“Best Cost Countries” And How To Blame The Government For The Failure Of Corporate America

As I have done before, I receive regular articles from Manufacturing & Technology News and wanted to post the article with my observations. To me, this simply points out that Corporatism rules this country and that those who are in control of corporations don’t give a single rat’s ass about the American workers or their well being (at least from their job perspective).

Corporations are anti-worker. Corporations are entities set up with one goal in mind: making the most profit for their share holders as possible. Period. They do this off of the backs of labor and always have.

So, when I read such stuff as Mr Farr writes (and Richard notes) like blaming government for the current fiasco, I have lived the last 30+ years watching corporations take off towards those “best cost countries” (aka cheapest labor and overhead possible). His blame is hollow when he and his ilk are just as responsible for this mess as any government official ever alive. And both parties are complicit.

I have been calling on Emerson Electric companies for 20+ years. I have actually sold Emerson Electric owned product and know first hand how cheap they are and how they run in to the ground any entity they buy up. So, Mr Farr, excuse me as I call your Bullshit for what it is… Bullshit.

Emerson Electric Votes With Its Feet, Saying The Goverment Is Destoying American Manufacturing

By Richard McCormack
richard@manufacturingnews.com

One of the country’s most important industrial companies says the United States is not a good place to manufacture and it will continue moving its assets offshore.

The federal government is “doing everything in [its] manpower [and] capability to destroy U.S. manufacturing,” says David Farr, chairman and CEO of Emerson Electric Co., in a presentation at the Baird 2009 Industrial Conference in Chicago Ill., on Nov. 11. In comments reported by Bloomberg, Farr added that companies will continue adding jobs in China and India because they are “places where people want the products and where the governments welcome you to actually do something. I am not going to hire anybody in the United States. I’m moving. They are doing everything possible to destroy jobs.”

In his Powerpoint presentation available on the Emerson Electric Web site, Farr notes that the federal government is damaging prospects for U.S. economic growth with a $1.41 trillion federal deficit (10 percent of GDP); $12 trillion in government debt that will grow to $20 trillion in 10 years; a policy of printing money; a “non-targeted $800-billion stimulus”; bailouts for Wall Street and the automobile companies; the prospect for cap and trade legislation; a “government takeover” of health care to the tune of more than $1 trillion; increasing taxes and regulations; and a “lack of U.S. $ support” for manufacturing. The global stimulus “soon will fade,” says Farr.

What does it mean for a company like Emerson? “We continue to increase our international and emerging market presence,” says Farr. The company has increased its emerging market sales by 19 percentage points over the past 10 years, from 13 percent of total sales in 1999 to 32 percent in 2009. It is now generating 55 percent of its sales from overseas operations, a figure that will grow to 60 percent by 2014, with 40 percent of total sales coming from emerging markets.

“Emerson’s investment in emerging markets is continuing to pay off with sales growth,” say Farr. In 1999, the company generated $12.4 billion in annual sales from mature markets and $1.9 billion from emerging markets. By 2009, sales from mature markets grew to $14.2 billion, while sales from emerging markets more than tripled to $6.7 billion.

The company projects sales from mature markets in 2014 of between $16 billion and $17 billion, while emerging market sales will reach almost $12 billion.

Between 1999 and 2009 “73 percent of growth is from emerging markets!” Farr exclaims. “More than 60 percent of our growth is expected to come from emerging markets over the next five years so Emerson will continue to invest in these key markets.”

In 2001, the company had 21 percent of its 360 manufacturing facilities located in “best cost countries.” Today, Emerson has 250 manufacturing locations and 36 percent of them are in “best cost countries.” That percentage is going to increase to more than 40 percent.

Emerson is following the money. Infrastructure investment in the United States now accounts for 21 percent of the global total of $12 trillion, down from 27 percent in 2004. Asia Pacific’s share of global infrastructure investment has increased from 18 percent of the global total in 2004 to 27 percent in 2009. That number is expected to continue going up — to 31 percent of global investment in 2014 and 37 percent in 2019.

The current recession has been destructive and the United States will have a hard time recovering, says Farr. U.S. job losses of 7.3 million to date are only slightly less than the total of the last four recessions combined (8 million). The current downturn is having a big impact on Emerson and its employees. The company has reduced its headcount by 15 percent. It has closed 55 facilities and has incurred $540 million in restructure expenses.

The 2001 recession was also tough on the company. It reduced its headcount by 14 percent, closed 75 facilities and incurred $437 million in restructuring expenses. “But the world did not change much,” says the Emerson CEO. With the current recession, “there will be some fundamental changes going forward.”

The company reported sales for its 2009 fiscal year ending in September of $21 billion, down from $25 billion in 2008 and $22 billion in 2007. It had an operating profit of $3.2 billion in 2009 (15 percent of sales).

I will say this. At least now we will see the true spirit of the Corporate Controllers of this country. What you, as a poor redneck just trying to make ends meet needs to know, these jobs will NEVER come back. The vast majority of jobs that have folded up (either for good or to move overseas to those “best cost countries”) are NEVER going to come back to the USA. If you had a decent paying job making parts for an American automotive company… sorry, your job is gone FOREVER. If you were lucky enough to move to an Asian automotive company, get ready to see your wages decrease (or NEVER increase to accommodate inflation). And when it gets bad enough, watch as these jobs disappear, as well.

We used to think that China was the “best cost country”, but I read recently that Mexico is now.

You think that is going to help your chances keeping a good job as these corporations (who ONLY care about the profits) move out even more over the next two years?

It is a snow ball rolling down hill and I see it growing and growing.

BTW: My comment on the article:

Comment: Mr Farr’s comments have a ring of BS to them. I have called on Emerson Plants for almost 20 years and have watched as they took every advantage of “best cost countries”, with NEVER a thought of the American worker in mind. This moving away was happening long ago and the fact is that government and Corporations are BOTH instrumental in this fiasco. Corporations control our government. This is so evident that surely there is no argument. So, Mr Farr, I see this as just another way for you to fulfill your obligations to make as much profit for your shareholders as you can. But do not think for a second that you can start this crap and think that everyone will believe it. Emerson Corp is set to make money… with or without Americans. I say you take your entire shebang elsewhere, then.