Jobs and Profits
We hear a great deal about jobs leaving the country and going overseas, particularly China and Mexico. The jobs that we are losing are the jobs that require the least amount of skills. Jobs that require very little from the employee are usually the least paid jobs.
Who is looking for those jobs in the first place? They are either unskilled or minimally skilled jobs and they don’t offer a career path that benefits the employee. These also tend to be the most fragile jobs within a company.
Years ago it required more employees to do the job than it takes today. Technology has accomplished more than to offer us toys to carry around and make phone calls, play music, access the internet and play games.
Technology improves the methods and equipment to perform unskilled tasks. Machines and computers can do more and do it longer than humans can do. Unskilled jobs are fragile because when it takes little to perform the tasks and adds little to the bottom line, then that makes the position very expendable.
Let’s look at some of the decisions that manufacturers have to make.
Do we purchase high tech equipment to replace unskilled employees?
Do we outsource some tasks and purchase partially completed product and finish the product ourselves?
Do we staff up to perform all the tasks in house and provide more jobs and be more self sufficient?
In terms of jobs these are some of the choices that employers have to make. The final decision is made based on the analysis of the entire situation.
One consideration is initial cost and through accounting practices depreciation and upkeep. Purchasing high tech equipment requires a large upfront expense. Maintenance and reliablility also impact the decision.
Another consideration would be how many employees are required to perform the tasks the high tech equipment would perform? Do you want to staff one shift two shifts or three shifts? Each shift requires employees but the equipment can run with minimal staffing to support it.
Upkeep costs for the equipment and for the employees is a major consideration. Wages and benefits are a big expense on a weekly basis. Upkeep costs for equipment is much less.
Is it possible to purchase the product in a partially completed state and finish it in house and still maintain a competitive price? Or can we contract out the entire manufacturing process and still remain competitive?
These questions and considerations only scratch the surface, but they are part of what a manufacturer must consider before making the decision on how to produce their products.
These decisions affect the number of jobs and where those jobs are located. The costs of the decisions will impact the cost of the product and that drives the price the consumer pays.
In a global economy everyone’s costs are reflected in the cost of each item available for sale. If Manufacturer A doesn’t take advantage of the cheap labor from the third world but Manufacturer B does, how will that affect the price of the product that they both sell in a competitive market.
The price must stay competitive or Manufacturer B will dominate the market and Manufacturer A will lose business and suffer. The jobs that Manufacturer A tried to save by not using cheap labor from the third world were lost because the company could not compete in a global economy.
Risking profits by accepting higher costs and reducing profits or dividends is not an option. Public companies are owned by investors. They invest to make money. Companies that do not make a profit do not have stock holders. Pension funds, retirement portfolios and individual investors invest in companies who succeed and make money. Making bad decisions that do not lead to a profit does not make a company worth the investment.
Decision makers in companies have to make the best decisions for the company. Good decisions lead to profits not to jobs. Profits provide stability and security for the employees and the suppliers and even the state, local and federal governments. Profits lead to tax payments.
Profits and stability are a good thing. When a politician runs for office and says that companies are too greedy and have made enough money only show their ignorance.
Profits are the life’s blood to a company. They provide for growth, security and stability for a company, it’s employees, and suppliers as well as for the economy.
Profits are king, they have never been a bad thing and they never will be. Politicians who condemn success and profits do not understand how the economy works. Those should not be the men and women we place in position to have any impact on our economy.
They shouldn’t be in charge of anything more than the song rotation played by the piano player in whore house.
This is an election year pay attention to which politician speaks about the economy and who is making sense. Apparently there are a lot of whore houses in this country, and they all need a new music director.