There are industries such as computers, restaurants, gambling and maybe a couple of others where you can start with an idea and create an empire.
But when it comes to manufacturing, it doesn't seem to happen anymore. Creating innovative products for consumers has been replaced with creative financial manipulation to increase stock prices.
It's apparent that if you want to be a successful producer in this country you must be capable of making quality, innovative products that are cost-competitive. It would allow a company to not only market their products in our country but also to export to other countries as well. This would help keep trade in balance.
At one time we were manufacturing leaders in all types of goods. The products we produced reflected the latest technology, which created a market for them. And by using innovative processes it allowed us to keep our prices low and still pay high wages. This is what created our strong middle class that was the envy of the world.
But the leaders that created these products and whose entrepreneurial spirit inspired people at all levels of the organization are all but gone, replaced by money managers.
The prime interest of a money manager is not to create new products or to develop a competitive workforce, or to build innovative production processes. Their main interest is to do whatever it takes to drive up the company's stock price. Stock options were created as an incentive to operating managers to direct their decision-making processes primarily to programs that will increase the stock price of the company.
To assist them in this endeavor, managers hired consultants to advise them in just about every area of business.
Keep in mind that the consultants never ran anything in their lives or, if they did, they were not successful.
In general, consultants follow more or less the same script. The first thing most of them will advise is to develop better communications which, of course, will always result in off-site seminars, cross training, etc.
Since half of the people are in seminars, you have to hire additional people. Because you have more employees, you have a tendency to go into other businesses and to move into more locations.
This all looks good to Wall Street, so the stock of the company goes up. After a while the profits start to level off or maybe go down. This now becomes an excuse to hire more consultants. These consultants - again according to a typical script - will advise you to sell all of the other businesses you added and return to your core business, lay off 20% to 30% of your manpower, cut down on all the frills, etc. Again this looks good to Wall Street, and the stock goes up.
To make the layoffs and the rest of it easier, you hire more consultants.
The final act of this play is when the chairman, who probably has no emotional feeling for the company one way or another, decides to sell the company. His stock options, which have nothing to do with the decision, of course, now become almost priceless.
If you watch what's happening in today's business, you will see parts of companies being spun off; big companies are buying small companies, small companies are merging with other small companies, etc. What is not being created is products that can compete in the world market.
Now my sardine story: This guy sells a load of sardines for $800. The buyer of the sardines sells them to another guy for $1,200. He in turn sells them to someone else for $1,500. The person that bought the sardines for $1,500 calls the guy he bought them from and complains that the sardines smell to high heaven. The guy declares him stupid and tells him that these were not "eating" sardines but rather "buying and selling" sardines.
We could be fast approaching the point that companies no longer exist to produce products to serve customers but only for buying and selling. Stephan Sharf is a formerCorp. executive vice president for manufacturing.