A Hypothetical Situation

[therising]

Pretend this is true.

You owe stock in XYZ COMPANY. You've owned the stock for years, you invested a thousand or two of your graduation money when you were 18.

XYZ Company makes widgets in a plant in Iowa. They send a letter to shareholders, saying that they're considering closing the Iowa plant, and building one in China. They have empirical evidence that closing the plant will increase stock prices by 20% in the first year. (just play along, here)

The plant in Iowa employs 800 workers.

They ask you, as a shareholder to help make the decision, with your proxy vote.

Let's say your shares, whatever the $ amount may be, equals half of your savings. Whether that be $5k, $20k, or $100k - it's half your savings.

How do you vote?
Do you vote to close the Plant, have the jobs go to China, and make 20% on your money?
Or, do you vote to keep the jobs here, knowing that the share price will remain stagnat, at best?

[buffy]

This is business...that's why it's called an "investment"

It's a global market these days...go w/the flow and show me the money

[therising]

Thank you for answering Buffy, I get this thread was not as interesting as I thought.

I think its's important because it poses a moral dilemma (laying people off) versus a financial one (more money in your pocket)

I'd like to see more people step up to the plate and anser this.

[300miles]

I think it makes a very good point therising. None of us want to support companies that sacrifice US jobs to ship them offshore.

yet when our own money is at stake, probably most of us would stick with profits instead of principle.

It proves that we can't really complain unless we're willing to put our money where our mouth is.

[LaNdReW]

Originally posted by therising
Thank you for answering Buffy, I get this thread was not as interesting as I thought.

I think its's important because it poses a moral dilemma (laying people off) versus a financial one (more money in your pocket)

I'd like to see more people step up to the plate and anser this.

You hit the nail on the head...
Look at it this way..

Would you rather invest in a company that keeps it employees here, pays them well, and has a growth rate of 5% a year..

Or invest in a company that ships jobs overseas, shirks its tax responsibilities, milks the system for tax breaks, and makes 7% a year.


The problem is that you don't get this info in a prospectus. And its uncool to be a responsible/moral business manager..

Its all about profit Maximization rather than Profit Realization.
(its how Jack Welsh, Roger Smith, and Trump got famous) Damn the employees, employees are leeches..unions are always bad.

Morality does come into play, as many of the countries that we use for foreign labor have horrendous human rights and environmental problems.. But what do we care..as long as we can buy a 6 pack of socks at wally world for $4.99

[LHardy]

Take the money. This is buisness and companies come and go everyday. Jobs come and go everyday. Our Money goes there , their money comes here. There is a trade gap but with a world economy and trying to grow newly industrialized nations this will happen.
Stop taxing the companies (shareholders) out high rates. Give them reason to reinvest in the US market and they will create more jobs here. Right now foriegn investment pays better.

Total US direct investment abroad 2004 - 2.063 trillion
Total US direct investment in foriegn manufacturing 428 billion

Total Foriegn direct investment in the US 2004 - 1.526 trillion
Total Foriegn direct investment in US manufacturing - 519 billion

http://www.bea.gov/bea/ai1.htm

[Stevenco]

Political boundries are imaginary, so there isn't anything immoral about transferring jobs there.So some of your brothers and sisters in Iowa lose their jobs, then, some of your brothers and sisters in China get jobs. It's all good.

[LHardy]

Morality does come into play, as many of the countries that we use for foreign labor have horrendous human rights and environmental problems.. But what do we care..as long as we can buy a 6 pack of socks at wally world for $4.99

Not so true. It does happen but not to the great extent that you portray.
US direct investment abroad percent by country 2004.

UK Islands Caribbian - 3.1%
Mexico - 3.2%
Ireland - 3.5%
Luxembourg - 3.6%
Germany - 3.9%
Japan - 3.9%
Bermuda - 4.4%
Switzerland - 4.9%
Netherlands - 9.8%
Canada - 10.5%
U.K. - 14.7%
All others - 34.6%
http://www.bea.gov/bea/ai1.htm

[Caledon]

No, your all missing a valuable point which must be brought to the fore

There was once a company (I wont say its name) but its management looked at its costs and compared it to outsourcing

They looked at their payroll
They looked at their small parts manufacturing
They looked at their research
They looked at their product development
They looked at their marketing
They looked at their customer support, etc

Because their management looked at the costs as unconnected and isolated (aka discrete). One by one they outsourced each part of their company thinking they were going to bank the savings.

Until they looked at their costs...

They didnt reallize that tracking the costs, quality, technology, controls....all reduced the savings in some cases the reductions were 25%....50%....and in some cases there were no savings

Then they audited their business again and found that their costs were increasing because they were locked into contracts and could had way to restructure and use efficiencies to lower costs

Then they audited again and found that their costs were going up because the work that the company was doing could no longer be spread throughout the entire company...

