Tom and Dave′s Deutschland Dispatch

Make America Great Again!

January 30, 2017 by Thomas Tatum

Not only in America is a huge chunk of the population convinced that everyone else is reaping the fruits of globalization while they are left holding the golden turd. Rest assured, a great number of Germans, French or Italians out there were convinced that TTIP was going to hand the US an unfair advantage, just as there were millions of Americans worried that things were going the other way around. It may come as a surprise to many in the US, but a widespread sigh of relief could be heard in many European circles the day DJT declared the effort to be dead! Hardly the reaction you’d expect if everyone was happily screwing America through faulty trade agreements, as was claimed during the US election…

Of course, we all like to buy cheap. Presumably, this impulse is lodged somewhere deep in human nature. Let’s pause and think, though: why exactly has the cost for relatively big ticket household items (to use just one example) gone down so significantly in relation to what we earn? It’s true that wages at the lower end of the scale have stagnated or even dropped across the longer term when adjusted for inflation. But it’s no secret that the cost of televisions and washing machines and cameras and clothing has also been dropping for years. Think back for a moment:  how long did your parents or grandparents have to work before they could afford a new television? Or even a new wristwatch?

The answer is pretty straightforward. While wages haven’t risen for many workers, buying power has increased immensely across most of the board. And that’s because Americans (and just about everyone else) has grown accustomed to buying from China or Mexico or Guatemala or Turkey. That’s not a bad thing because the money earned there through our consumption is spent on goods and products which we can sell to the rest of the world as well. If we’re willing to compete, that is. Not on price but on quality. And it’s precisely here where too few American companies fail to invest. For many companies, size and quantity counts for more than quality, flexibility for more than training. Economies around the world are digitalizing and reliance on automation is growing fast, so good jobs for unskilled workers are disappearing fast. Specialization has become hugely important. Make no mistake:  people who build things still have a future, but only if they are miles ahead of their competitors, both in skills and productivity, and if they have the imagination to recognize where their markets are now and where they will be heading in the future. And if they invest in the talent needed to make their customers relate to them, the work they do and the products they make. Today, the opposite is often the case. Education takes time and costs a lot of money. And once people are truly skilled, they cost more money to employ and to retain.

But this investment in highly skilled labor and focus on engineering is a cornerstone of the more robust European economies. Not a single one of the industrialized Western nations–meaning America as well–can today even hope to be competitive at heavy industries such as steel, mining or shipbuilding. The cost of labor and infrastructure in most places elsewhere in the world are simply too low. The key to success, then, is recognizing what one does better than everyone else and focusing on honing precisely these skills. From Italy to Scandinavia, it is perfectly normal for apprenticeship training for skilled workers to take two to three years at a minimum. But the technology manufactured by such a workforce is top-notch and, at those times when business is slow, companies tend to hold onto their personnel as the time and expense involved in training them makes layoffs expensive. But honestly, how many US companies are willing to make this kind of investment in their employees today? I have personally seen aircraft manufacturers in the US lay off 8,000 production line employees at a pop–and given that this particular company’s investment in training was often a paltry 2 to 4 weeks, it was a no-brainer that replacing them would be cheap and easy when business picked up again. Talk about shareholder value! Looking at the US from Europe, it is easy to see why American workers feel vulnerable.

The Swatch AG in Switzerland is a fine example of how things can work the other way around. Everyone knows the products but not everyone knows that it’s a company which helped an entire industry rise from the ashes by embracing a concept of using highly specialized and skilled workers to create exceptional high-value products. The late Nicolas Hayek, founder and chairman, is today credited with nothing less than having revived a crippled Swiss watch industry at a time when dominating low-cost Asian competition threatened to wipe out the traditional players in the market. The investment paid off handsomely–the entire industry rebounded as Swatch succeeded in making a lifestyle product out of low cost watches while investing heavily in training and technology and finesse in the high-end products now under the brand’s wing. The Swatch Group today includes such illustrious names as Breguet, Blancpain, Omega and a number of others. DJT complained that people in Germany don’t buy Chevrolets but seriously, why should they? Americans should note that the German automakers aren’t shaking in their shoes because of anything that’s coming out of Detroit these days. But rest assured, they’re all watching Elon Musk and Tesla Motors.

In today’s America, instead of relying on people to make the difference, there’s a tendency to send software into the ring to make companies more efficient, breaking down the activities of the business into manageable processes. For some segments of some companies active in certain industries, this is no doubt a valuable tool. But for many companies, this investment does little more than make a handful of people in the software business happy while deluding entire industries into believing efficiency can consistently be equated with effectiveness.

There’s a chain reaction behind the metrics which people tend to forget when all the chants of Make America Great Again abate and we go back to focusing on day-to-day business:  investment in education by federal, state and local government and parallel investment in the training and empowerment of its workforce through its companies are the principal factors in determining the chances of success for a business or a nation in a globalized world. Globalization is not going to go away and there’s no realistic way for any developed or developing economy to opt out. Period. If America and its industries decide to shirk responsibility by suggesting they can shake off this simple truth, nothing can or will change for the better, regardless of who is president or what he professes to represent. And while there may be reasonable cause for concern about DJT’s visible lack of professionalism in advancing America’s cause abroad thus far, it’s not in any American’s interest to see him fail utterly.

Make America Great Again? Learn hard, work hard and get used to paying a fair price for what you buy!

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