing companies that were the foundation of the towns economy –gone – as business moves over to China to keep pace with the product pricing requirements of “Big Box” operations. We do benefit in one major export commodity area. China continues to ship us cheap products, but we ship back the Card Board these products are packaged in. That’s why the “Card Board Lady” of Hong Kong is one of the richest women in China, she buys U.S. high grade used card board and turns it back into packaging material for Chinese manufactured products headed back our way. over and over. It’s being very Green so, hey, we all benefit.

The end result, family owned community stores close and Wal-Mart wages can’t support Wal-Mart purchases in the community any longer. They “The Big Box” have now eaten it’s own tail. the community is milked dry. So eventually the “Big Box” store is closed leaving an abandoned building, and a weed invested parking lot. They are killers of small financially sound communities built up, over time, by small family owned businesses that were the spine of the community. They are the snake that eats it’s own tail.

But fear not, innovation is on the way. New industries will pop up to save the day.

Or will this really happen?

Recently I had worked for a $1 billion company that started to realize that dropping margins and and sales was not just due to a temporary drop in the economy. It was absolutely an ongoing trend. They became enlightened. Something to do with product life cycle, I believe. So what do we do? Think fast, real fast – the Street, the investment community, they need answers or heads will fly.

Wind Power, Solar Power, Bio-fuels, high speed rail, yep, still waiting, Nano-Technology, etc. are all new words for a redo of the movie “The Graduate”. Forget plastics; these markets are hot new areas for growth in the U.S. So everyone has rushed in to feed on these new carcasses… new markets… new dreams. But where are the nano-technology opportunities? We have fresh new nano “Graduates” looking for jobs. Where are the mass of new Wind Power Job Opportunities? What about the new solar farms? Is bio-fuels still alive – can I get my car tank topped off and some moon-shine in one stop? I have worked in these new “Graduate” markets. I have one thought for you. if you are a Graduate. Ready? Where’s the Money?  Show me the money that will finance these projects.

Well, yes, there is Informatics, HIT opportunities – after all, someone has to electrify all those patient health records before we go live in 2015 with the new Obama Health Care Program.

So companies, me included, find that chasing these new markets, are filling up shoulder to shoulder with competition, all waiting to feed on a minnow. Big companies all positioning to serve these new future growth markets.

So finding that these new markets may someday buzz but who knows when, the reaction to react today in manufacturing is lets quickly move all production off-shore, lay off 1/3 of the work force, transfer over 20 years of high technology manufacturing experience to China. The savings in labor costs alone will justify this action. I know, I have sat in on these decisions and had to help implement them. I felt like a real Judas goat. But, I know from past experience, when you open up a plant and train Chinese how to manufacture your products to stand up to U.S. quality standards, they will be down the street in 5 years competing with your operation. They are true entrepreneurs who think patents are a new American baby diaper and will treat them as such.

What about the white collar jobs left in the U.S. shell of exiting U.S. manufacturing concerns? Well India has many very highly qualified engineers and seasoned managers. Many want to come to the U.S. and look for sponsorship. In fact, India has engineering schools that are MIT quality. So we have natural selection at work. An increasing number want to come to the U.S., and in some cases, are better educated than the U.S. worker, and they will work for less to get a ticket in the door. Its happening, just look around. Well, at least we have each other. Maybe all Americans should come out of their houses more often and say hello to their neighbors. Yes, they may be packing, but experiencing brotherly love towards one another might be a good thing. And who knows, actually talking to your neighbor might lead to new ideas, opportunities, and networks. Oh wait… I guess we have LinkedIn for that.

About the Author

Terry Larson is an award winning sales and marketing executive with extensive experience building marketing departments from the ground up at numerous Fortune 500 companies. http://www.linkedin.com/in/terrylarsonprofile

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