Whats my point? My point is that outsourcing is not and never has been the panacea for corporate savings that people claim. Yes, it helps the bottom line but many companies have outsourced themselves out of business! Contracting so much of themselves to the lowest cost provider that they couldnt compete, they couldnt change and they lost control of their ability to control their quality and their cost structure.

It takes generation(s) to build a fortune 500 company and a bad manager can give the keys to that company away as they outsource their technology & services...(dont be niaive and think that your outsourcers can prevent someone from using your proprietary information, change it slightly enough to start a lawsuit, and open their own company)...or a bad manager that outsources their company until it cant change, compete or control its costs.

There are many democrats and republicans who believe that our country is rotting from within!

In fact, we are the only world power to have become a world power and then given its status as world power away voluntarily in 50 years!

[LHardy]

Cal:
You have pointed out one good example of poor management discisions. This does not hold true over all of our companies in the US.
Also The US itself does not own nor control these companies outside of the laws and taxes burdened upon the companies.

Then they audited their business again and found that their costs were increasing because they were locked into contracts and could had way to restructure and use efficiencies to lower costs- Applies to outsourcing and our labor unions alike.

The main purpose of a company is to profit as greatly as possible. It is not in buisness of supplying jobs to the masses. They are the tools to produce the profits. If there where no profits to be had no one would go into any buisness venture. We would the have to resort to being farmers agian and self sufficient.
We can blame greed, as long as we realise greed exists at every level of buisness. Bottom to Top, Top to Bottom.
It is all about the money.

[crater]

could the problems have been because of the incompetency of the people putting the business together, and negotiating the contracts? without looking at the real big picture, I think that somethings can be outsourced efficiently but not others, when you are an employee of an outsourcing company, you know
a. its a temporary job
b. if the client leaves there is other ones
c. whether you do good at your job or not it's a menial job
there is no connection to your client.

[buffknut]

I'm going to assume in your example that these widgets are a commodity item and that there are competitors. Also I assume that this is a price-elastic product so customers will go for the lowest cost widget.

Given those assumptions, the real problem is that if the company does not close the plant and offshore, then there is a strong possibility that not only will all the Iowas jobs be lost anyway, but you will also lose all your shareholder value.

A true double whammy.

If I'm a shareholder and not living in Iowa, then you really give me no choice. I don't like shipping jobs offshore, but again, as a shareholder, I'll have to sell as soon as I see I can get better returns elsewhere. Wouldn't you?

To vote in favor of keeping the employees in Iowa also means you are assuming that their income as an employee is more important than my income as a shareholder. People may believe that, but it is a value judgement and is really another means of wealth distribution.

By the way, I would fire the management that could not make that decision.

[OneEmerald]

Originally posted by therising
Pretend this is true.

You owe stock in XYZ COMPANY. You've owned the stock for years, you invested a thousand or two of your graduation money when you were 18.

XYZ Company makes widgets in a plant in Iowa. They send a letter to shareholders, saying that they're considering closing the Iowa plant, and building one in China. They have empirical evidence that closing the plant will increase stock prices by 20% in the first year. (just play along, here)

The plant in Iowa employs 800 workers.

They ask you, as a shareholder to help make the decision, with your proxy vote.

Let's say your shares, whatever the $ amount may be, equals half of your savings. Whether that be $5k, $20k, or $100k - it's half your savings.

How do you vote?
Do you vote to close the Plant, have the jobs go to China, and make 20% on your money?
Or, do you vote to keep the jobs here, knowing that the share price will remain stagnat, at best?

Back to the original question..... This plant with 800 workers is large and must have been around for quite awhile. Most people, I would think, would prefer to buy items made in the USA - at least that is what we hear from our customers.

I would consider the risk of the unkown against the known. I probably invested in this company because it is US owned and manufactures in the US. There are so many variables to consider, but since this is just about the money, I would keep my patriotic hat on and vote no.

I really believe I would vote that way.

And since I didn't put "all my eggs in one basket" I have other investments.

[therising]

Only Buffy, Stevenco and Emerald actually answered the question. Buffknut, kinda, but I didn't see a firm answer

How do you vote?

I'd vote to send the jobs overseas.

I'd have a hard time answering to the boss (ie wife) as to why our IRA and college funds have suddenly dropped. I don't think the "Yeah, but we saved jobs" would go over too well.

You gotta look out for number 1 sometimes. This is the reason most of the people on this MB were willing to sacrafice the jobs of Erie County workers.

I also drive a foreign car for the same reason, although I know there are quite a few people in this Labor town that have a problem with that.

[yokes]

I'd vote to protect my investment. But I am selfish