15%. That's our cut. That's the percentage of the expenses of a company.
It's not only that we are treated like inanimate inputs, but we
don't even get our 50%, as you'd expect.
Apparently, according to Yves Smith, we've been sold a bill of goods
about globalisation.
Managers in the West have been able to export our jobs to the East
with the argument that globalisation will find its equilibrium,
which means western workers will be unemployed or working for
Chinese wages.
Well, that's another 30-year-old bubble in my head which has just burst.
Apparently workers are only 15% of expenses, so we don't even
make a difference when you consider executive wages.
And the execs are stupid too. They are only looking out for themselves.
What the perception of extra income has done with managers is make
them stuff their faces with high paying contracts and allowed them to eat up
the profits before the company fails, which it will.
So, it's the bad managers who cannot handle the Eastern competition, not the "lazy unionised workers". Indeed, labour became insignificant thanks to 80's right-wing policies which have been carried on by successive governments.
checkitout: naked capitalism
The Decline of Manufacturing in America: A Case Study
One frequent and frustrating line that often crops up in the comments section of this blog is that American labor has no hope, it should just accept Chinese wages, since price is all that matters. That line of thinking is wrongheaded on multiple levels. It assumes direct factory labor is the most important cost driver, when for most manufactured goods, it is 11% to 15% of total product cost (and increased coordination costs of much more expensive managers are a significant offset to any savings achieved by using cheaper factory workers in faraway locations). It also assumes cost is the only way to compete, when that is naive on an input as well as a product level. How do these “labor cost is destiny” advocates explain the continued success of export powerhouse Germany? Finally, the offshoring,/outsourcing vogue ignores the riskiness and lower flexibility of extended supply chains.
This argument is sorely misguided because it serves to exculpate diseased, greedy, and incompetent American managers and executives. In the overwhelming majority of places where I lived in my childhood, a manufacturing plant was the biggest employer in the community. And when I went to business school, manufacturing was still seen as important. Indeed, the rise of Germany and Japan was then seen as due to sclerotic American management not being able to keep up with their innovations in product design and factory management.
But if you were to ask most people, they’d now blame the fall of American manufacturing on our workers. That scapegoating serves to shift focus from the top of the food chain at a time when executives have managed to greatly widen the gap between their pay and that of the folks reporting to them.
Let me give you an all too typical example of how American management has contributed to the demise of our industrial competitiveness, namely, the former Mead Corporation paper mill in Escanaba, Michigan, which is now part of NewPage, owned by Cerberus.
