Briggs' CEO denies consequences of low road strategy

Several weeks ago, John Sheily responded to my Crossroads article that criticized his comments at a Public Policy Forum luncheon and Briggs and Stratton's' high-volume, low-cost business strategy with a piece that blogger Jim Rowen rightly called a "counter productive meltdown."

Sheily, Briggs' CEO, criticized the former mayor, Milwaukee's religious community, the Catholic archbishop, my sister, reporters, MPS students, MATC (my employer) the Briggs union, the great grandson of a former Milwaukee mayor and yours truly.

Mr. Sheily's startling response was almost twice as long as the article it was answering. Yet, he never answered its principle criticism- that Briggs’ decision to compete at the low end of the small engine market led to the loss of family supporting jobs in Milwaukee.

Instead he engaged in personal attacks and innuendo.

Sheily wrote, “Rosen has described himself as chairman of the Economics Department at Milwaukee Area Technical College.” For the record I have not described myself as the chairman of the MATC economics department for more than three years since I resigned from the position.

He also wrote, “According to Rosen, prosperity only comes to a political economy when it increases taxes, promulgates more burdensome regulations and nationalizes various industries. If this Hugo Chavez brand of 'economics' is what MATC is teaching the next generation work force, it's no wonder we have a problem. This is the same MATC that runs two taxpayer-financed business incubators that a recent Journal Sentinel report revealed as hopeless failures.”
The first sentence is simply not true. I did not prescribe any of the policies he ascribes to me.

The second sentence is an attack on me as a professional educator and an attempt to discredit me through my association with an activity of my employer, MATC, which I have absolutely nothing to do with.

Mr. Sheily actually suggests that MATC is responsible for the area's labor shortage. He never acknowledges that Briggs, like many area manufacturing firms, downsized its apprenticeship programs in the 1980s, contributing to this very shortage. Nor does he appreciate the fact that Briggs' antagonistic approach to its employees and frequent layoffs make it unattractive to workers who have legitimate concerns about economic security.

Mr. Sheily defends Briggs' decision to move thousands of family supporting jobs to southern college towns where it employs students at low wages and without benefits. He seems pleased that in right to work states like Georgia and Alabama, no one, according to him, worries about inequality, poverty and low wages. The thousands who marched and sacrificed in Montgomery and Selma, including the late Dr. Martin Luther King and Rosa Parks, would surely find that an interesting observation!

Perhaps feeling a tad bit guilty over his multi-million dollar salary, Sheily defends excessive CEO salaries which were not addressed in my critique of Briggs' low road strategy and makes short shift of the nation's growing economic divide, calling it "the rhetoric of two Americas." That is, of course, because the one he inhabits, a world of soaring CEO compensation and corporate profits, is doing just fine.

Sheily even has the audacity to suggest that his work hosting a board meeting of the Rock N Roll Hall of Fame Board in Milwaukee is an adequate economic development response to Briggs' decision to move 10,000 jobs out of the region!

Rather than accepting responsibility for Briggs' decision to move jobs to low-wage, non-union states, he blames my sister, a long time Briggs' employee and elected union official, and his former employees for fighting to protect their jobs after Briggs started moving them.

Sheily dismisses Germany's successful economic model as "a welfare state with high rates of unemployment."

The facts: the German economy, Europe's largest and third in the world, is booming. Germany has been the world’s largest exporter of goods for four straight years. Unemployment and corporate bankruptcies are down and investor confidence is soaring. Germany has greater economic mobility than the United States. His suggestion that Alabama or Georgia, states with lower average hourly wages, per capita income and educational achievement than Germany, or Wisconsin for that matter, are models indicates that what Mr. Sheily really finds attractive is low wages!

But Mr. Sheily never responds to my principle contention that his firm ignored premium and emerging green markets, focusing its production on high-volume, low cost engines that necessitated large concessions and the relocation of thousands of jobs to low wage regions. Yet, it was this strategic decision that led Briggs to abandon Milwaukee and its employees.

And he resorts to old fashioned red-baiting, attempting to discredit my ideas by inaccurately comparing them to those of Venezuela's socialist President, Hugo Chavez.

But Chavez is the President of a country with a nationalized oil industry. I criticized Briggs' decision to abandon Milwaukee, but never discussed Venezuela's approach to economic development or nationalizing industry.

Chavez was elected and re-elected by the people of his country. I teach economics to the people Sheily laid off and their kids.

I don't need to teach them about the consequences of capital flight or "two Americas theory" Mr. Sheily blithely dismisses. They live in a city which has lost tens of thousands of manufacturing jobs, with the nation's 8th highest poverty rate and 7th high child poverty rate.

Milwaukee didn't lose these jobs because it treated CEOs poorly or over-regulated and taxed businesses. It lost them because beginning in the early '70's many of the city's corporate leaders abandoned the social compact between labor-management that had helped Milwaukee and its people prosper in the decades after the World War II. They declared war on their employees and unions in an effort to reduce labor costs and increase rates of profit.

This new approach became apparent when the Milwaukee Meatpackers Association hired non-union labor to cross the Amalgamated Meatcutters picket line the day that Local 248 went on strike in 1974. By 1978, even Master Lock, a United Auto Workers shop, was hiring scabs, an unheard of event during the post World War II period when Milwaukee was a "union town" with a relatively prosperous blue collar middle class.

