Thursday, February 21, 2008

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.


Anonymous said...

right on, mike!

Anonymous said...

This posting is so far off the mark, it is unbelievable. For starters 21st century business economics have nothing to do with CEOs, boards of companies, politicians, or acedemics. Private sector, for profit, businesses are exactly that "For Profit", that is there reason for existance. The midwest union mindset is so myopic it makes me want to cry. Th fact is unions are living in fantasy land.
In this age of global free trade, virtually all manufacturers and many service companies compete globally. In today's fierce job competition market, states compete with states, and countries compete with countries. In addition humans compete with automation / Robots. If Briggs, or any US manufacturer for that matter, caved to unsustainable unon demands they would go out of business. Manufacturers survive by doing things like Briggs did in Kentucky. They produce small engines in a highly automated plant. The labor content is 30 minutes which is less than the cost to ship an engine from China. That my friends is what competition is all about. The fact that the plant is in Kentucky is a direct result of our attitude in the Milwaukee area toward manufacturers. This is the economic reality we have got to get into the thick skulls of our politicians and union leaders in Milwaukee and Madison.
Why is Wisconsin and the midwest losing jobs? It's simple we over tax, we over regulate, and we simply do appreciate the private sector. In fact Wisconsin Democratic politicians view the private sector as a "cash cow". Where do we go from here? Hopefully the citizens of Wisconsin will get their heads out of the sand and change their attitudes toward the private sector. We should be asking all existing private sector employers: What does it take to expand your business in Wisconsin. Of course their answer will be "lower our cost of doing business in WI". The question is will we provide what they ask for or conyinue to drive them out as we have for the last thirty years?

Anonymous said...

anonymous, not quite sure what you are talking about when you speak of the negative attitudes of wisconsin towards businesses. over tax? wisconsin business' have one of the lowest tax rates in the country. it is funny that the very people you are defending, CEO's and boards of companies pay less in taxes than their own secretaries (15% at the capital gains rate). your right, as citizens of this state we shouldnt demand anything from the local businesses, we should deregulate, because obviously this country has seen the benefits of deregulation with all of the toxic toys and clothing that have been shipped in just from overseas. It is a cheap tactic and pretty despicable to read someone rant against the few safeguards we from Wisconsin actually have to make a safe and decent life for our families.

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