August 28, 2013
By: Kelly Diamond, Publisher
As mentioned before, people aren’t the only one’s voting with their feet!
Businesses are also fleeing as economic refugees. Some piecemeal in the form of outsourcing certain departments and jobs, others are literally uprooting their companies and getting the hell outta Dodge!
The virtual ink hadn’t even dried on my last installment before this little gem crossed my path! As a follow up to my last story, a timely little piece just surfaced a couple days ago: “Italian factory owner moves company to Poland while staff are on holiday”. Evidently, the costs for keeping his staff and staying in operation are so crippling, he has not turned a profit in nearly five years! His Eastern European competitors are enjoying handsome profits, so, seeing this, he decides to uproot his entire business – machines and all – to Poland.
While pro-union advocates argue for greater compensation (not based on actual skill, but juxtaposed with the profits of the company and its owner), the jobs can’t exist if the job makers no longer find it worthwhile. Not yielding ANY profit for several years certainly falls into the “no longer worthwhile” category.
People forget why they have a job and why that job in particular exists. First, there was the job opening. Then came the applicants. Then came the person who filled the job. The job opening was conceived in the owner’s desire to grow and expand their business and meet the demand of the market. In essence, it was begotten by the owner’s desire to make more money. Employees are an investment to that end. Employees MUST produce more than what they are worth. It’s called generating an ROI. If there is no return on the investment, then by all counts, that’s a bad investment.
Government comes in and fixes the costs of everything ranging from energy, to labor wages and compensatory packages, to regulatory edicts, and taxes everything else. With all those non-fungible costs in place, how do you generate a profit? By charging more. If you charge more, people buy less. People buy less for one of two reasons: they found a competitor who will charge them less OR they simply don’t have the money to buy as much.
“Italy’s thickets of red tape, high social welfare costs and corruption mean that it fares dismally in terms of economic competitiveness.
“In the World Bank’s most recent Ease of Doing Business survey, Italy ranks 73rd out of 185 countries, behind the likes of Tonga, Kazakhstan and Belarus.”
What union thugs fail to realize is that the relationship between employee and employer is not meant to be parasitic… it was meant to be symbiotic. When it ceases to be that, then one side is no longer receiving the benefits of the relationship creating an imbalance.
I remember when Universal McCann decided to outsource its billing department. People were upset that folks in the Philippines was getting their data entry jobs. Okay, but a living wage in San Francisco is $45,000/year. A living wage in the Philippines is like $5,000/year. They can get 9 for the price of one… why wouldn’t they?
Again, geographic loyalties run only as deep as the profits, and when those dry up, you go where the profits are. And this is the basic disconnect – one I honestly don’t understand: Employers are in their business to make money. Employees get jobs to make money. Both want to maximize their profit margin. But there are some employees who don’t quite understand that no one is entitled to their job, no one is entitled to get paid an amount they are not worth, and a business is not morally obligated to go bankrupt to meet the demands of whiners.
The case of Fabrizio Pedroni, he was being “strangled by high salaries, crippling taxes and dismal rates of productivity… Labor costs were high because firms like his had to pay generous social insurance, health insurance and pensions… ‘An employee who is paid €12,000 a year in fact costs the company €30,000. It’s unacceptable. We haven’t made a profit since 2008’”.
Many folks don’t realize that salaries aren’t the only costs associated with employees, but I think this reality check might lend some perspective. The employees only see their wages and think they are meager. The employer sees the whole picture, and thinks it’s more than what the employee’s job is worth. In Pedroni’s situation, the employees weren’t producing enough to warrant such a high compensatory package. But that package was largely dictated to him by the Italian government.
Greece went bankrupt as a country because of the unsustainable amount of benefits it promised its employees. Detroit IS bankrupt and judges are STILL ordering the city to pay out the benefits that bankrupted them in the first place. If governments in general keep piling on the bureaucracies and regulations and oblige businesses to expenses that eat at their profits, I expect we will start to see the same drastic measures taken by Mr. Peroni from our employers. Mexico is only a stone’s throw away… they come here for jobs… but ironically it might only be a matter of time before we save them the trouble of immigrating and just emigrate the jobs to them!
The most telling line in the whole article is the last one: “Mr. Pedroni says he has had messages of support from many business owners in Italy…” Clearly, he isn’t alone. Governments around the world would be wise to heed such warning signs, but we all know they won’t. Unions won’t stop their incessant yammering about being “exploited”. And sadly, most Americans are just too damn short sighted to realize that at some point their employers will find a way to make the numbers work, or they might simply take their ball and go home (or elsewhere!). Either might entail layoffs and job loss.