In Cleveland, Ohio, the family-owned business Payne Tool and Die is about to go out of business. Ryan Forrester tells the family that if they want to keep the company afloat, they’ll have to outsource to China, but instead the family patriarch wants to sell their personal property to keep it running. He’s outvoted, but had his strategy prevailed, do you think he could have saved the company?
Not likely. The lower wages paid to workers in off-shored settings , along with the lower lost oaf materials, makes it very difficult for “on-shore “ companies to compete while remaining profitable.
It’s a real puzzle, isn’t it. Most people - especially in today’s economy - will opt for the lower-priced item. If an American manufacturer buys that item from China & sells it for, say, 25% less, other companies lose sales if they don’t match that price. And companies generally can’t do that for long without making some adjustment somewhere, whether it’s layoffs or moving the factory.
At some point someone points out that yes, people will lose their jobs if the factory moves overseas, but that they’ll lose them anyway if the local company shuts down AND the business goes under.
I think Ryan is a realist, although it makes him sad to know what has to happen. And I think that he’s right, that selling the family assets would only buy them a little bit of time.
Given the economy at that time, no. Businesses were outsourcing to keep your stockholders and board happy.
I agree. The authors do pretty good job of showing why this would be true.
I don’t think so. That would be going against the tide and unless they found some magical solution they would have lost everything.
Very few family-started manufacturing businesses survived unless their product was so unique. Selling personal assets would not have helped this family. Sad ending, too.
It is sad to say but I agree with the others, it would not have survived. I grew up a few miles from the steel mills and could always see them when we were in the car driving. I now live about 3 minutes from Gates Mills! I am able to digest the past and the present in real life. I am not sure how I would have “voted” if it were my family in the predicament. Could the family still survive financially if they cut back? Probably, but for how long?
I agree with the others. In today’s economic picture there doesn’t seem to be any room for loyalty or sentiment as was important in the past. We have developed into a ‘dog eat dog’ society where those on the bottom are just bait for the bigger fish and they all turn on each other in the fight for survival.