Douglas Fraser, President of the UAW, wrote about these developments in his 1978 resignation from the Labor Management Group: "I believe the leaders of the business community, with few exceptions, have chosen to wage a one-sided class war today in this country—a war against working people, the unemployed, the poor, the minorities, the very young and the very old, and even many in the middle class of our society. The leaders of industry, commerce and finance in the United States have broken and discarded the fragile, unwritten compact previously existing during a past period of growth and progress."

John Sheily and other Briggs leaders made a conscious decision to compete based on low wages and union avoidance. This meant abandoning their workers and the Milwaukee area in pursuit of low-cost labor. Name calling and factual distortions won't change what they did. Nor will it bring back the 10,000 jobs they moved from Milwaukee. Examining the consequences of their failed business model is necessary, however, if Milwaukee and its businesses are to develop alternative competitive paradigms for the Twenty-First Century.

Milwaukee businesses leaders seem to want a return to the 19th century

Milwaukee businesses leaders seem to want a return to the 19th century

At a recent Public Policy Forum luncheon, some Milwaukee business leaders criticized the city's business climate. Their comments suggest that many corporate leaders remain committed to low wage, low skill economic strategies that have cost Milwaukee thousands of middle class jobs and contributed to the city's growing rates of poverty and inequality ("Business leaders want to warm city's climate," Jan. 11, www.jsonline.com/705904).

Complaining that CEOs don't get the same red carpet treatment in Milwaukee that they get in China, Oilgear boss Richard Armbrust said: "Get on a plane, go to China, and you get picked up in a limousine with lights flashing."

Armbrust's message mirrored the widely publicized comments of former RedPrairie Corp. CEO John Jazwiec, who attacked Wisconsin as "socialist" and suggested that the state flag included a "hammer and sickle" shortly before he resigned after reporting an unsubstantiated home invasion.

The country whose business climate Armbrust finds so appealing is a dictatorship where child and sweatshop labor are rampant, worker health and safety barely an afterthought, independent unions non-existent.

Chinese-made products, from toys to toothpaste to fish, have been found to be tainted with harmful agents. U.S. toy importers are demanding increased government regulations to ensure consumer safety.

As China has become the world's sweatshop, it has also become one of the biggest contributors to global warming. Milwaukee CEOs may get the red carpet treatment when they visit China, but pollution is so bad in many Chinese cities that its people can barely breathe.

Armbrust's desire to return to the 19th century was echoed by Briggs & Stratton CEO John Shiely, who said it was unlikely Briggs would open a new factory in Milwaukee because "we still have problems with the tone in this town. . . . Other places admire wealth creators. They don't beat them up."

So what strategy does Shiely want to be admired for? For almost 25 years Briggs beat up its employees as it pursued a less-than-admirable business model based on high-volume, low-cost production. Many of its foreign competitors pursued a model of low-volume, high-quality production in premium markets. (Full disclosure: My sister was employed by Briggs during most of these years and was an elected union leader).

Briggs even fought clean air regulations, ignoring the potential for green markets. As a result of Briggs' 25-year-war against its employees, which included outsourcing jobs to the South, China and Mexico while pursuing wage and benefit concessions in Milwaukee, thousands of wealth-producing employees lost their jobs.

Briggs' plant on 124th St. is closed, the one on N. 33rd St. abandoned. And these "leaders" wonder why they aren't given red-carpet treatment in Milwaukee? Are they really this tone-deaf?

The city they are bashing has the nation's eighth-highest poverty rate and seventh-highest child poverty rate. One of three kids lives in poverty. More than 45% of African-American males are unemployed.

Before international competition became a serious threat, Milwaukee's corporate elite began moving production in search of low-cost labor and short-term profits. The interests of others, particularly those who devoted their lives and labor to help these businesses prosper, were ignored.

When global competition heated up, Milwaukee's elite chose to compete on cost rather than on quality and service. Milwaukee's deindustrialization and deunionization are a byproduct of these low-road strategies, which stand in contrast to Germany, another mature industrial economy, where manufacturing and workers are flourishing based on high-wage, high-skill production.

As Milwaukee's CEOs abandoned their workers, they promised to help the city and people left behind. For more than 30 years, since the Greater Milwaukee Committee promoted the Performing Arts Center and the Grand Avenue Mall as catalytic urban redevelopment projects, Milwaukee's corporate leaders have promoted downtown development as a panacea.
When the festive marketplace model failed to deliver, they promoted a publicly subsidized convention center. Later, the GMC launched the Initiative for a Competitive Milwaukee, and then Johnson Controls' Metro Markets came along, promising a market approach to urban revitalization. The former created one high-wage job, the six figure consultancy of Harvard professor Michael Porter. The latter little more than a three-part series in the Journal Sentinel.

Since former Gov. Anthony Earl convened the Wisconsin Strategic Development Commission in the early 1980s in response to Kimberly-Clarke CEO Darwin Smith's threats to leave Wisconsin, demands for lower taxes, deregulation, privatization and subsidies have dominated the agenda. The efforts have resulted in increased poverty, unemployment and growing inequality in Milwaukee.

Milwaukee's CEOs shamefully used this luncheon to press their narrow economic agenda of reducing labor and other production costs. They dream of a "red carpet" world where wages are low and grateful chauffeurs cater to their every whim. For Milwaukee's working people, many of whom can barely afford to fill their gas tanks and heat their homes, much less hop on a plane, this "dream" is increasingly a nightmare world of haves and have-nots.


Michael Rosen is an economics instructor at the Milwaukee Area Technical College.